Relief is in sight for those parents whose wealthy ex-partners have used inventive ways to manage their affairs in order to shirk away from their child maintenance obligations.
Under the current system, if separated parents cannot agree how much child maintenance the absent parent (known as the paying parent) will pay, it is necessary for one parent to apply to the Child Maintenance Service for a statutory assessment. That assessment uses a formula based on the paying parent’s income, the number of children they are supporting and how many nights the child lives with them. However, there is a limit to what is classed as “income” for the purpose of the calculation, and furthermore the paying party’s capital assets, such as properties or cash held in bank accounts, do not feature at all.
Whilst many parents use the system without issue, there are some paying parents who are able to use their capital assets in ways to fund a lavish lifestyle but without that funding being considered as “income” within the narrow definition used by the Child Maintenance Service. This can lead to a perverse situation whereby an immensely rich paying party can enjoy a luxury lifestyle without having to pay any child maintenance whatsoever as they are assessed as having no income.
All this is about to change. On 29 November, new regulations were approved which come into effect on 13 December 2018 with the aim of closing down this loophole. Through these regulations, certain capital assets such as money, virtual currency, gold bars, land (except the payer’s main home), shares, gilts etc. with a value of at least £31,250 will feature in the maintenance calculation. In its simplest terms, the Child Maintenance Service will take 8% of the value of that particular asset and include that figure as ‘income’ within the maintenance assessment.
The new regulations bring in various other amendments but the other key inclusion within the regulations is an ability to confiscate the passport of somebody who fails to pay what they owe in child maintenance. This is an attempt to improve the enforcement rates which have been somewhat static in recent years.
As an additional measure, if a paying parent’s gross income is assessed as being £156,000 or more, the receiving parent can apply to the court for a “top up” order and increase the maintenance they are to receive in excess of the maintenance calculation. A receiving parent whose ex-partner’s income is just below £156,000 but who has other capital assets may wish to review their maintenance provision as they may be entitled to a top up.