[2023] UKUT 175 (AAC)

I do not accept the father’s argument that the redundancy payment should have been entirely excluded from the 2016/17 income used for the purposes of the consent order. What was decided in BB v Secretary of State for Work and Pensions (CSM) [2019] UKUT 314 (AAC) was that the taxable element of a redundancy payment does fall to be included within gross earned income when “historic income” is being calculated, but not when “current income” is being calculated. This is because the taxable element of a redundancy payment is taxed under section 10(3) (rather than section 10(2)) within Part 2 of the Income Tax (Employment and Pensions) Act 2003 and so, by virtue of regulation 36(1)(a), falls within the scope of the HMRC figure used as a basis for calculating historic income under regulation 35, whereas it does not fall within the scope of regulation 38(1) and so cannot amount to current income.

The father is therefore right to submit that a redundancy payment cannot be taken into account when calculating current income. However, as child support maintenance was being assessed for a period beginning on 9 September 2017, income in the 2016/17 tax year was, if relevant at all, “historic income” and so the taxable element of the redundancy payment received in December 2016 was rightly included in that income. On the other hand, the fact (if it was a fact) that the father was still living off the redundancy payment during at least part of 2017/18 would not permit the redundancy payment, or any part of it, to be taken into account as “current income” in 2017/18, if the income in that tax year was relevant.