Navigating child maintenance: financial responsibilities in separated families

The Government last estimated there are 2.5 million separated families in the UK, with a combined 4 million children. Post separation, parties are encouraged to co-parent in order to ensure the best interests of the children are met. This relates not only to contact arrangements, but financial costs too. Parents will know all too well the increasing costs of raising children. Full-time child-care costs alone now average more than £1,000 per month.

When parents cannot agree amicably to a financial arrangement for their children, the ‘resident’ parent with whom the children spend the most time, can apply to the Child Maintenance Service (CMS) to carry out a maintenance assessment. This will take into account various factors including the income of the non-resident parent, the number of children (both their own and others living with them in the non-resident parent’s household) and contact arrangements.

Following a calculation being made, there can be issues raised, and ultimately an appeal against the decision by either parent if it is not considered fair. A paying party may request that the amount be reduced to take into account other expenditure incurred by them which could impact the child. Examples include mortgage payments for a former-family home, some travel expenses incurred in connection with maintaining contact with the children and school fees.

Conversely, the receiving party may ask for payments to be increased, taking into account other factors than just the other party’s earned income. Examples include property income and dividends.

Perhaps one of the biggest factors often overlooked is a request to the CMS to calculate a ‘notional value’ to assets owned by paying parent. Where the paying parents holds specific assets worth in excess of £31,250, the CMS can assess a notional income value of 8% per annum to those assets for the purpose assessing income. This can be highly advantageous in cases where a parent has significant capital reserves or may have taken early retirement. For example, if one party held a second property mortgage-free valued at £500,000, a notional value for the purpose of assessing maintenance could assume additional annual income from the property equivalent to £40,000 a year.

Whilst a notional value assessment could be very favourable to the receiving party, a number of exemptions are in place to safeguard what assets can be reasonably included.

If you consider you may have a claim, or may be considered liable for making such payments, the Family team at Blacks can provide specialist advice on this area of law, please contact us on 0113 227 9285.