New punitive Child Support (Miscellaneous Amendments) Regulations 2018
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Clearchem
Posts: 25 Forumite
This concerns the changes to child maintenance as result of the consultation which concluded in June. The outcomes are to incorporated in the forthcoming Child Support (Miscellaneous Amendments) Regulations 2018.
It seems a bit to read but affects every parent who does not live with their child so is worth reading. It activates, if there is no successful challenge, by the end of autumn this year. Posted here in money saving dad's as fathers are the majority group who end up being parents with contact rather than the the parent with whom the child lives but equally affects mothers who are not living with the child.
Paying parents should note that the new regulations are deliberately taking a (as stated in the government’s response) punitive approach towards paying parents. The idea of notional income for non-income generating assets was removed in 2012. It is now being re-introduced, which, as it did then, penalises paying parents who try to build up any independence and new life, and create any savings, but now with an even lower threshold, down from £65k to £32k eg:
• It targets those saving for a deposit for a new home, potentially condemning them to rented accommodation for 19 years, and even punishes them in saving for a deposit for housing or student support for their child they are supposed to be paying for
• It targets those who try to build funds in case of unemployment potentially increasing reliance on the benefits system.
• It distributes any financial or asset prizes or inheritance to the receiving parent even though it might have nothing to do with them
• It discourages ambition as the paying parent is punished for any financial success
Perhaps you have a small inheritance, have put some money aside for you retirement or medical expenses, received a redundancy payout, or created a fund for your parents social care? This will all be assessed for your ex partner's benefit.
As a parent you do not, nor should be required to, share every financial asset with your ex partner (there is no guarantee the ex will use it for the children) or indeed your children themselves - you should have some choice. This is different from a person's duty to support their children. You make provision for yourself, for others and for one child or another if you have the financial capability and based on need. This asset assessment punishes you for behaving normally and distributes all you have to the carer of any child separated from who has the child for the majority of the time, to the detriment of yourself or others (inc children) which whom you might live or care about.
The punitive rate of assumed income of 8% was not called for by any respondent to the consultation, and respondents even highlighted that it caused hardship, but still the government has decided to reintroduce it at that level. The government also claims that is was never challenged by the courts and uses this to justify the 8% charge. This is not correct, it was successfully challenged due to unfairness in PB v Secretary of State UKUT 2013 0149 (AAC), but the way it is worded now that is it designed to be a punishment, will prevent any future challenge.
This is coupled with the fact that there is still no compulsion on the receiving parent to spend the money on the child in question but can use it to better their own personal life at the expense of the child if they see fit (and there are many examples of this). Still the inequalities are not dealt with in that paying parents do not receive any of the benefits (tax credits or child allowance) which go 100% to the parent with care, despite the fact that the parent without care may have the child up to 50% of the time. They are even punished for keeping a spare room for the child in terms of housing benefit.
If you are in or those you know arrived in the position where 12, 16 or 20% has to be paid, not just of everything you earnt before tax, but after this legislation is introduced, everything you had, have or might have (the legislation takes into account assessing for assets or income you had in the past during the liability period or could be receiving in the future) how would that be addressed without damage? You and your family have no say in being able to effectively plan your family’s future and have to fund 1 child possibly to the exclusion of others. Do you think this might effect future relationships?
There is no way to stop a partner from forcing you into a CMS controlled arrangement to give more latitude in what and how is funded. So much is missing from this review, other that punitive terms and ways to exact retribution on struggling separated parents, targets only as the child does not live with them, a situation often not one of choice but forced upon them.
The new legislation has to be read in both houses. I urge you to write something similar to your mp to ask them to either vote against the legislation or speak to members of the House of Lords to table an amendment and to draw this issue to the attention of your colleagues, friends and contacts.
If my interpretation of the legislation is incorrect, I will be very pleased to be told.
It seems a bit to read but affects every parent who does not live with their child so is worth reading. It activates, if there is no successful challenge, by the end of autumn this year. Posted here in money saving dad's as fathers are the majority group who end up being parents with contact rather than the the parent with whom the child lives but equally affects mothers who are not living with the child.
Paying parents should note that the new regulations are deliberately taking a (as stated in the government’s response) punitive approach towards paying parents. The idea of notional income for non-income generating assets was removed in 2012. It is now being re-introduced, which, as it did then, penalises paying parents who try to build up any independence and new life, and create any savings, but now with an even lower threshold, down from £65k to £32k eg:
• It targets those saving for a deposit for a new home, potentially condemning them to rented accommodation for 19 years, and even punishes them in saving for a deposit for housing or student support for their child they are supposed to be paying for
• It targets those who try to build funds in case of unemployment potentially increasing reliance on the benefits system.
• It distributes any financial or asset prizes or inheritance to the receiving parent even though it might have nothing to do with them
• It discourages ambition as the paying parent is punished for any financial success
Perhaps you have a small inheritance, have put some money aside for you retirement or medical expenses, received a redundancy payout, or created a fund for your parents social care? This will all be assessed for your ex partner's benefit.
As a parent you do not, nor should be required to, share every financial asset with your ex partner (there is no guarantee the ex will use it for the children) or indeed your children themselves - you should have some choice. This is different from a person's duty to support their children. You make provision for yourself, for others and for one child or another if you have the financial capability and based on need. This asset assessment punishes you for behaving normally and distributes all you have to the carer of any child separated from who has the child for the majority of the time, to the detriment of yourself or others (inc children) which whom you might live or care about.
