When parties are separated or divorcing it is possible for either party to arrange payments directly between them on a voluntary basis. It is often the case that the parties may also look to see what the Child Support Agency (“CSA”) assessments would be before agreeing a level of voluntary maintenance.
There are now three child maintenance systems running side by side and these are as follows:-
Although it is acknowledged that most newly separating clients will be caught within the CSA-2 and CSA-3 formulas it is still possible for children born in January 2003 to be caught within the CSA-1scheme rules. The CSA-3 changes were implemented in December 2012. At the moment the majority of the new rules will only affect a very limited number of applications for child support which are described as “pathfinder” cases for the next few months. The new rules will only apply to those cases that have entered the new scheme and cases outside the new scheme will still be governed by the existing rules i.e. either CSA-1 or CSA-2.
At the moment new applicants under CSA-3 will qualify if they have four or more children with the same non-resident parent. It is anticipated that this criteria will change to cover families where there are two children from the same parents and towards the end of 2013 it is anticipated that all new cases will automatically slot into this new scheme.
The main differences between CSA-2 and CSA-3 is that under the CSA-2 scheme, child maintenance is calculated on a percentage of net income whilst under the CSA-3 scheme it is based on gross weekly income of the non-resident parent.
These arrangements can become quite complicated when, for example there may be other children that the non-resident parent is supporting (for example from a previous marriage or relationship) or where payments are already made through either the CSA, under a Court Order or a voluntary arrangement.
The main point of the new scheme is to encourage parties to enter into voluntary arrangements known as “Family Based Arrangements” instead of formalising arrangements via the Child Support Agency. The Family Based Arrangements place the emphasis on the parents agreeing directly the sums of monies to be paid.
However, if the parent receiving payment does not believe that the non-resident parent (who will then be known as the “parent who pays”) will pay under a Family Based Arrangement there will now be an application fee to gain access to the child support system and at that point the CSA (who will be known as the “Child Maintenance Service”) will become involved and will contact the relevant parties. There will also be on going charges to both the receiving parent and also the paying party. The intention behind this appears to be to disincentive those parents using the system because it will “cost” both parties more in terms of benefiting their children.
The above is a brief overview of some of the changes - in the next newsletter, I will look at specific examples of the changes and how they may potentially impact upon clients.