There are some important changes ahead to the way in which the State will operate child maintenance arrangements between separated parents.
The underlying aim is to encourage parents to agree their own maintenance arrangements by way of a Family-Based Arrangement (FBA) rather than using the statutory framework.
As of 2014, all CSA maintenance cases will be closed/transferred to the Child Maintenance Service, if Government plans go ahead. If parents cannot agree maintenance between themselves, there are some important changes to note:
- All cases currently operated under the CSA will be closed/transferred to the new Child Maintenance Service by 2014 (with 6 months notice)
- A new financial formula based on the gross weekly income of the paying parent comes into force in October 2012
- Fees will be applied if a couple cannot agree maintenance between them and choose to use the maintenance collection service
- Before the CMS can be used, parents have to go through a "gateway" telephone service to see if they can agree maintenance privately in a Family-Based Arrangement (FBA).
The new formula
The gross weekly income of the paying parent is now the starting point (as opposed to net) and a sliding scale is applied. HMRC will provide details of a paying parent’s gross income to CMS directly.
- If the gross weekly income of the paying parent is less than £800, the maintenance payable is calculated using the following formula:
(a) One child – 12% of gross income
(b) Two children – 16% of gross income
(c) Three or more children – 19% of gross income
- Where the paying parent earns more than £800 per week gross, the amount of maintenance is calculated by applying the above formula to the first £800 and then adding the following percentage on the remainder:
(a) One child – 9% of gross income
(b) Two children – 12% of gross income
(c) Three or more children – 15% of gross income
- Where a paying parent’s gross weekly income is less than £100 they will pay a flat rate of £7 per week (paying parents who earn less than £10 per week will be "nil assessed")
- Where a paying parent’s gross weekly income is between £100 - £200, a different formula will apply
- Any income above £3,000 gross per week is ignored for the purpose of calculating the level of maintenance payable (parents will still be able to use Schedule 1 Children Act 1989 applications for "top up" orders if the paying parent has a very high income
- If the non-resident parent has the child/children staying with them overnight for 52 nights or more per year, their maintenance payments will be reduced by 7ths incrementally, as is currently the case
- If there are other children living with the parent paying the maintenance, they will be entitled to reduce their gross weekly income as follows:
(a) One child – 12%
(b) Two children – 16%
(c) Three or more children – 19%
- CMS will be able to claim unpaid child support against the estate of a deceased liable parent
- Unless there is a significant drop or rise in the paying parent’s income, the liability will be fixed for a term of 12 months to prevent frequent applications for variation.
Application and collection fees
The Government hopes to incentivise separated parents to reach their own private child maintenance arrangements.
A parent applying for a child support assessment will pay a £20 application fee.
- Parents will have to go through a telephone "gateway" service which aims to encourage collaborative child support discussion between them, before they can access Child Maintenance Service.
- Direct Pay option ; parents can then choose a direct payment scheme whereby they agree the amount of maintenance payable and record it in writing (DWP has specimen agreement forms online - http://www. Dwp.gov.uk). The paying parent pays the parent with care direct, taking care to keep a record of payments made.
- The Child Maintenance Service option : If the CMS scheme is chosen to collect/enforce payments, the parent with care will have to pay collection fees of 7% from every maintenance payment collected by the CMS. The Government say that this fee is needed because "it is vital that the parent with care has an incentive to allow the non-resident parent to pay maintenance through Direct Pay." There will be no exemption for parents who have been victims of domestic violence.
- A non-resident parent who has failed to pay via Direct Pay will face an ongoing collection fee of 20% on top of child maintenance.
- Further enforcement charges will apply if further steps are necessary, including £50 if the CMS make deductions from the non-resident parent’s earnings