|
At current rates of interest any saver with a no-risk investment woulde be lucky to get a return of 4 per cent per annum – and even to achieve that the money would most probably need to be locked into a three or four-year bond.
But parents living apart from their children (which in most cases means fathers) will be surprised to hear that, according to the Child Support Agency, they are obtaining a return of 8 per cent from savings or other capital-producing investments worth more than £65,000. This is the assumption which the CSA will make when estimating a parent's wealth for the purposes of calculating maintenance payments.
And while there are exceptions to the above, the way the rules are drawn up is so complicated that working them out requires a fair degree of mathematical ability. No wonder so many affected fathers throw up their hands in despair and decline to exercise their right of appeal.
The above assets do not include the house in which the separated person lives, but should the CSA (through the Child Maintenance and Enforcement Commission) deem that he has failed, and is continuing to fail, to pay child support maintenance, they can prevent any planned sale or transfer of the property going through.
Now life for non-resident parents is, potentially, about to get worse. In recent years, the percentage of a non-resident parent’s income which could be devoted to maintenance was calculated on the following basis: 15 per cent for one child, 20pc for two children and 25pc for three or more children. It has also been possible for parents to apply for departures from the assessment based on the amount of time they spend with the children, payments towards a joint mortgage and other factors.
There are, however, a number of changes which will are coming into force under a phased introduction (the precise dates when these changes will be made are not clear at the time of writing.) Although the percentages for each child are being reduced, these will now be calculated on gross income (i.e. the amount paid by an employer before tax) rather than, as at present, the net income (i.e. take-home pay). The proportions will be 12pc, 16pc and 19pc for someone earning less than £800 a week, and 9pc, 12pc and 16pc if the salary or wage is above that amount. Effectively, however, every wage-earning non-resident parent will have to pay more.
If a non-resident parent earns less than £800 a week but has built up a substantial pension pot (or owns a heritable asset such as property) then the latter may also be taken into account when assessing liability for maintenance payment.
As a result of the issues stated above, assets and income are something of a “balancing act” for non-resident parents subject to child maintenance orders. They therefore need to think very carefully about which assets they wish to take with them in any divorce settlement. The experienced team of family lawyers at McKay Norwell can provide initial advice and, if necessary, legal representation.
Just as many people frequently juggle capital and income for taxation purposes, so it is right and proper that non-resident parents take the same approach in respect of child maintenance liabilities. Few non-resident parents wish to deny their children the necessities and comforts of life, but equally they have a right to ensure they are not subject to excessive compulsory payments by the authorities as a result of avoidable “over-assessment”
There are many complexities about the new CSA rules, and if you have a problem about them do not hesitate to contact John Mitchell, Sheila Byth, Ann Scott, or Douglas Peters at this office on 0131 222 8000. |
News 
