Financial provision for the children of unmarried parents

When an unmarried couple separate, the question of financial support for their child or children can be an important factor to resolve at an early stage, as there are no automatic claims for one cohabitee against the other as there might be in the case of a married couple who are divorcing. The focus falls on making sure that the needs of the parties’ children are met.

Most people are familiar with the idea of child maintenance, but what is this and what does it mean in practice? And what about if you need support in securing a house in which you and your child can live?

In this blog, we explore 5 of the most common issues that separating parents face when trying to resolve the question of financial support for their children.

Where do I start?

The starting point for most parents who are separating and want to resolve the question of child maintenance payments is the calculation applied by the Child Maintenance Service (CMS). A different approach might be appropriate if one of the parents or the child lives overseas (see further below). Where there’s a genuine “shared care” arrangement in place, neither parent has to pay maintenance to the other. 

The CMS formula is based on a percentage of the paying parent’s income. It takes into account:

  • The number of overnights that the children stay with the paying parent
  • Whether paying parent is will be paying maintenance to more than one parent
  • Whether the paying parent has other children living with them.

The calculation doesn’t take into account the circumstances of the parent who is receiving the maintenance payments.

It’s possible to obtain a calculation online by entering in the key information described above. The CMS encourages parents to use this calculator to reach an agreement about the amount of maintenance paid – and most parents agree payments based on this calculation. Where there’s a dispute, the CMS can be asked to undertake the assessment, and will look at records with HMRC to check the paying parent’s income.

The CMS will send a formal notification of the payment amount to the paying parent; and if payments are not made as directed, the CMS can step in to assist with this. There’s a charge for using the ‘collect and pay’ part of the CMS – with an additional 20% being paid by the paying parent, and a deduction of 4% of the amount due for the parent who is receiving the maintenance.

Getting the “right” calculation from the CMS

One of the most common issues is ensuring that the CMS uses the correct income figure as the basis of their calculation.

Although the CMS will approach HMRC for information provided by the paying parent about the income, this is unfortunately not a fool proof system. Issues regularly arise where a paying parent is self employed; and even where a paying parent has filed a tax return, this doesn't automatically mean that the correct figures are released to the CMS.

Where the CMS is asked to provide a calculation, it will confirm to the paying parent the income that has been taken into account in their calculation, and will ask for further information and clarification where required. The paying parent is under a duty to ensure the information provided to the CMS is accurate. 

There are a number of steps a parent who receives maintenance can take to make sure that the full extent of the paying parent’s income is taken into account. It may be necessary to apply for a variation, asking the CMS to take into account other sources of income. The CMS can be directed to look into:

  • Unearned income – this could be income from a rental property or dividends from a company
  • Earned income that has not been taken into account
  • Income that has been ‘diverted’ – this might be where the paying parent runs a company, but it’s their new partner that receives the lion’s share of the income it produces.

There are certain conditions around the extent of the income to be taken into account; and again, specific legal advice on your circumstances might be necessary to establish whether the CMS can and should be making further enquiries to determine the paying parent’s property level of income.

For the parent who is paying maintenance, it might be relevant to ask the CMS to take into account certain expenses which reduce your income available to pay child maintenance. The most common cost that is raised is that of maintaining contact with the child for whom maintenance is paid. This is particularly relevant where the costs are significant e.g. where the parents live in different parts of the country. There may also be circumstances in which costs of boarding school fees or mortgage payments for the property in which the child lives might be able to be taken into account. 

Ultimately if there are significant issues about how the maintenance payments have been calculated, there’s a process of mandatory reconsideration, and ultimately appeals to get to right calculation. It’s these later stages where legal advice can really add value, although it’s important to make sure that any legal fees are proportionate to the amount of maintenance being sought. Legal advice is particularly important when it comes to the information that is provided to the CMS as there are rules around disclosure.

When would the court deal with maintenance instead?

The court’s powers to deal with the question of maintenance are limited to circumstances where:

  • the paying parent’s income is above the maximum threshold for the CMS – currently set at £156,000 per year gross (the CMS has to have provided a ‘maximum assessment’ for the court to be able to act). This is sometimes referred to as “top up” maintenance because it’s paid in addition to the amount calculated by the CMS.
  • payment it sought for school fees
  • payment is needed for expenses connected with the disability of a child
  • where payments are sought from a step-parent

Each of these different types of cases have their own particular considerations, but one of the key starting points will be financial disclosure from both parties so that the court can fully understand the circumstances in which it’s being asked to make an order. In some cases, parties may be able to follow the steps of financial disclosure and negotiation themselves or through a process of mediation. Where parents do reach an agreement, they can ask the court to simply confirm their agreement in binding consent order. Where an agreement cannot be reached or where one party is being uncooperative, the court can be asked to make specific directions about the nature and extent of information to be shared; and can ultimately make the decision of the amount of maintenance to be paid.

