Confused about the new child support rules and what it means for you?Don’t be! Here is a summary to help you on your way.
In the last week, changes have come into effect meaning that all new cases requiring assessment will be referred to the Child Maintenance Service (CMS) rather than the more commonly known Child Support Agency (CSA) which administers the previous scheme (known as the 2003 scheme).Cases which are opened before 25 November will still be dealt with by the Child Support Agency.
The first point to note is that the previousl definition of a ‘child’ was someone up to the age of 18 years in full time education but it is now those in full time education up to the age of 20 years.
The new scheme calculates the level of child maintenancis based on the non resident parent’s gross income unlike previously when it was based on the non resident’s parents net income.The definition of gross income is slightly confusing as pension contributions are discounted.
In calculating gross income, the non resident parent’s historic income is used, usually from information provided to HMRC under a PAYE scheme or from their self assessment tax return.Only if the current income differs by 25% is it possible to apply for a calculation based on the current income.
If the non resident parent’s income is in excess of £156,000 per annum then the court would have jurisdiction to deal with an application for a ‘top-up’ award.
So what is the new calculation?If the non resident parent has an income of less than £5 per week, there is no liability and if they income of less than £100 per week or receive certain benefits there is still a flat rate of £7.If the non resident parent has an income of between £100 and £200 per week, a reduced rate applies so that they pay the flat rate of £7 plus a percentage of their net weekly income.In all other cases, the basic rate applies.
The basic rate is as follows:
1. For gross income between £200 and £800 per week, child maintenance is paid at the rates of:
a. 12% for one child
b. 16% for two children
c. 19% for three or more children
2.For gross income of £800 to £3000 per week, child maintenance is payable at the rate of:
a. 9% for one child
b. 12% for two children
c. 16% for three or more children
3. If there are children living with the non resident parent (not necessarily their own child, but for example their partner’s children) then a deduction is made of:
a. 11% if there is one child
b. 14% if there are two children
c. 16% if there are three or more children
4. If the non resident parent cares for the children (if more than one child, this means all the children) overnight, then a reduction will apply of:
a. 1/7th if the child(ren) are cared for overnight 52-103 nights each year
b. 2/7th if the child(ren) are cared for overnight 104-155 nights each year
c. 3/7th if the child(ren) are cared for overnight 156-174 nights each year
d. ½ if the child(ren) are cared for overnight 175 or more nights each year
If the child(ren) spend equal amounts of time with each parent, no child maintenance is payable.In the event of a dispute, a parent receiving child benefit will be deemed to be the parent with care and should receive child maintenance.
I have encountered numerous cases where a non resident parent’s assessed income is wholly inconsistent with their lifestyle.Under the previous regime it was possible to apply for a variation to the maintenance assessment.This is no longer possible and an application for an upward variation can only be made on the basis of unearned income (from property, savings, investments etc) or diverted income (where the non resident parent pays income to another person or otherwise to reduce their own income).
The new rules are an attempt to reduce the costs of the child support regime.Currently there is no charge involved in seeking a child maintenance assessment.Parents are now being encouraged to reach an agreement between themselves and the government says it will give help and support to do so.
In an effort to actively encourage people to try to reach an agreement, once the new scheme is up and running and is judged to be working successfully, charges will be introduced as follows:
1. £20 application fee
2. 20% collection fee which the non resident parent will have to pay in addition to the assessed payments
3. 4% charge on top of payments which are deducted from the maintenance payments received by the parent with care.
If the non resident parent stops paying, the Child Maintenance Service will step in to enforce payments.
The aim of the new Child Maintenance Service is to be able to process applications and make payments more quickly than under the old scheme, preventing a build up of arrears and potential financial hardship for the parent with care.The non resident parent’s financial situation will be reviewed annually to make sure the payments are fair and accurate so if a non resident parent fails to pay, quicker and more effective enforcement action will be taken.
The new calculations are slightly more complex than the previous regime.Whether they will be effective and work better than the previous regime only time will tell.
If you are separated or divorced and need advice as to the level of child support which should be paid by you or to you, please contact me on 01245 809 556 or firstname.lastname@example.org