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Child support: changes and charges

Back in February this year we brought you an update on the new child maintenance regime. Things have moved on since then, so here we are again.

As a reminder, all new applications to the child maintenance scheme now use the paying parent’s gross income. It is payable for children under 16, or aged between 16 and 20 and still in non-advanced full time education or training. It is calculated as follows:

  • For gross income of up to £800 per week, child support is payable at the rate of 12% for one child; 16% for two children; and 19% for three or more children.
  • For gross income of £800 to £3,000 per week, child support is payable at the rate of 9% for one child; 12% for two children; and 15% for three or more children.
  • Parents earning less than £7 per week (or in prison, or who are students) pay nothing. Those earning £7-£100 or who are receiving certain state benefits pay a flat rate of £7 per week, and there is a reduced rate for those earning between £100 and £200.
  • Deductions from the total child maintenance payable can be made to take account of other children who live in the paying parent’s household at the rate of 11% for one child; 14% for two children; and 16% for three or more children.
  • Further deductions can be made to reflect the number of nights the child for whom maintenance is paid stays with the paying parent. If the child stays on average one night per week there will be a 1/7th reduction, two nights leads to a 2/7th reduction and so on.

By way of reminder, the much maligned Child Support Agency closed to new business in November 2013. The organisation now dealing with all new cases is the Child Maintenance Service (CMS). Like the CSA it is a Government body, and has largely the same functions. Over the next few years the CSA’s cases will be terminated. All affected parents will be contacted between now and 2017 to give them notice that their current arrangement will end. Most clients will get 6 months’ notice and will be offered support from Child Maintenance Options to put a new arrangement in place, or can opt to use the CMS.

With effect from Monday 30 June 2014 most parents making a new application to the Child Maintenance Service (CMS) for an assessment of child maintenance will have to pay an application fee.

The application fee is a flat £20 which is payable by the parent with care of the children who is applying for a maintenance assessment. This fee is a reduction from the original amount of £100 which the Government wanted to charge, and the lower level is the result of lobbying from several quarters. All new applications will attract this fee, unless the applicant is under 19, or is a victim of domestic violence or abuse. (In order to qualify as a victim of domestic violence the applicant must have reported it and must make a declaration at the time of the application that they are a victim of domestic abuse or violence).

There are also ongoing collection fees, which will have a far greater impact on parents than the one off application fee, because they are continuing charges on maintenance collected by the CMS from the non-resident parent and passed onto the parent who looks after the children more of the time. They penalise both the paying and the receiving party, and represent the Government’s attempt to get parents to sort out and pay maintenance for their children without troubling the collection service. New cases are already coming into this system, and from 11 August 2014 collection charges will be charged to both parents in a pre-existing case where the CSA currently passes on maintenance, no matter how long parents have been using the system, unless the parents opt to transfer money direct instead.

When the CMS is used to collect the maintenance, a 20% administration fee will be added to every amount collected from the paying parent. So, as an example, if the amount assessed is £100, the paying parent will actually have to pay a further £20 (so £120 in total) to CMS.

At the receiving end, the parent with care of the children will be charged a 4% fee on any child support collected through the CMS. So of the £100 assessed as payable, only £96 will actually reach the parent.

For both payer and recipient these amounts add up over the course of a year to quite a reasonable amount of money, on which they will both lose out. However, if the parents can make arrangements to pay maintenance directly from one to the other, fees will not apply, whether or not the CMS has been used to calculate the amount of maintenance payable; however, this isn’t available if the payer is in arrears. A maintenance calculation is a stand-alone application – you do not have to apply for the CMS to collect the maintenance due at the same time. So someone who only wants the CMS to perform a maintenance calculation will only have to pay the £20 application fee, as long as both parents can manage the direct payment option.

The CMS refers to payments made directly between parents as ‘maintenance direct’ or ‘direct pay’. Where CMS is used to collect and pass on the maintenance, that is using the ‘collection service’ or ‘collect and pay’.

Whilst we support initiatives encouraging parents to sort out arrangements themselves, we share the widely held concerns about these new charges penalising many families. Will these charges really help or encourage parents to support their children financially? Where the receiving parent is forced to use the CMS to collect maintenance as it is not being paid willingly, he/she and the children will be penalised for a situation beyond their control. In the end, we consider that the new charges are likely to increase resentment between parents already struggling to cooperate, and that children are likely to bear both the financial and social brunt of the fall-out.

As always, if you would like to make an appointment to talk to us about any aspect of family law, please call us on 01223 443333.

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