Proposed Changes to Child MaintenanceJoanna Craig
The child support agency has had its critics and its difficulties. It was temporarily replaced by CMEC (but nobody noticed the difference and CMEC itself was abolished in March 2012). Since then the Department for Work and Pensions has been responsible for the CSA which in turn was replaced by the Child Maintenance Service (CMS) in December 2012.
The CMS has been up and running since the 10th December 2012 but on a trial basis available only to ‘path finder groups’ that is, parents who have 4 children or more, the children have the same parents and they are not currently using the CSA. All other parents have to continue using the CSA for the time being.
It is proposed that the CMS will replace the CSA once it has been running for a number of months and working well. It is expected that parents who use the CSA will be given notice that their cases will be closed and given the opportunity of using CMS if they need to. These changes are intended to be finalised by the autumn.
There are a number of new arrangements.
If parents cannot agree a maintenance arrangement for their children an application can be made for a statutory child maintenance arrangement and this involves a calculation of maintenance and choosing whether the maintenance collection service is required. If it is, a fee is payable. This is new. The government is obviously seeking to save money and will be charging for its services that were previously provided free.
There are certain conditions involved. The person asking to receive maintenance must live in the UK, the child must live in the UK and the person paying must also live in the UK (or work in the civil service, the armed forces or for a UK based company).
In addition, there cannot be a Court order in place prior to April 2003 or a Court order made after April 2003 that has been made less than 12 months before the application. The child must be under 16 years of age or between 16 and 20 and undertaking full time, non advanced education or aged between 16 and 20 and registered with certain types of government approved training course and child benefit is in payment.
The CMS will decide how much the paying parent should pay to the receiving parent based on a standard formula and can also collect and pass on payments if required.
The CMS can also try to locate the other parent.
There is no right to use the CMS. They will only get involved if asked by either parent or grandparent or other guardian of the child needing maintenance. It can be used if the child is at boarding school.
The big change is that the government is planning to charge for using the service. DWP have announced that they are considering what fees parents should be charged and expect to announce their final decisions imminently. There is an intention to impose a 20% fee to be payable by the paying parent on top of the child maintenance and 7% of that will be deducted from the maintenance received.
The new maintenance calculation
Instead of the relatively simple formula used by the CSA (15% of NET income for first child, 20% for second, 25% for three or more) there is a far more complicated formula:
If gross weekly income is less than £100 the child maintenance will be a flat rate of £7 a week.
If gross weekly income is less than £800, the child maintenance will be 12% of gross income for one child, 16% of gross income for two children and 19% of gross income for three or more children.
If gross weekly income is more than £800, the above formula is used and an additional percentage is added of 9% of gross income for one child, 12% for two children and 15% of gross income for three or more children. (These figures are only added on the difference above £800).
Any income over £3000 gross per week is ignored.
As with the previous arrangements this formula changes according to how often the children stay with the paying parent. If the child or children stay with the paying parent for more than 52 nights per year this will reduce payments by one seventh on a sliding scale – as currently happens.
Any children living with the paying parent will reduce payment – one child 12%, two children 16% and three or more 9%.
Obviously these changes are not yet in force but they are the proposals which seem to be imminent. The use of gross payments are in part to avoid excessive pension contributions being used to reduce liability and the fees are either to dare parents using the CMS unnecessarily and to recoup some of the costs of the agency.
It is to be seen whether this ensures reluctant parents are any more willing to pay!
We are grateful to Rachel Goodall of 3PB Barristers Chambers for assistance in writing this article.
For more information or to discuss further please contact Nicky Gough on 07711 527968 or email email@example.com.