Ask anyone who has been through the process, and they will likely tell you that claiming child maintenance is not as straight forward as it should be. In the majority of cases, child maintenance is calculated by reference to a formula decided upon by the government. Simply put, it requires the paying party to pay the party claiming child maintenance a percentage of their gross income.
While this may sound straightforward, it can become difficult once the detail is taken into account such as, who is the paying parent, what income is taken into account, whether the paying parents has care of other children, whether it is a shared care arrangement, whether other financial contributions are being made and what discount should be applied to reflect the time the child or children spend with the paying parent. The process is normally administered by the Child Maintenance Service (“the CMS”). Once engaged, the CMS will make an assessment for the party claiming child maintenance in respect of what the monthly payments should be.
Claiming child maintenance and obtaining assessment from the CMS is not always a straightforward process. Before the CMS maintenance claim can begin, the applicant needs to contact another body called Child Maintenance Options, who act as a gatekeeper to the child maintenance claim. However, the matter is further complicated when dealing with high earners.
The CMS will conduct their assessment based upon the level of the paying party’s gross income and then discount the required payment by one seventh for every night the child or children spend with them on average over a year. The percentage of the gross income which the paying party needs to pay is tapered depending on the level of earnings. However, there is a cap on the level of income which the CMS can take into account, and therefore the level of child maintenance which the CMS can award. Currently, the maximum amount of pre-tax income that can be taken into account by the CMS is £3,000 per week/£156,000 per annum. Once the paying party’s income exceeds this, the Child Maintenance Service will make a maximum assessment. This maximum assessment allows the court to award maintenance in excess of the CMS assessment, sometimes referred to as a top up maintenance.
What income can be taken into account by the CMS
The CMS will base their assessment on the paying party’s:
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salaries and wages
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self-employed earnings
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bonuses, commission, overtime payments and royalties
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overseas earnings if these are taxable in the United Kingdom.
When a party is claiming child maintenance, the CMS will not in the first instance take into account ‘unearned income’, which includes rental income and dividends. These figures are not ultimately disregarded, but the party claiming child maintenance may need to request a variation of the assessment to take such income into account.
The court’s assessment of child maintenance
Having gone through the (potentially arduous) process of obtaining a maximum assessment, the court then has jurisdiction to make a child maintenance order. This will usually be in the context of a financial claim upon divorce or an application made pursuant to Schedule 1 of the Children Act 1989.
Unlike the CMS, the court is able to take a discretionary approach to assessing the appropriate level of child maintenance. They are not bound by the same rules and formulas that the CMS have to apply. There may however be a move towards a more aligned approach.
In the case of Re TW & TM (Minors) [2015] EWHC 3054 (Fam) Mr Justice Mostyn gave the following guidance:
“My decision in GW v RW makes it clear that where a court is considering issues of child maintenance the formula [applied by the CMS] is not, so to speak, written in marble but supplies only a starting point. There may be in a case a very good reason why there should be departure from the starting point of the formula. In my opinion the formula should apply even where the earnings of the father are in excess of the £3000 per week maximum provided for in the Act and the Regulations. If the earnings of the father were very much in excess of that then there would be a good reason to depart from the formula downwards, but if the income of the father is not un-adjacent to the maximum then to my mind, subject to other factors, that of itself is not a good reason to depart from the formula.”
Mostyn J expanded on this guidance to party’s claiming maintenance from high earners in the later case of CB v KB [2019] EWFC 78, giving further clarification on his opinion as to the correct approach:
“I suggest that in every case where the gross annual income of the non-resident parent does not exceed £650,000, the starting point should be the result of the formula ignoring the cap on annual gross income at £156,000. For gross incomes in excess of £650,000 I suggest that the result given by an income of £650,000 should be the starting point with full discretionary freedom to depart from it having regard to the scale of the excess.”
If this approach is applied by the court the party claiming child maintenance would receive 9% of the paying party’s income between £156,000 and £650,000 where there is one child, 12% where there are two children and 15% where there are three or more. These amounts would be in addition to the maximum assessment carried out by the CMS, which range between approximately £1,100 per month to approximately £2,100 per month, depending on the circumstances.
It should be noted that this guidance is not binding upon other judges. It remains to be seen whether it will become the accepted approach adopted by all courts or whether other judges will continue to adopt a more discretionary stance to those with incomes over £156,000. However, until the point comes before the higher courts, it is certainly a useful guideline as to the appropriate level of child maintenance payable by high earners.
The issues raised above are an overview of a complex area of law. You should always seek specialist advice. You can contact our child maintenance lawyers in London to discuss your circumstances by calling us on 020 3405 0060 or emailing us at contact@bortoftbell.com.