John Fotheringham: Changes to child support system could result in £26m lost to kids

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THE complex and confusing system of child support is undergoing radical change – with a desire to save money at the heart the way in which the Child Support Agency will operate in future.

The new system (known as CS3) will be rolled out gradually, starting with new cases involving four or more children in the same family. Once these are working well the rules will be applied to new cases with two or more children, and then lastly the government will start to convert existing cases. The changes begin to come in to effect this week.

Single parent charity Gingerbread says 100,000 people who currently get payments are likely to fall out of the system rather than switch – resulting in £26 million lost to children.

So what does this mean for you if you have an existing case? If you are a party to a child support case, you will get a letter intimating that the case is about to close (in either 30 days or six months, depending on when the case began). You will then have to decide whether to apply under the new scheme or attempt to reach an informal agreement with the other party.

The government predicts that 185,000 families will reach their own agreements – but offers no assessment of whether this will result in single parent families being better or worse off.

If you can’t reach an agreement, you can apply under the new scheme but may have to convince the CSA that you tried hard enough to settle the case with the other party. This will no doubt cause difficulties for a large number of families.

What are the main changes? If you do apply under the 2012 scheme you will find several major (and many minor) changes from the existing position.

maintenance is calculated on the non-resident parent’s gross, not net income

income will be established from the most recent Tax Return rather than the most recent wage slips and personal accounts

different sets of percentages will apply depending on the number of children concerned

changes in the non-resident parent’s income over the year will be ignored unless amounting to more than 25%

the CSA can no longer deem the non-resident parent to have additional income based on 8% of his net assets (excluding the house in which he lives)

the parent with care can no longer point out that the non-resident parent cannot be restricted to his declared income, taking into account his expensive lifestyle

the non-resident parent will be entitled to a reduction in payment if the child stays overnight for one night per week or more. If the parties cannot agree the number of nights, the CSA will statutorily assume that it is one night per week. Even the word “child” has been re-defined as a person under the age of 20 in respect of whom Child Benefit is payable.

One of the problems of using an informal agreement as opposed to using the child support system at all is that the agreement cannot be relied upon to last for more than 12 months. After that either party may apply for a Child Support Maintenance Calculation which will replace whatever the agreement said about aliment for a child. That’s one rule which may yet be changed.

John Fotheringham is a director in the family law team at Lindsays.