We are all probably confused over child maintenance, the new formula or even exactly what they are now called. From the Child Support Agency (CSA) to the Child Maintenance Enforcement Commission (CMEC) to Child Maintenance Options Service and finally it is now called Child Maintenance Service (CMS). There is also a website to assist separating families, the CM Options website contains useful toots and information.
The new CMS opened yesterday (29th July 2013) to new applicants with 2 or more children. This government is determined to avoid mistakes of the past when the 2003 scheme was launched too quickly and for too many clients. Hence, this scheme is being introduced in phases. So far the new scheme has only been rolled out to parents with 4 or more children (with the same parents) with no previous child support involvement. Eventually the system will be available to all new applicants.
The reason for the change to the statutory service is to enable parents to work out child maintenance themselves without needing to involve the state. CMS will eventually replace the Child Support Agency (CSA) and is designed as a safety net to help separated parents to reach an agreement over the level of child maintenance.
So what is different I hear you say? Well, under the new CMS scheme, it is designed to target difficult cases and will be able to use new enforcement fines to deter parents from trying to avoid paying the maintenance owed. For those who use the new system, unless there is domestic violence or you can convince the CMS that their input is required, you will have to go through a mandatory assessment. After the assessment, the CMS will contact the parent who pays and will decide which service is appropriate. The parents can either enter into the “Collection Service”, which means calculating and collecting the payments together with enforcement or can direct a parent’s application to the “Direct Pay Service”, whereby the agency calculates the figure but the payments are made direct between the parties with the CMS in the background. However, the person applying would have had to incur a fee to instruct the CMS of £20 unless there is evidence of domestic violence in which case there is an exemption.
Enforcement will not be covered by these deductions and there will be further fees payable.
Other important changes to the system which you should be aware of are:
On-going charges by using the Collection Service
If you use the Collection Service, your maintenance will be reduced by 4% which will be deducted from the maintenance calculation before it is paid to you. In addition to this, the paying parent will pay a “handling fee” towards the CMS’s running costs which is calculated as 20% of the maintenance calculation. For example, if child support is calculated to be £100 per week, then the parent who has applied for child support will receive £96.00 per week by reducing the 4% fee and the paying parent will pay £120.00 per week. Therefore, the CMS will receive a total of £24.00 as their handling fee which will go towards administration costs of collecting and paying child maintenance. Therefore, there is a clear disincentive to using this service as it will cost more to the paying parent than the parent in receipt of payment. This is regardless if any party is on benefits.
Upon it being reported that a payment is missed, the Person who pays will be notified within 72 hours then they have 14 days to provide evidence of payment and if not produced it is necessary to proceed with enforcement.
It therefore makes sense for a person who pays to opt for the Direct Pay Service to avoid charges.
Calculation based on gross income
The CMS are now working to lower percentages as they are working with a gross income calculation as opposed to the net income calculation which we were so used to.
There is now a two stage process.
Stage one where gross income received is under £800 per week, child support is calculated as follows:-
- 12% – one child;
- 16% two children;
- 19% three or more children.
Stage two where gross income is over £800 per week or up to the new maximum of £3,000 per week, child support will be calculated as follows:-
- 9% – one child
- 12% two children
- 15% three or more
At the bottom of the system, the minimum ‘flat rate’ for those with an income of less than £100 per week is increased from £5 to £10. Students, who are currently automatically ‘flat rate’, will now be assessed on whatever their income actually is.
Where there is a maximum calculation it is possible for the parent with care to apply to the court for ‘top up’ maintenance under Schedule 1 of the Children Act 1989.
Unlike under the CSA scheme, parents who share the day-to-day care of their children exactly equally are not required to pay maintenance to each other if they have a CMS case. However, both parents will be required to provide evidence that the day-to-day care. Annual reviews will be made by the CMS and will be done automatically. What is not clear is whether there will be any further reductions.
The new scheme also has an upper age limit from 19 to age 20.
As stated above, if the paying parent uses the CMS to pay child maintenance and they do not make their payments on time, within 72 hours of a payment being missed, the CMS will contact the paying parent. The purpose is to make sure that the paying parent does not get into arrears. If child maintenance continues to be unpaid, there are three things which the CMS can do:
- Take the money direct from earnings;
- Take the money from the paying parent’s bank or building society account; or
- Take action through the courts.
If the matter then goes to court, there are several actions available to the CMS. The court can:
- Instruct bailiffs to recover the money;
- Sell the paying parent’s property;
- Send a paying person to prison.
Therefore, there are a few schemes still running alongside each other, which in time, it is proposed to have just the one scheme, the CMS scheme. The process of closing the old scheme is likely to take around 3 years, however, the CM Options will be in the background to offer support to help them decide on which option to use.
This article is intended for information purposes only. For further guidance or advice about any child maintenance calculations, please contact CM Options at www.cmoptions.org.