The punitive rate of assumed income of 8% was not called for by any respondent to the consultation, and respondents even highlighted that it caused hardship, but still the government has decided to reintroduce it at that level. The government also claims that is was never challenged by the courts and uses this to justify the 8% charge. This is not correct, it was successfully challenged due to unfairness in PB v Secretary of State UKUT 2013 0149 (AAC), but the way it is worded now that is it designed to be a punishment, will prevent any future challenge.
This is coupled with the fact that there is still no compulsion on the receiving parent to spend the money on the child in question but can use it to better their own personal life at the expense of the child if they see fit (and there are many examples of this). Still the inequalities are not dealt with in that paying parents do not receive any of the benefits (tax credits or child allowance) which go 100% to the parent with care, despite the fact that the parent without care may have the child up to 50% of the time. They are even punished for keeping a spare room for the child in terms of housing benefit.
If you are in or those you know arrived in the position where 12, 16 or 20% has to be paid, not just of everything you earnt before tax, but after this legislation is introduced, everything you had, have or might have (the legislation takes into account assessing for assets or income you had in the past during the liability period or could be receiving in the future) how would that be addressed without damage? You and your family have no say in being able to effectively plan your family’s future and have to fund 1 child possibly to the exclusion of others. Do you think this might effect future relationships?
There is no way to stop a partner from forcing you into a CMS controlled arrangement to give more latitude in what and how is funded. So much is missing from this review, other that punitive terms and ways to exact retribution on struggling separated parents, targets only as the child does not live with them, a situation often not one of choice but forced upon them.
The new legislation has to be read in both houses. I urge you to write something similar to your mp to ask them to either vote against the legislation or speak to members of the House of Lords to table an amendment and to draw this issue to the attention of your colleagues, friends and contacts.
If my interpretation of the legislation is incorrect, I will be very pleased to be told.
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Comments
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Well, I think your interpretation of the proposed regulations is somewhat biased and incomplete.
It's worth noting that the provisions include a lot of exemptions, and explicitly allows an exemption where assets have been bought from normal income, which appeal to be aiming to avoid double-accounting and would arguable protect assets such as (say) a stocks and shares ISA or savings account built up through regular savings.
There is also a specific exemption where paying the extra amount would require selling the asset in question, and that doing so would cause hardship to any child of the paying parent or would in all the circumstances be unreasonable, which may well mean that if someone has assets such as unit trusts or similar, used as a vehicle to save for a deposit, that this would be something which it would be unreasonable to touch.
It's also worth noticing that you don't lose the asset, only that income is assumed to be received on it. So if you have £1,000 in savings, you are assumed to have £80 in income from that and would therefore have to pay an extra £12-£20 for your child.
The assumed interest / income rate is lower than what is used when assessing those on means tested benefits, where capital is assumed to give a return of £4.35 per month per £250 capital, which works out at just under 21% annually - I'm a little surprised that the government hasn't decided to use the same calculation here.
I don't agree with your conclusion that it prevents the non-resident parent from being able to plan - they can still plan, and save, but need to take into account that some of their wealth will be used for the benefit of their child. Bear in mind that the amounts payable in child support take into accoubnt any other children, so it's not the case that you benefit one child to the exclusion of others. If you have another child, the amount you pay for the child you no loner live with is reduced. The only difference is that with the child you are paying CMS for, their other parent receives the funds and decides how best to use those for the child's benefit, with the element that you retain because you have another dependent child, you get to decide how to use that for that child's benefit (or, if you prefer, for your own benefit)
I would agree that it is not a perfect system but I don't think it necessarily penalises non-resident parents. After all, in most cases, the amount which a non-resident parent pays under CMS is less than 50% of the actual cost of raising and caring for a child, so you might with as much merit say that he existing system penalises the parent with whom a child lives.
I do agree that it would be better if the CMS and benefits system were to be reviewed in order to take into account situations where there is a shared care arrangement and to allow benefits for children to be split, where appropriate, but again, there is the issue of trying to find a balance between a system which is clear and (relatively) easy to use, and one which might be fairer but which is more complex and difficult to access.All posts are my personal opinion, not formal advice Always get proper, professional advice (particularly about anything legal!)0 -
Are you saying they are assuming 8% interest? As that what is seems to say. Hopefully they will publish this account because I have about £85k (maximum protected) to put in it & more than 2% would be more than fantastic.0
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Thanks for giving some feedback.
Asset exemption from normal assessed income does not appear to exclude the examples given ie: inheritance, gifts, funds put aside prior to the cms claim being launched. Additionally the definition of asset appears unclear and may exclude money in accounts.
An exemption where an inexperienced person who probably has little spare to pay for a lawyer has to argue successfully that they would have to sell the asset against an arguement by the limitlessly funded state that it would be mearly less worthwhile is going to be very hard for people to use I suggest.
Yes, a person is assumed to have £80 income from £1000. They do not of course. Hence the discussion in the government paper about why this is assumed - to be a deliberate punishment and prevent challenges.
I guess that those assisting people with means tested benefits are campaigning about the assumed return rates in that situation. They are both outrageous but that is no reason to say 8% is fine because there is a worse situation elsewhere.
Your wealth is distributed to the other parent. Whether or not that ever reaches the child is far from certain. That it cannot be ring fenced is a significant issue.
I disagree that the paying parent pays less than 50% of child costs. On an average £27k income the paying parent pays £270 per month for 1 child. The nationwide average cost to raise a child until 11 is £60k or £455 per month (Halifax 2017). So the paying parent is contributing 59% of the cost with no help, no tax credits, no child benefit, all of which go 100% to the parent with care. Anybody earning over £45500 is contributing 100% or more of those childcare costs. But this is a different arguement from the point about coming after every resource somebody has.0
This discussion has been closed.
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