Child Maintenance for High Earners
16 Aug 2023 | Lisa Pepper
Table of Contents
How much should be paid?
When separating or divorcing parents cannot agree the amount of child maintenance to be paid, (in high income cases where the paying parents’ gross income exceeds £156,000 per annum,) they revert to: (i) the Child Maintenance Service to carry out a maximum assessment and (ii) the court – which can order a ‘top up’ amount to be paid. An explanation of the Child Maintenance Service formula can be found here.
James v Seymour [2023]
In the case of James v Seymour [2023] Mr Justice Mostyn sitting in the High Court of the Family Division gave further guidance as to how that ‘top up’ should be calculated, building on a formula he had previously recommended in a case known as CB v KB [2019] EWFC [49]. At paragraph 34 of his Judgment, Judge Mostyn states the James v Seymour formula is a logical starting point in a child maintenance case.
The court will still consider an income needs budget and there is a useful example of a budget and the Judge’s view on it at paragraph 49 of the Judgment.
Access the full Judgement and tables here
How is top-up child maintenance to be calculated?
Judge Mostyn provides the following formula:
E = (G x (1-Z)) – P – (S/0.55)
- E = exigible income (see below)
- G = Gross income per P60/tax return
- Z = the reducing factor due to the number of children living in the paying party’s household
- P = the amount of pension payments currently being paid
- S = the amount of school fees and extras currently being paid.
Once the exigible income has been calculated, the figure can be applied to tables set out in the appendix of the Judgment to calculate the ‘Child Support Starting Place’. Judge Mostyn explains in the appendix to the Judgment that the exigible income is calculated by taking the paying parents’ gross earned income as disclosed in their most recent P60 or tax return and making adjustments for (i) the number of other children living in their household; (ii) the paying parents relievable pension contributions currently being made are annualised and deducted; and (iii) the grossed-up school fees currently being paid by that parent should be deducted.
Table 2 within the Judgement (which can be viewed in the above link) allows for a reduction where there is a shared care arrangement and the paying parent is having the children with him/her for some overnights.
Notably, the formula is not relevant if:
- The paying party’s gross exigible income is more than £650,000;
- There are four of more children;
- The paying party’s income is largely unearned;
- The paying party lives on capital.
Lisa Pepper is a Partner in our Family Team and Head of Family Finance. She is also an accredited Mediator. Lisa is recommended to HNW individuals in the Tatler Address Book , Spears 500 and in the Chambers HNW guide.
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