What’s the news?
We’ve had a new set of Regulations come into force to tweak the child maintenance calculations and enforcement provisions.
It is snappily entitled the Child Support (Miscellaneous Amendments) Regulations 2018.
What does it mean for you?
- specified assets are now to be calculated as having a weekly value, which is taken into account in order to vary a maintenance calculation. The weekly value of the asset is treated as additional income of the non-resident parent
- regular deduction orders and lump sum deduction orders can be made to joint accounts. The application of lump sum deduction orders to sole trader accounts are extended, and both orders are applied to partnership accounts (where such a partnership is formed in England or Wales)
- additional circumstances in which the Secretary of State may exercise the power to write-off arrears – so they will stop chasing non-payers
- enforcement against non-payers by disqualification for holding or obtaining a UK passport
This means that once the basic child maintenance calculation is done, either parent can apply for a variation of the calculation on the basis that there are capital assets that should be taken into account and calculated as income producing assets. This used to be in force under Scheme 2, was taken out in Scheme 3 and is now back again… I suppose we call this Scheme 4?
What are the ‘specified assets’ that will be given an income value?
They have to be worth more than £31,250.00 (at present) and could be any of the following:
1. money, whether in cash or on deposit, including any money which is due to a non-resident parent where the Secretary of State is satisfied that requiring payment of the monies to the non-resident parent immediately would be reasonable;
2. gold, silver or platinum bullion bars or coins;
3. a virtual currency which is capable of being exchanged for money;
4. land or rights in or over land;
5. certain company shares;
6. stock and unit trusts;
7. gilt edged securities; or
8. a chose in action (basically a type of legal case/order/debt due to you) which has not been enforced on the date of an application for a variation and enforcement would be reasonable.
The exemptions are if the asset:
- has been received by the non-resident parent as compensation for personal injury suffered by the non-resident parent;
- is being used in the course of the non-resident parent’s trade or business;
- the Secretary of State is satisfied could have been purchased from the gross weekly income of the non-resident parent which has been taken into account for the purposes of a maintenance calculation;
- will need to be sold in order to meet any additional maintenance payment required as a result of a variation and the sale of that asset would cause hardship to a child of the non-resident parent, or would otherwise be unreasonable having taken into account all relevant circumstances; or
- is a legal or beneficial interest in land where the land in question is the primary residence of the non-resident parent or any child of the non-resident parent. (so not your own home
What is the income rate then?
It is 8% of the capital value per annum. So, if you had gold bars worth £20,000.00, they would be disregarded. If the gold bars were worth £31,250.00 they would be taken to give you £2,500.00 in additional income each year.
If you had a holiday home worth £300,000 (mortgage free), that would give you an additional income of £24,000 per year. If there was a mortgage of, say, £150,000 then the mortgage is taken off first and the 8% applied to the balance so then £12,000 in additional income.
The child maintenance regulations can be complex and the process an unfamiliar one. If you need help with a child maintenance problem, contact us.