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15 August 2012

Proposed Child Maintenance System Reform

Emma Alfieri reports on the Government's plans for a reshaped child maintenance system.

The Government has unveiled detailed plans for a reshaped child maintenance system in Great Britain.

Ministers believe the current system, which costs £0.5bn a year, and focuses purely on collecting and transferring money has proved inefficient and has damaged separated families.

The Government wants to reshape the system so it is focused on supporting families to make their own arrangements which are in the best interests of the children involved.

In order to achieve this, it is proposed that £20m is invested to provide a network of support services to help separated families. The policy document; Supporting Separated Families; Securing Children’s Futures sets out the key improvements.

For the first time, all parents considering applying for child maintenance payments via the state will be invited to discuss their situation and consider possible alternatives. Where appropriate, it will signpost them to community-based support services.

The new statutory maintenance scheme, to be known as the Child Maintenance Service, will take cases where parents cannot make their own arrangements. It is proposed, as well as a £20 application fee, the parent paying maintenance will pay an additional collection fee of 20% on top of each assessed payment.

The parent receiving maintenance will have 7% deducted from each assessed payment. But parents who fail to pay will face additional penalty charges reflecting the cost of enforcement action. For example, it is proposed that a Liability Order from the courts will carry a £300 surcharge, while £200 will be charged if money has to be removed from their bank account via a lump sum Deduction Order.

Both parents will avoid collection fees if the paying parent opts to pay the other directly without use of the collection service. This is designed to build trust between separated couples.

The new Child Maintenance Service will continue to be heavily subsidised but will be faster and fairer and better for parents.

Payments will usually be based on the paying parent’s latest tax-year gross income, reported by HM Revenue & Customs. Use of tax data means assessments will depend less on what parents choose to disclose about their income. Maintenance calculations will be reviewed annually to ensure they remain fair accurate and up to date.

Emma Alfieri, from our family team comments: “This in encouraging news. The additional support for parents to work together can only be useful and the new system should encourage reluctant parents to take their responsibilities seriously”.

For further information please contact our family team.