Wednesday, June 18, 2008

C-MEC: Effect of new formula

Now that the Child Maintenance and Other Payments Act 2008 has been passed (and further to this post), I've been having a more detailed look at the effect of the new rules for calculation of child maintenance, contained in Schedule 4. I've put together the following table, using The Salary Calculator to come up with figures for net income (all figures are rounded down to the nearest pound), and assuming that the NRP has no other children:


(I believe these figures are correct, but if you think I've made an error, let me know.) Just to recap, the new system will be based on gross income, with the basic rate figures (income £200 - £800) changing from 15% to 12% for one qualifying child, from 20% to 16% for two and from 25% to 19% for three. The rates reduce to 9%, 12% and 15% where the NRP's gross weekly income exceeds £800. The intention of the reduced rates was, of course, to keep the maintenance figures the same. As will be seen from the table, this has worked fairly well, but there are some anomalies, especially where there are one or two children - here, many NRPs will pay significantly more, particularly if they have higher incomes.I'm also not sure if the lower rates for NRPs with gross weekly incomes over £800 are low enough to achieve parity with the current formula.

The new scheme will not begin until 2010. From April 2009 existing CSA 'customers' will be asked if they would like to opt-in to the new system, and the transfer will take place if either parent wants to opt-in. Transfers will start in 2010 and should be completed over the following three years.
Posted by John Bolch at 9:46 am
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4 comments:

  1. Hi John,

    I didn't see all of the Lord's amendments; is it still the case that in circumstances where one has 50/50 division of time, care & expenses, one parent still has to pay money to the other?

    Whatever happened to the case of Michael Cox, from last year?

    cheers

    STH

    ReplyDelete

  2. The rules on shared care are essentially the same. I don't recall hearing anything about Cox's judicial review.

    ReplyDelete
  3. Nick Langford21 June 2008 22:35

    Mike Cox did not have grounds for judicial review and because imprisonment does not erase the debt the CSA may decide to prosecute again.

    The profound injustice in the child support arrangements remains. All CMEC does is repeal s.6 of the 1991 Act to allow parents to make their own arrangements. It is unlikely that in so doing they would introduce the imbalance the legislation provides, which will mean parents in receipt of CS will have no incentive to agree - they will always be assured of a better deal if they don't. The government hopes the change will result in a 35 to 50% drop in case load, though as the change will only affect 24% of cases that seems optimistic.

    ReplyDelete

  4. Thanks Nick for the update on thr Cox case.

    I fear I am as pessimistic about the changes as you seem to be.

    ReplyDelete

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