Child Maintenance: When is capital, income?

10 Aug 2021 | Lisa Pepper
father and children

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Reading a recent case from the Child Maintenance Tribunal, I considered it worth flagging up that the Child Maintenance Rules changed in 2018, regarding paying parents’ capital.

For the purposes of this article I shall refer to the Parent With Care/Non-Resident Parent (CMS terms) as Mother and Father respectively, acknowledging of course it depends on the individual situation.

On an application to the Child Maintenance Service (CMS) for an assessment, it will initially assess on the basis of gross income using tax returns, etc.  The Mother can apply for a variation to take into account capital. Where the Father’s capital exceeds £31,250 then a notional income of 8% of the value can be ascribed to him. This can include a number of types of assets including assets held in a trust of which he is a beneficiary (note that his primary residence is excluded). This is a very important change and should not be overlooked when advising clients on CM issues.

The case I mention was BB v Secretary of State for Work and Pensions and another (CSM) [2019] UKUT 314 (AAC) which considered a Child Maintenance Service assessment in 2016 regarding redundancy payments.  The question for the Tribunal was whether redundancy payments count as current income (and therefore should be taken into account as part of the calculation of Child Maintenance Payable).

The Tribunal held that the redundancy payments were not income, they were considered more like payments of capital, in that they were compensated for the loss of a job, and taxed differently.  The Upper Tribunal concluded that current income for the purposes of a CMS assessment did not include redundancy payments, but the taxable part of the payment counted as historic income.  As I say, this concerned a CMS assessment made in 2016, the rules have now changed, and there is a new ground of variation for notional income to be ascribed to assets exceeding £31,250.

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Child Maintenance FAQs

What income is taken into account for child maintenance?

Any income you have from employment, self-employment, property and investments is taken into account when working out how much child maintenance you should pay. This includes any income you receive from bonuses, overtime or commission. If you are claiming benefits, the amount of most benefits you receive will be included as part of your income.

Income is capped at £156,000 per year (£3,000 per week) before tax, which is the maximum income of the paying parent that will be taken into account for child maintenance. If the paying parent’s income is higher than £156,000, it may be possible to apply to the court for top-up maintenance.

Is child maintenance calculated on gross income?

Yes, child maintenance is calculated on gross income in England and Wales. The Child Maintenance Service (CMS) has a formula for maintenance based on various factors, including how much gross income you earn, how many children you have, how much time the children spend with you and whether you are paying for children from another relationship. You can use the government’s online calculator to work out how much you should be paying in maintenance.

What can be deducted from child maintenance?

You can ask the CMS to take into account certain expenses you pay, which reduces the gross income figure that is used to work out child maintenance payments. These include:

  • Boarding school fees
  • The cost of travel to and from contact visits
  • Extra costs for children with special needs
  • Making mortgage payments on the home that the receiving parent and children still live in

Does inheritance affect child maintenance in the UK?

Inheritance is not income and does not form part of the paying parent’s gross income used for calculating child maintenance. However, inheritances can be considered a source of capital for parents. This means the receiving parent can apply for a variation to take the inheritance into account if it exceeds £31,250.

Do I still pay child maintenance if my ex remarries?

Yes, you would still be required to pay child maintenance if your ex-partner remarries. The amount of child maintenance you are required to pay is based on your income and the number of children you have, not your marital status.

How many nights a year is shared care?

There is no set number of nights required for shared care in England and Wales. However, if the child stays with a paying parent for an average of one night a week or more (at least 52 nights a year), this can reduce child maintenance payments.

For example, where there are 52 to 103 nights of shared care each year, child maintenance is reduced by 1/7th for each child. For 104-155 nights, the reduction is 2/7ths. For 165-174 nights, it is 3/7ths, and for 175 nights or more, there is a 50% reduction in child maintenance.

Do you pay child support if you have 50/50 custody?

If you have 50/50 custody and an absolute equal share for the care of the children, then you would not typically have to pay child support. Child maintenance rules assume that the paying parent provides day to daycare to a lesser extent than the receiving applicant.

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