Child maintenance can be a daunting subject for parents going through a divorce.
When it comes to forward planning, particularly with finances, it can be difficult to be fully aware of all the implications of child maintenance and what they mean for you personally.
Are you fully aware of what is involved in UK child maintenance, current organisational changes, and how to estimate what you will have to pay so that you’re prepared after a divorce?
What Is Child Maintenance?
Child maintenance is a consistent and regular financial support payment that helps towards a child’s everyday living costs when parents have separated. It is provided by the parent who is not responsible for the main day-to-day care of the child (the non-resident parent).
If an informal agreement is not possible, parents can use the Child Maintenance Service (CMS) to arrange payments.
Child Maintenance and Recent Changes
The UK child maintenance landscape is changing.
The Child Support Agency (CSA) is closing and being replaced by the CMS. It is no longer possible to claim child maintenance through the CSA, and parents must now apply to the CMS.
Any child maintenance arrangements made through the CSA are therefore now ending, and from now on, the CSA will only deal with existing cases of financial support. The entire transition will take until 2018 to complete.
CSA cases are not automatically transferred to the CMS, however. This means that parents need to be aware that they must apply to the CMS in order to receive payments through the new system once their case is closed.
A fee of £20 is usually charged for using the CMS. This includes:
- HM Revenue & Customs (HMRC) checks of your child’s other parent
- A maintenance calculation and payment schedule
- Account access
- An annual review to ensure you continue to receive the right amount of money
- Information on how to arrange payments directly between the two of you
What Does This Mean for Parents?
With the recent changes, parents whose child maintenance arrangements are currently being handled by the CSA will be notified by letter informing them of:
- When their child maintenance arrangement will come to an end
- How and when to go about making new child maintenance arrangements
Parents can expect to receive a letter by the end of 2017, and it will usually come at least six months before the child maintenance arrangement comes to an end.
How Is Child Maintenance Calculated?
A number of factors can affect the amount of child maintenance that a non-resident parent has to pay. Among these reasons is the number of children living with them, any benefits the parent is receiving, as well as whether the child stays with them for at least one night a week.
There are also certain circumstances in which a nil rate may apply to child maintenance payments, such as if the parent is a full-time student, in prison, or earning under a certain amount per week (see below).
Child maintenance is calculated using a variety of information, which includes:
- Details from the non-resident parent’s employer
- HMRC information
- One of four rates that are applied to the non-resident parent’s net weekly income
Child Maintenance: The Rates
The rates applied to the non-resident parent’s net weekly income are:
- Basic rate – For parents who have a weekly income of £200 or more.
- Reduced rate – For parents who have a weekly income of more than £100 but less than £200.
- Flat rate – For parents who have a weekly income of £5–£100.
- Nil rate – For parents who have a weekly income of less than £5
Issues with Child Maintenance
It has been reported that of the historical cases closed by the CSA, 70% had unpaid arrears attached to them, which reached a staggering £4bn owed across the UK.
Knowing Where You Stand
With arrears at such a high amount and organisational changes taking place regarding the CSA and CMA, it is crucial for parents to be aware of what they can expect to pay in child maintenance and what implications the recent changes have for them.
The process of calculating child maintenance can be less daunting if parents know what they can expect to pay once they start having to contribute maintenance.
Tools, such as Cordell & Cordell’s Child Maintenance Calculator, give an indication of what parents can expect to pay.
Author: Haroop Ahluwalia
DISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances. This article is merely a general comment on the relevant topic. If specific advice is required in connection with any of the matters covered in this article, please speak to Cordell & Cordell directly.
Published on 15th December 2016
(Last updated 23rd March 2018)