News
7 December 2011
Financial provision for children - how is it calculated?
Separating parents are generally aware that they have an obligation to support their children financially. In most cases, parents are happy to provide maintenance for their children even though they may deeply resent paying anything to their former partner or spouse.
Fiona Craig, matrimonial specialist with Beswicks Solicitors, provides an overview of how child maintenance payments are calculated.
The Child Support Agency (CSA) was set up in 1993 under the Child Support Act and was welcomed at the time as it promised a means of streamlining the assessment, collection and enforcement of child maintenance payments. It soon became clear that the Child Support Act created many more problems than it solved. The formula for assessment was complex, methods of collection were ineffective and problems with enforcement soon led to lengthy delays in the courts. Most seriously, the Act failed to give credit to absent parents (usually fathers) who had made substantial capital payments to their former spouse in return for agreements not to claim child maintenance.
Over the last 18 years many of the problems have been ironed out, but the scheme is still fraught with problems. November 2008 saw the establishment of the Child Maintenance and Enforcement Commission (CMEC) which was intended to take over many of the functions of the CSA. To date it appears that the changes have been largely cosmetic and the CSA handles just as many assessment cases as before.
Today, the CSA uses a simple formula for assessing child maintenance based on the non-resident parent’s net income:
• 15% for one child;
• 20% for two children; or
• 25% for three or more children.
Because the formula is easy to use, many separating parents are able to agree on how much child maintenance should be paid. There are significant advantages for both resident and non-resident parents in dealing with matters in this way, rather than getting caught up in the bureaucracy of the CSA. The CSA’s on-line calculator at www.direct.gov.uk/csa is quick and simple to use and can help parents agree their own arrangements.
However the CSA formula has been criticised as being inflexible and giving insufficient weight to individual circumstances. It can also produce some odd results. For example, one non-resident parent earning £100,000 gross can be assessed to pay just over £500 per month for two children, if he marries a new wife who has two children – even though the new wife may herself have a good salary and receive maintenance for her children.
Also the jurisdiction of the CSA is limited. It covers all cases where both the child and the non-resident parent are resident in the UK, and applies to all children up to the age of 16, or 19 if they remain in full time secondary education or its equivalent. The CSA has no jurisdiction in the following cases:
• where the non-resident parent has died;
• where financial support is being sought from a step-parent;
• Where either the child or the non-resident parent is resident outside the UK, unless the non-resident parent works for the UK diplomatic service or armed forces, or for a company registered in the UK. Overseas cases are becoming more common as parents move abroad with employment. In overseas cases the Court may well be persuaded that applying the equivalent of the CSA assessment to the NRP’s earnings will achieve a fair result.
• where the child is over 16 and is in tertiary education - happily few such cases end up in court. Either parents are only too willing to provide whatever financial support they can afford to their student child; or the student child opts to support himself by a combination of grants, loans and part-time working.
The role of the CSA is also limited where:
• the child has extra expenses due to a disability - disputes are relatively rare because often the disabled child’s needs can be met by state benefits such as Disability Living Allowance
• the non-resident parent is a high earner, earning over £2,000 net per week.
In all these cases the court can make orders for child maintenance and, unlike the CSA, the court will take a highly case-specific approach to any application.
”Top up” cases involving high earners on over £2,000 net per week are the most difficult and have attracted most attention and, in some cases, controversy. The difficulties arise if the parties have never married. If the parents have been married, the court’s approach will take account of many different factors, many of them outside the scope of this article. If the parents have never been married, the court will not consider the length or nature of the parents’ relationship. The court will consider the standard of living which the child would have enjoyed if his parents’ relationship had continued. It is not enough for the high earner to pay enough to meet the child’s basic needs. His or her liability is likely to be significantly greater than that. If that means that the former spouse also benefits, by enjoying high quality accommodation and a substantial income, at least while the child is a minor, then so be it.
Capital payments
Finally it is worth pointing out that the Children Act also enables courts to make capital payments for the benefit of children. This provision can offer invaluable assistance to former cohabitees who find themselves with no financial security at the end of a long relationship.
Beswicks’ family team can advise in confidence on all aspects of financial provision for children, and should be contacted on 01782 205000 for an initial consultation.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.
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