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Financial Provisions for the children of separated parents

Wednesday May 29, 2024

Divorce Family Law Separation Agreements

When unmarried couples separate, securing financial support for their children becomes a critical issue to address early on. Unlike married couples who divorce, there are no automatic financial claims therefore the primary focus shifts to ensuring that the needs of the children are adequately met.

This blog post explores five common challenges faced by separating parents when addressing financial support for their children.

Where Do I Start?

For most separating parents, the starting point for resolving child maintenance payments is the calculation provided by the Child Maintenance Service (CMS). However, different rules may apply if one parent or the child lives abroad. In cases where there is a genuine “shared care” arrangement, neither parent is required to pay maintenance to the other.

The CMS formula calculates maintenance based on a percentage of the paying parent’s income. It considers factors such as:

  • The number of nights the children stay with the paying parent
  • Whether the paying parent supports more than one parent
  • Whether the paying parent has other children living with them

This calculation does not account for the circumstances of the parent receiving the maintenance payments. An online calculator is available for parents to reach an agreement about the maintenance amount. Most parents agree to payments based on this calculation. In case of a dispute, the CMS can conduct an assessment and verify the paying parent’s income through HMRC records.

If the paying parent fails to make payments as directed, the CMS can assist in collecting the payments. This comes with an additional charge: a 20% fee for the paying parent and a 4% deduction from the receiving parent’s payment.

Getting the “Right” Calculation from the CMS

One common issue is ensuring that the CMS uses the correct income figure for their calculation. While the CMS cross-checks information with HMRC, discrepancies can arise, especially if the paying parent is self-employed. Even when tax returns are filed, incorrect figures can still be issued to the CMS.

Once the CMS provides a calculation, it will confirm the income taken into account to the paying parent and request further information if needed. The paying parent must ensure the provided information is accurate.

Parents receiving maintenance can take several steps to ensure the full extent of the paying parent’s income is considered. It may be necessary to apply for a variation, asking the CMS to include other income sources, such as:

  • Unearned Income: Income from rental properties or company dividends
  • Earned Income: Income not initially accounted for
  • Diverted Income: Income directed to a new partner rather than the paying parent

Specific legal advice may be required to determine if further inquiries by the CMS are necessary.

For paying parents, it might be relevant to ask the CMS to consider certain expenses that reduce available income for child maintenance. Common costs include maintaining contact with the child, particularly if the parents live far apart, boarding school fees, and mortgage payments for the child’s residence.

Addressing Calculation Disputes

If significant issues arise regarding the calculation of maintenance payments, a process of mandatory reconsideration and, ultimately, appeals is available to ensure the correct calculation. Legal advice can be particularly valuable at these stages, as there are rules around disclosure and the costs should be proportionate to the maintenance amount sought.

When Can the Court Handle Maintenance?

The court’s ability to address maintenance issues is limited to specific circumstances, such as:

  • When the paying parent’s income exceeds the CMS maximum threshold of £156,000 per year gross, requiring a ‘maximum assessment.’
  • Payments for school fees
  • Expenses related to a child’s disability
  • Payments from a step-parent

Each case requires comprehensive financial disclosure from both parties, allowing the court to understand the context and make an informed order. Parties can often reach agreements through financial disclosure and negotiation, sometimes aided by mediation. If an agreement is reached, the court can confirm it in a binding consent order.

In situations where an agreement cannot be reached, or one party is not cooperating, the court can direct the nature and extent of information to be shared and ultimately decide on the maintenance amount.

What If One Parent Lives Abroad?

If one parent lives overseas, the CMS might not handle the maintenance calculation, but parents can still reach an agreement, potentially using the CMS formula as a guide. However, factors like housing costs and higher taxes can complicate the process.

If an agreement is not achievable, legal proceedings may be necessary. Determining the appropriate court, ensuring it has jurisdiction, and considering enforcement options are crucial. There is international cooperation for enforcing maintenance payments, allowing orders from one country to be recognised and enforced in another, although this can be time-consuming.

Contact CWC Solicitors

Both parents should seek early legal advice to resolve maintenance issues efficiently and avoid further costs and stress. Specialist advice can help address complications and ensure the financial impact on children is minimised.

For more guidance on securing financial provisions for your children after separation, please contact us. We are here to support you through this challenging process.

When unmarried couples separate, securing financial support for their children becomes a critical issue to address early on.