What CMS “unearned income” actually means, what can count, the £2,500 annual threshold, and the important role of HM Revenue & Customs (HMRC).
Last updated: 25 August 2026
The Key Law: Regulation 69
The main legislation is Regulation 69 of the Child Support (Maintenance Calculation) Regulations 2012.
Regulation 69 allows qualifying unearned income to be considered as part of a child maintenance variation where the statutory conditions are met.
However, the legislation does not define unearned income as simply money received.
What Regulation 69 links unearned income to
Regulation 69(2) links the definition to income of a kind chargeable to tax under specific parts of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA).
- Part 3 — Property income
- Part 4 — Savings and investment income
- Part 5 — Miscellaneous income
The relevant question is what the payment actually represents and whether it falls within the statutory Regulation 69 definition.
What Can Count as Unearned Income?
Government guidance gives examples of income that can potentially fall within the additional unearned income rules.
- Rental income from property
- Rental income from land
- Interest from savings
- Investment income
- Dividends
- Certain miscellaneous taxable income
GOV.UK guidance describes additional unearned income as including income such as rental income from property or land, dividends and interest from savings and investments.
The £2,500 Threshold Does Not Mean £2,500 of Bank Deposits
This is an important distinction.
The legislation refers to qualifying unearned income equal to or exceeding £2,500 per year.
It does not mean that simply having £2,500 pass through a bank account automatically creates £2,500 of assessable CMS unearned income.
The nature of the payment must first be identified.
The question is: “What was the money actually for?”
A Bank Deposit Is Not Automatically Unearned Income
Money can enter someone's account for many reasons.
For example, a payment might represent:
- a genuine personal gift;
- a transfer between someone's own bank accounts;
- repayment of money previously lent;
- reimbursement for something purchased for another person;
- return of someone's own money;
- loan proceeds;
- another transaction which is not qualifying income.
The existence of a bank transaction alone does not establish that the payment falls within Regulation 69.
Does Unearned Income Have to Be Taxable?
Regulation 69(2) is specifically linked to income “of a kind that is chargeable to tax” under Parts 3, 4 and 5 of ITTOIA.
This means Regulation 69 does not give CMS an unrestricted power to classify every payment received by a paying parent as unearned income.
The source and legal character of the payment matter.
HMRC Has an Important Role
Regulation 69 contains specific provisions concerning information supplied by HM Revenue & Customs.
Under Regulation 69(3), subject to the other provisions in the regulation, the amount of unearned income is determined by reference to information supplied by HMRC at the request of the Secretary of State for the latest available tax year.
Regulation 69 also provides that where the relevant HMRC information does not identify income of the type covered by Regulation 69(2), the amount is to be treated as NIL, subject to the other provisions and exceptions contained within the regulation.
This makes HMRC information an important part of the statutory unearned-income process.
What DWP Decision-Making Guidance Says
The Department for Work and Pensions also publishes official child-maintenance decision-making guidance dealing with variations.
The guidance explains how HMRC information is obtained and how the £2,500 threshold should be considered.
The guidance describes possible HMRC outcomes including:
- HMRC identifies qualifying unearned income and supplies relevant information.
- HMRC has a record for the paying parent but no relevant unearned income is identified.
- HMRC does not hold the relevant income details or there is no match.
DWP guidance and the £2,500 threshold
The DWP variations guidance explains the decision-making process where HMRC information identifies qualifying unearned income of £2,500 or more, as well as circumstances where the HMRC result is nil, below the threshold or relevant details are not held.
Can CMS Ever Use Evidence Other Than the Initial HMRC Figure?
Yes. It would be wrong to say that CMS can only ever use an initial HMRC figure.
Regulation 69 contains provisions dealing with circumstances such as where:
- the latest available tax year is not the most recent tax year;
- the HMRC information does not include relevant information from a self-assessment return; or
- relevant HMRC information cannot be obtained.
In specified circumstances the Secretary of State may determine an amount using sufficient evidence relating to the relevant tax year.
Regulation 69 also requires such a determination, as far as possible, to be based on information of the type that would be required for a self-assessment return.
The existence of these provisions does not change the basic statutory definition of what qualifies as unearned income.
What If the Unearned Income Has Stopped?
Regulation 69 also deals with situations where historic unearned income is no longer being received.
Where the required conditions are satisfied, including where the paying parent no longer has the relevant property or asset which generated the income and has no current source from which that income could be derived, the regulations provide for the current unearned income figure to be treated as nil.
This is important because historic income should not automatically be assumed to continue indefinitely where the underlying source no longer exists.
How Annual Unearned Income Is Converted
Where qualifying unearned income is included, Regulation 69 provides a method for converting the annual amount into an additional weekly amount for the maintenance calculation.
The resulting weekly figure can then form part of the income used in the child-maintenance calculation in accordance with the legislation.
Example: Qualifying Rental Income
Example only
Suppose qualifying annual rental income is identified as:
This exceeds the £2,500 annual threshold.
That additional weekly income may then be taken into account within the statutory maintenance calculation.
This is very different from merely seeing £5,200 worth of transactions enter an account and assuming every transaction represents unearned income.
Example: Somebody Gives You £5
Suppose a friend or family member gives someone £5 as a genuine personal gift.
The Regulation 69 question is not simply:
The relevant question is whether the payment is income falling within the statutory Regulation 69 definition.
A genuine personal gift does not automatically become Regulation 69 unearned income merely because money changed hands.
In addition, the Regulation 69 unearned-income variation threshold is generally £2,500 per year.
Unearned Income Is a Specific Variation Ground
It is important not to mix Regulation 69 unearned income with other parts of the child-maintenance variation rules.
Other rules can deal with matters such as:
- income from certain assets;
- notional income;
- diversion of income;
- other statutory variation grounds.
Those are separate concepts and can involve different statutory tests.
Questions to Ask CMS About Unearned Income
If CMS says that unearned income has been included in a maintenance calculation, useful questions include:
The Bottom Line
CMS unearned income does not simply mean “money that you did not earn by working”.
Regulation 69 gives it a specific legal framework.
- It is linked to income of a kind chargeable to tax under specified parts of ITTOIA.
- The relevant categories include property income, savings and investment income and specified miscellaneous income.
- The general Regulation 69 threshold is £2,500 per year.
- HMRC information plays an important role in identifying the relevant income.
- Regulation 69 contains an important nil-income provision where the relevant HMRC information does not identify qualifying income, subject to the regulation's other provisions.
- Money entering a bank account is not automatically Regulation 69 unearned income.
The nature, source and legal classification of the money matter.
Official Sources
Read Regulation 69 on legislation.gov.uk
Read ITTOIA 2005 on legislation.gov.uk
View the official Decision Makers' Guide on GOV.UK