Changes to the Child Maintenance Service
An explanation of the legislative changes due to the Child Maintenance Service.
The Child Maintenance Service
The Child Maintenance Service (CMS) was introduced in 2012 and replaced the Child Support Agency. The Child Support Agency was a heavily criticised and beleaguered service which accrued £3.8 billion of payment arrears. The aim of the new CMS service was to clear the backlog of payments due to parents, and to promote financial negotiation between separated parents in relation to the living expenses of their child.
The CMS are only applied to by a parent where an agreement has not been reached on how the living costs of their child will be met, a payment agreement has broken down or there has been abuse or domestic violence. If the CMS are required, a parent will apply and the gross income, less certain expenses (such as pension and other supported children) will be assessed by the CMS. Once a decision has been made by the CMS about the amount a parent should pay, the day to day arrangements for payments are normally made between the parents. If the CMS is required to manage the payments, a small fee will be collected from them.
The recent consultation
On the 18 June 2021 the government launched a consultation to assess the requirement for further legislative measures to enable the CMS to have a wider ability to manage cases in certain circumstances and to clear low level debt. The consultation was open to voluntary and community sector organisations, as well as CMS customers and the general public.
Changes to the legislation
In response to the consultation replies, the government is proposing to make changes to secondary legislation (the Child Support Information Regulations 2008). The new legislation will cover the following areas:
- Including unearned income held by HMRC in CMS calculations alongside paying parents’ earned income. This could include income noted by the HMRC from interest on bank accounts or from share dividends.
- Easing the evidential requirements for self-employed paying parents where a change that has breached the income tolerance has been reported. In future the CMS will require a statement of projected earnings from newly self-employed parents, or recently ended self-employment and the information will be checked against HMRC data.
- Extinguishing small volumes of very low value debt (£6.99 and under) where the maintenance calculation has ended but there remains an outstanding debt and the value of the debt is substantially less than the cost of collecting it
- Extinguishing arrears where:
- child maintenance has been deducted from a paying parent’s earnings where their employer has gone into administration before the payment has been passed to the CMS; and
- where they are unable to recover the outstanding arrears from the trustee handling the company’s insolvency
- Sending CMS notifications only via a digital method where a customer has told us this is their preference. Presently, there are some circumstances where the CMS are required to communicate by post. The new proposals will allow individuals to choose their preferred CMS contact method.
- Requiring the following organisations to provide information when requested to do so in a timely manner: private pension providers, academy proprietors, the Motor Insurers’ Bureau and all types of companies that offer, promote or sell investment management services or facilitate share trading
Consultation feedback where no legislative changes are proposed
The following feedback was also received during the consultation, but the government has no current plans to change aspects of the CMS legislation or methodology, other than where indicated as below:
- Shared care – paying parents felt that the current rates for reduction were unfair on the paying parent and that shared care payments were being used by the receiving parent as a means of control. The government has acknowledged that the distinction between shared care and equal care was a point of tension between parents and confirmed that they would improve the use of terminology, signposting and provision of resources to help.
- Gross v Net income – a number of paying parents felt they were being unfairly penalised by being assessed on gross rather than net income. This might affect people with company benefits, such as cars.
- Receiving Parent income – Some paying parents expressed concern that the receiving parent’s income was not taken into consideration when calculating the amount of maintenance due. This gave some parents the impression that they were financially worse off and the receiving parent was better off.
- Fraud and lifestyle inconsistent – Receiving parents were concerned that they were no longer able to apply for a variation to payments under the ‘fraud and lifestyle inconsistent with the declared income’ provision.
- 25% tolerance – A number of paying parents complained that the 25% income tolerance wasn’t enough to take into account recent issues around covid, furlough and reduced income thresholds.
- Overseas enforcement – Payment receivers have suggested that the CMS should be working more closely with the Reciprocal Enforcement of Maintenance Orders (REMO). These are reciprocal agreements with other countries to enforce maintenance orders made outside their jurisdiction. The government has no current plans to update this part of the CMS service. For more information about REMO’s, how and where to apply please go to https://www.gov.uk/child-maintenance-if-one-parent-lives-abroad/other-partner-lives-abroad
Timeframes for legislative change
Although the government intends to make the changes to secondary legislation, this will be ‘as parliamentary time allows’. It is therefore unlikely that the changes will be made as a priority.