This column first appeared in the Wigan Observer on June 3rd 2014.
Q: How will recent changes to child maintenance affect new parents who wish to make payments through the Child Maintenance Service (CMS) ?
A: There have been more changes in relation to separated parents and calculation of child support ( or maintenance ) payments further to the CMS changing its name from the Child Support Agency, of which people will be a lot more familiar, other changes being the move from a “net” to a “gross income” scheme and encouraging parents to come to agreements between themselves.
If private agreement cannot be reached, new changes require all parents wishing to use the CMS to pay a set fee of £20 to initiate a new claim, although this is waived in a case of Domestic Abuse. Further, if the CMS has to collect and pay the monies, the parent paying the child support will have to pay a further 20% on top of the assessed amount and the parent receiving the monies will have to pay 4% of the amount received. This payment can be avoided by arranging direct payments between the parents.
The gross income scheme starts by finding the paying parents gross annual income to which one of four rates is then applied with reference to how many children the child support is payable. The CMS now have wider powers to make a “Best Evidence Assessment” and also to make a “Default Maintenance decision” of a fixed amount where the income is in doubt, even if the paying parent asserts a lower income that might not otherwise support such a payment.
If the paying parent’s gross income is less than £200 per week a “reduced rate” will be payable, but if the income is between £200 to £800 per week (equating to a gross income of £41,600 ) then a rate of 12%, 16% or 19% will be applied to determine the amount payable depending on whether there are 1,2 or 3 children respectively. Income over £800 up to a maximum of £3000 per week will be assessed at rates of 9%,12% or 15%, to take account of the higher income tax rate. The final amount payable is then calculated by reducing the assessed figure by 1/7th for each overnight stay the child/ren have with the paying parent. The CMS now have the power to determine that no maintenance is payable where day to day care is “shared equally”
The reforms follow suggestions the old system costing up to £74 million a year to run, was too much for the taxpayers in this era of austerity. Although “up front” costs to the taxpayer may be reduced, the jury is out as to whether there might be increased costs “down the line”, particularly in the event of increased benefit payments to a parent unable to secure monies from the other parent.
The new changes are said to remove families from the “system” that can come to private agreements and focus on securing child support from parents “unwilling” to contribute. The new system supports the ideal that children benefit more when parents work together, even when they are separated and the emphasis is that the CMS should be used as a last resort where parents are unable to agree, as well as locating the other parent if whereabouts are unknown, facilitating payments and taking action if payments aren’t paid.
Unfortunately, the fact that the amount of a child’s time with a parent, determines to an extent how much support is payable has lead to suggestions that some may withhold “contact” or seek arrangements for more “contact” in order to increase or decrease the sums payable, meaning some parents could find themselves having a “dispute” about time with children for financial reasons. Another concern is the system may oppress some parents into ‘unstable’ private arrangements to avoid paying the new enforcement costs where children may too lose out on vital financial support.
The rationale for the new system comes from evidence suggesting over 50% using the CSA claimed they could have come to their own arrangement if the right help and support had been offered to them, such as support from the likes of the Child Maintenance Options now being offered. In reality the lack of access to legal advice, especially in light of Legal Aid cuts, may be a barrier to this.
Good legal advice may still be needed about a parent’s options, or where perhaps there is concern that another parent is trying to “force” an agreement where it is not in the children’s interests.
If the new scheme means more children will receive more financial support from both parents, then it will be a good thing. Only time will tell if it works.
To find out more visit https://www.gov.uk/child-maintenance/
Media information: Lianne Tracey and Chloe Kendall
Stephensons Solicitors LLP
Tel: 01616 966 229 or 01616 966 229