Child maintenance for high net worth individuals

In certain circumstances, calculating child maintenance is not as simple as it should be. For most situations, there is a formula from the Government that is set out from the Child Maintenance Service (CMS). However, if your situation involves a parent that is a high earner, they may exceed the threshold. This article looks at child maintenance for those high net worth individuals.

What is child maintenance?

Child maintenance is the regular payment made by a non-resident parent to the person or parent with care of the child to meet the day-to-day living expenses of a child following marriage, civil partnership or relationship breakdown.

These payments can be agreed between the parents, calculated by the CMS or, in limited situations, ordered by the court. Often parents will use the guidance of the CMS to reach an agreement or if an agreement cannot be reached, they can ask the CMS to intervene.

How does the CMS make their calculation?

The CMS uses a fixed formula based on a number of factors including:

  • Gross income (salaries, wages and self-employed income)
  • Bonuses, commission, overtime payments and royalties
  • Overseas earning if these are taxable in the United Kingdom
  • The number of overnight stays the child has with the non-resident parent
  • Whether the non-resident parent is also making maintenance contributions for other children

However, once the paying party’s income exceeds £3,000 per week/£156,000 per annum, the CMS will provide a maximum assessment and a top up provision through the court can apply.

What if the income exceeds the CMS threshold?

If the paying party's income exceeds £3,000 per week/£156,000 per year the CMS will make their maximum assessment up to that level.  A court application could then be made to make a top-up child maintenance order. The sum awarded will be determined by the circumstances of each case.

When will the court make a top-up order?

The court can make a top-up order when:

  • A calculation for maintenance is already in force
  • The gross income of the non-resident parent is in excess of the CMS threshold
  • The court is satisfied that, in the circumstances of the case, ordering additional payments is appropriate

However, under an area of law within Schedule 1 of the Children Act 1989 the court can consider an application for financial needs of a child that are not limited to maintenance. The court has the power to order a lump sum of money for the child or even the transfer or settlement of property if it is for the benefit of a child.

Does equal share affect payment?

Where the care of a child is shared equally, neither parent can be said to provide care to a lesser extent. Therefore, the CMS may not provide a calculation, as there is no statutory child maintenance liability.

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