Changes in Child Maintenance Calculations and how they affect you.

2342578485_528c342f0a_mOkay, so let’s talk Child Maintenance. There are a number of the initial questions a Client has when instructing a solicitor to deal with their child matter and whilst these questions vary from case to case most will include: Will I get custody of my child?; Can we arrange contact with my child?; What rights do I have in relation to my child?; and there is one question that will more than likely crop up: ‘how much child maintenance do I have to pay?’. For those of you that don’t know, child maintenance is a sum that the parent who does not care for the child on a daily basis has to pay to the parent who has day-to-day care of the child. If the parents of a child cannot come to an agreement with regard to maintenance they may be able to get maintenance arranged. Previously, this was arranged by the Child Support Agency, however as of the Child Maintenance and Other Payments Act 2008 a new scheme of maintenance was provided for. This Scheme was introduced in December 2012 and replaced both of the existing means of calculating child maintenance: Child Support Agency (CSA) schemes of 1993 and 2003. The Child Maintenance Scheme 2012 was introduced by the Child Maintenance Calculation Regulations 2012. Those currently under the old calculation schemes will be transferred over to the new scheme, unless they can come to private arrangements. This process will hopefully be completed by the 31st December 2017.

The previous two schemes calculated maintenance on the non-resident parents’ net-income; however the new scheme calculates maintenance on the non-resident parents gross-income, as supplied to them by the HMRC. Net-income is your income following deductions such as tax and national insurance. Your gross-income is the income you receive prior to the said deductions. For those of you interested in how the old schemes worked and how maintenance was calculated, please visit the below websites:  http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/@benefits/documents/digitalasset/dg_198872.pdf and http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/@benefits/documents/digitalasset/dg_198849.pdf.

The 2012 Scheme means child maintenance is no longer administered by the CSA, but is administered by an entirely new body: The Child Maintenance Service and will be worked out in the following way:

1. The individual’s gross income information is received from the HMRC and reviewed yearly to ensure the correct amount of child maintenance is paid.
2. The CMS check for factors that could affect the income figure, such as contributions to private pensions.
3. The CMS then take the correct gross income figure and apply one of the four child maintenance rates:

• Basic applicable if the weekly income is between £200 and £800; or Basic Plus applicable if the weekly income is between £800 and £3,000;

• Reduced applicable if the weekly income is between £100.01 and £199.99;

• Flat applicable if the weekly income below £100 or if the paying parent is receiving certain benefits;

• Nil if the weekly income below £10.

4. The CMS will then look at how many children the non-paying parent is responsible for both with the resident-parent and any other children, such as children with a new partner. They will also check to see if there are any private arrangements between the parents that need to be taken into account.

5. The CMS will then take the child maintenance rate from number three above and use this to work out a weekly figure based on the gross weekly income from number two above. The number of qualifying children in number four above is then taken into account.

6. Finally the maintenance amount will be reduced in accordance with the amount of nights the child or children spend with the non-resident parent.

The above Basic, Basic Plus and Reduced rates are based on a formula found within legislation. The flat rate is currently £10.

The number of children for which the non-resident parent is responsible will alter the percentage that will be deducted from their gross income to pay maintenance. For example if the non-resident parent qualifies for the Basic rate band the percentage of their gross income to be paid in maintenance will be: 12% for one child, 16% for two children, and 19% for three or more children.

It is now possible for the non-resident to get reductions in their child maintenance on the ground of costs of contact, this includes the cost of fuel or train travel they outlay in order to collect the child. This is in addition to reductions for shared care.

The fact that the HMRC is now responsible for informing the CMS as to the appropriate gross income will result in there being a greater reduction in the need for searching beyond the declared income. Previously the CSA have often needed to conduct investigations in to the salary of a non-resident parent. These investigations were often costly and sometimes fruitless. However, all is not lost if the resident parent believes the non-resident parent is not declaring all of their income to the HMRC, because they may be able to ask the HMRC to perform investigations of its own. Further where the non-resident parent has what is called ‘unearned income’ of more the £2,500 per annum, such as income received from rent, dividends or interest, this income can be taken into account via variation.

From the 25th of November 2013 the new scheme was opened to all new applicants and thus it is now applicable to anyone starting a new child maintenance claim. The new scheme, whilst appearing to initially disadvantage the non-resident parent by calculating on the higher gross-income figure, will in fact simplify the process and create a fairer outcome for those paying maintenance. One final point on the matter is to remind those considering child maintenance that it is completely separate and apart from an individual’s claim for spousal maintenance.

For an approximate calculation of child maintenance please visit: https://www.gov.uk/calculate-your-child-maintenance

For further information on the new scheme please visit: http://www.adviceguide.org.uk/wales/relationships_w/relationships_children_and_young_people_e/relationships_child_maintenance/relationships_child_maintenance_2012_scheme/relationships_child_maintenance_eligibility_and_rules/the_2012_child_maintenance_scheme_who_can_get_maintenance.htm

Leave a Reply

Your email address will not be published. Required fields are marked *