Children need financial support but is seems that child maintenance – the how much and how long for – can be a problem whoever you are and however much money you have.
Not many of us are in the realms of Brad and Angelina. She says he is not paying any meaningful maintenance. He says he lent her $8million to buy her house and so far has paid over $1.3 million for expenses and child maintenance in effect.
But back to reality. What does child maintenance mean for the average person? As ever, there is a difference in practical terms between the married/civil partnership family and the unmarried family. The basic ‘rule’ is that whatever is going on between the two parents, they both have a financial obligation to their children and that does not end until the children are over 18 or over 18 and out of education. There are some special exemptions for children with disabilities and additional needs.
So why is child maintenance so tricky? Enter the Child Support Act 1991. Introduced by Mrs Thatcher with a very complicated assessment calculation and also with a reclaim by the government to ‘get back’ via child maintenance some of the state benefits that were being paid out. The Child Support Agency (CSA) was set up.
Since that scheme, we are on to scheme number 3 with a possibility of that being changed again to account for parents who may be manipulating their finances to put money in property and assets to avoid paying child maintenance.
Each scheme’s rules are different and it can be complicated in terms of working out how the income of the paying party is calculated, the allowances that can be made and the amounts to pay. Then there is the system of revision, supersession, appeals and so on. Deep breath!
So, ten basic points:
- The third scheme is based GROSS income – before tax and national insurance. Pension contributions are also deducted – provided they are reasonable e.g. no suddenly putting £1,000 a month into a pension when it was a lot less before
- Emphasis is on agreeing it yourself, parent to parent, using the online calculator. I like this. You are the parents. You are the grownups. Take control. The online calculator gives the minimum but you can agree to pay more or less, if you want.
- If you can’t agree, you can ask the Child Maintenance Service (was the CSA, then C-MEC now CMS) to assess the child maintenance for you. The fee for this is £20 paid by the person asking for them to assess
- The maximum income the CMS can deal with is £156,000 per annum. If the person who is going to pay earns more than this, – congratulations! That’s a lot of money! Remember, you don’t HAVE to pay the minimum for your children….
- If you do earn more than £156,000, the parent receiving the child maintenance can ask the CMS to deal with assessing child maintenance based on income of £156,000 but for the rest, they can make an application to the court for additional maintenance. Alternatively, you can agree to arbitrate for an arbitrator to decide the amount. (See our post about arbitration…)
- If you are married and divorcing, the court cannot order child maintenance but they do consider it as part of the whole and an agreement between you can be recorded in a court order.
- If you agree on paying child maintenance by Direct Pay, that means one parent pays it to another. The CMS are not involved.
- If you really are at loggerheads and you want the CMS to collect the child maintenance, this will cost the family. The person paying has to stump up an extra 20% to the CMS and the person receiving pays 4% to the CMS. So, you are funding the CMS aren’t you instead of your children? – which does not make much sense to me if you can avoid it.
- Every family should by now have received notice that they are moving or have been moved to the Third Scheme – the simpler one based on gross income. Older cases are being closed off. Watch this space for any changes…..
- Child maintenance is one thing but there are obligations for lumps sums to be paid, expenses towards education etc. and those can be dealt with by the court or an arbitrator- and that is whether you are married/in a civil partnership or not.
If you need help in this complex area, contact us. It’s a complex puzzle but we understand how it all fits together. You won’t meet Brad and Angelina though.