Over the last few years the Children Act has been subject to continuous change and it seems that over the next few years revolution will continue, affecting anyone involved in child support. This may include non-resident parents who are making payment, those parents in receipt of maintenance or any other body involved in the scheme.
The Child Support Agency “CSA” was originally taken over by the Child Maintenance and Enforcement Commission “CMEC” in 2008 and they became responsible for running the statutory child support scheme in place of the CSA. However, CMEC was abolished on 31 July 2012 and the responsibility reverted back to the CSA.
The CSA has now been re-branded as the Child Maintenance Service “CMS” and all new cases are being dealt with by the same officials. Regardless of the re-brand it appears many still refer to the new scheme as the CSA.
So what are the Schemes?
There are currently three schemes in operation. The first is the 1993 scheme which is known as the “old rules”. This scheme was particularly complex and took into account a number of factors including the income of both parents and their partners, housing costs, as well as making assumptions about the amounts required to support the parents and the children based on the level of welfare benefit payments. The basis of the complex formula was to make it as fair to both parties but the complexity made it unworkable.
The second scheme was allocated to all new applications made after 3 March 2003. This scheme was based on the net income of the non-resident parent and was a more simplified formula. The basic rules mean that the non-resident parent pays 15, 20 or 25% of their net income dependent on whether there are one, two or three children. The other parties’ income is not taken into account or the income of any partners or spouses.
The new scheme came into force in 2012 and is based on gross income – although it is only applicable to a limited class of applicants. The new formula looks at the gross income of the non-resident parent. The non-resident parent will now pay 12, 16 or 19% depending on whether there are one, two or three children and if their gross income is below £800 per week. If their income is above £800-3,000 per week the percentages are 9, 12 or 15% depending on whether there are one, two or three children.
All new cases are now being allocated to the gross income scheme and the government has predicted that this should increase the payments being made by the non-resident parents by a small amount per week. The first to be allocated were applications made on or after the 10 December 2012, there was no existing case with the CSA and there were four or more children with the same parties. Then in July this was widened to the same criteria but where there are two or more children.
From now on all new cases from 25 November 2013 have been allocated to this new scheme. The government plans to transfer all cases to the new scheme by 2017. If the parties under the old scheme want to continue going through the CSA they will need to reapply and then be allocated to the new scheme.
Charges under the new scheme
There will be collection charges under the new scheme and any old cases will be given six to nine months' notice that their cases are being closed. This should enable the parties to have enough time to re-apply and be allocated to the new scheme.
There will be an initial application fee of £20 for the parent with care, in order to get a maintenance calculation.
The collection fees are continuous fees which are designed as a deterrent for both parties to use the new scheme and for them to come to a voluntary agreement. The resident parent is likely to be charged a 4% collection fee and the non-resident parent will pay a 20% collection fee. These fees can be avoided if the payments are paid directly from one parent to the other.
Overall, there has been some strong criticism but the new scheme is likely to be introduced at the end of this year. Last week alone more than 50,000 letters were being sent out by the Department for Work and Pensions to parents in England, Scotland and Wales who currently pay and receive child maintenance through the old CSA, informing them of the changes.