There have been a number of recent developments in how maintenance is calculated in cases of a ‘maximum assessment’. In every case, the court has to look at the overall circumstances of the case, as well as the specific considerations which are set out in law, such as the parents’ incomes and the child’s needs. However, the recent decision in James v Seymour has produced a calculation which can help separating parents to establish what the starting point might be for a maintenance payment in their particular case if a ‘top up’ payment is due. There are a number of caveats around how and when this calculation is used, and it’s important to take early legal advice if you think this might be relevant in your case.

What if one of the parents lives overseas?

Although it might not be possible to apply to the CMS for a maintenance calculation, there are options for both parents. As for any other parents, it’s possible to reach an agreement about the level of maintenance to be paid and the CMS formula may assist with this. There are however some factors that might make this more difficult – for example if there are deductions taken from the paying parent’s salary for the cost of housing or if they’re paying higher taxes. There are also likely to be higher costs associated with maintaining contact with the children.

If it’s not possible to agree the level of maintenance to be paid, then the issue might need to be referred to court. Whether you're the paying parent or the parent with care of the child, it’s really important to consider which court to ask to resolve the question of maintenance. You need to make sure that the court has the power to determine the question (known as “jurisdiction”) and you need to think about what would happen if the paying parent didn’t follow the terms of the order – how would the court order be “enforced”? These questions are relevant to all sorts of disputes, but they’re particularly important considerations when it comes to maintenance claims.

There’s a level of international cooperation between courts when it comes to maintenance payments. Where a court in the country where the child lives has made an order for maintenance, it can be sent to the different country in which the paying parent lives to be enforced. Depending on the countries involved, this can be a relatively administrative process without the need for the parent with care to attend court. It can, however, take quite a long time.

These delays can have a negative effect on both parents – the parent expecting to receive maintenance might find themselves in financial difficulties; and the paying parent risks a significant bill for arrears if these have been allowed to accrue. It’s important for both parents to get early legal advice as soon as you know that maintenance could be an issue. With specialist legal advice on these issues, it may be possible to resolve matters at an early stage – helping to avoid further costs and stress for the parents, as well as the financial impact for the children involved.

International Child Maintenance is a very bespoke and specialist area. We have expertise within our family law team to advise on the enforcement of foreign orders in England; and we have a number of contacts in firms overseas who we can work with to help you to resolve issues in different countries throughout the world.

Do I have a claim for a lump sum or a for a house?

For separating couples who are getting divorced, these sorts of claims on behalf of children are usually wrapped up and dealt with as part of the financial claims on divorce. It’s unmarried parents who are much more likely to have to rely on the provisions of Schedule 1 Children Act 1989 to seek financial support of a capital nature.

From the cases that sometimes make the mainstream press, parents might have the impression that only cases where at least one parent is very wealthy would ever go to court for issues about a house for the child to live in or for a lump sum of money to support them in their day to day live.

The applications that can be made under Schedule 1 Children Act 1989 are open to be used by and against those with more modest means but, in practice, the respondent (the person from whom support is sought) would need to be reasonably well-off to make worthwhile an application for anything other than small lump sums. The decisions make clear that, where sufficient funds are available, the courts are determined to ensure that neither parent shirks their financial responsibilities to their children.

Claims of a capital nature can only be dealt with by the court. The court has to apply the same considerations to these sorts of cases as it does to maintenance cases – looking at the parents’ financial disclosure, weighing up all the circumstances of the case and ultimately making a determination which meets the needs of the child.

One of the key considerations when it comes to a parent providing a home for their child is the fact that this doesn't automatically mean that the house is given to the parent with whom the child lives. Depending on the circumstances of the case, it may be that the house is held ‘on trust’ - either to return to the ownership of the paying parent or to pass on to the child at an appropriate age (over 18). This can result in a very different long-term outcome to those cases where the parents are separating.

Our family lawyers are experienced in dealing relationship breakdown and financial provision for children of unmarried couples. If you need any advice, please contact us and we will be happy to help.

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Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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