Child maintenance here means regular (which might mean each week, month or year) financial support paid by one parent to the other to contribute to a childs everyday living costs. There are also other types of financial provision that a parent can be required to make for their childs benefit.
There are several ways that parents may resolve questions about payment of child maintenance.
If parents are able to agree on the level and frequency of child maintenance, then they can record this in a written document. The document does not have to be especially detailed and there is no magic form of words. The agreement does not have to be registered with the Child Maintenance Service (CMS) or any other organisation.
A child maintenance agreement is useful in situations where both parents trust one another and are prepared to be honest about their financial circumstances.
However, a private agreement is not legally binding. That is, if one party changes their mind, they will not be held to the terms of the agreement.
If one parent decides to ignore the agreement, it would be necessary to consider dealing with child maintenance issues under Options 2 to 4, below.
This is an option only as part of a divorce or dissolution.
A court agreement is very similar to Option 1. The difference is that the parents agreement is recorded and approved by the court in the form of an order. Unlike a private agreement, a court agreement is legally binding. It remains binding for at least twelve months.
After a year, if either parent wishes to change the terms of the court agreement, and that change is not agreed, either may apply to the CMS.
Most parents will be able to – and will have to – approach the CMS to resolve disagreements about child maintenance. See Option 4 for situations where the CMS cannot become involved.
The CMS scheme works by identifying which of a childs parents has day-to-day care. It does this by looking at the time the child spends with each parent. If the childs time is divided equally between parents, the CMS treats the parent who receives Child Benefit as the parent with day-to-day care. The other parent is called the Non-Resident Parent (NRP) by the CMS scheme.
Once the NRP has been identified, the CMS applies a formula to the NRPs net income to calculate the child maintenance obligation (the maintenance liability).
The CMS does not take into account the income (or the assets and other financial resources) of the parent with day-to-day care in deciding the NRPs maintenance liability.
Net income is calculated by subtracting tax and National Insurance payments and pension contributions from gross income.
Gross income includes any bonus, commission or overtime payments. It also includes receipts from any pension scheme, tax credits, employment credits and disabled persons tax credits. Gross income excludes investment income, State Benefits, student grants and loans.
The CMS obtains details of the NRPs gross income direct from Her Majestys Revenue and Customs Office.
The NRPs maintenance liability depends on his or her circumstances and net weekly income. There are formulae for determining, based on these factors, how much a NRP should pay.
As a general rule, the maintenance liability is a percentage of the NRPs gross income depending on the number of children being maintained. Where the NRPs gross income is between £200 and £800, he or she will pay:
In addition, the NRP will pay a further amount if his or her gross income is more than £801, as follows:
There is an upper limit on the NRPs income that the CMS can consider when it calculates the maintenance liability. The upper limit on annual gross income is £156,000. So, the highest maintenance liability the CMS could impose against a NRP – with three or more children – is about £480 each week.
The CMSs online calculator can give a rough-and-ready estimate of the NRPs maintenance liability based upon the familys circumstances.
These formulae were introduced quite recently, and will apply to new CMS applications made after December 2012. Earlier cases operate through the Child Support Agency (CSA) on a different formula that targets net, rather than gross, income. The current estimate is that all cases will be transferred across to these new formulae by 2017.
There are also plans to introduce fees payable by both parents – an application fee and a collection fee – for calculating, collecting and paying out child maintenance. The collection fee may affect how much parents will pay and receive.
The NRPs net income is reduced when calculating maintenance liability if there are other children living in their home. The NRPs maintenance liability might be reduced depending on how often the child or children for whom maintenance is paid stay with them.
Either the parent with day-to-day care or the NRP can ask the CMS to take into account additional information or circumstances. This is called a variation application. A variation application is appropriate where the standard formulae do not to do justice to the case. A variation application may be made by telephoning the CMS or writing to them.
The categories of variation application that might reduce maintenance liability are if:
The categories of variation application that might increase maintenance liability are if:
There is an appeal system within the CMS if either parent believes the maintenance liability calculation is wrong, or a variation application has not been dealt with properly.
There are some situations where the CMS will not be able to assist. These include the following:
In these situations, the court retains the ability to look at what level of regular financial support by the NRP is appropriate. The court will be guided by, but not bound by, the CMS formulae.
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