Child Support – The New Regime
The new 2012 system is administered by the Child Maintenance Service (part of the Department of Work and Pensions) and applies to all new applications since the 25th November 2013. The key changes are to the formula for assessing the paying parent’s income. It is now the gross income for the previous year, rather than the net income of the paying parent at the time of the application. The percentage calculation applied is to ensure a similar outcome to the former 2003 scheme administered by the Child Support Agency. The percentages applied under the new system at the basic tax rate (there is a lower percentage applied to calculate the level of support for income taxed at the higher rate) are;
For the first £800 per week for one child is 12%, for two children 16% and for three or more children 19%.
For income between £800 and £3,000 per week, the percentages reduce to 9% for one child, 12% for two children and 15% for three or more children.
Perhaps of more concern for separating parents, is the introduction of fees. On the 30th June 2014 the Child Maintenance Service introduced application and enforcement fees. If parents decide to use the ‘collect and pay’ service, they will have to pay fees with effect from the 11th August 2014. There will be a £20 application fee as well as a 4% reduction fee for the receiving parent, and a 20% handling fee for the paying parent, as well as additional charges if enforcement steps are taken. The effect of this, by way of example is that for a £100 payment, the paying parent pays £120, and the receiving parent receives £96. The Child Maintenance Service receives £24 plus the application fee.
It is perhaps no surprise that the new scheme actively discourages parents to use the system. Parents are instead encouraged to reach private agreements. Often the calculation of child support will not be a straight forward percentage as outlined above. The paying parent may have other children. The calculation of support may be subject to variations for example if there is a shared care arrangement for the children or contact costs, or perhaps the paying parent has unearned income from savings, investments or property that might need to be taken into account. Whilst the ‘online calculators’ will be of assistance in most cases, there will undoubtedly be a few ‘grey’ areas.
Parents seeking assistance in addressing the level of child support or indeed any aspect of their relationship breakdown may wish to consider Mediation as a way forward. Mediation is where an impartial third party (the Mediator) facilitates discussions, and assists those involved in relationship breakdown to reach their own informed decisions. Jackie Gifford at Bennett Griffin LLP is an experienced family lawyer and Resolution trained Mediator. Her legal knowledge can prove invaluable in the Mediation process.
If you would like to find out more about the Mediation process, or the changes in child support, please contact Jackie Gifford on 01903 229903 or email firstname.lastname@example.org