What is Child maintenance?
Child maintenance is where payments are made to a resident parent (RP) – the parent who has the child live with them most of the time – from a Non-Resident Parent (NRP) for the benefit of a child or children. This applies where the parents are married or unmarried. If the parties are married a NRP could also be entitled to spousal maintenance.
How is child maintenance calculated?
The Child Maintenance Service (CMS) is a government body set up to have jurisdiction to deal with child maintenance instead of the courts, up to a maximum annual income of the NRP of £156,000. The CMS apply a rigid formula using a set percentage and deductions to take into account the number of nights a year the children reside with the NRP. You can use the government calculator to find out more.
Parties do not need to go formally through the CMS and can instead reach their own agreement based on the calculation. Therefore, having a set formula is usually helpful in providing certainty to the parties as to what the amount should be.
If someone earns over the maximum income, then the court have jurisdiction for what is known as a ‘top up’ child maintenance case and there are also other limited circumstances where the court have jurisdiction instead of the CMS such as where the child is resident abroad.
What is top-up child maintenance?
As the CMS only have jurisdiction up to the first £156,000, in high earner cases a RP (or NRP) could apply to court for a ‘top-up’ child maintenance award under Schedule 1 of the Children Act 1985. The parties need to have a maximum assessment from the CMS first, and the court has to be satisfied that ordering extra payment is suitable.
Since the CMS threshold was brought in around 10 years ago the number of taxpayers above this threshold has increased 2.3 times to an estimated 629,000 meaning top up cases are becoming increasingly common.
How is top-up child maintenance calculated?
There has been a plethora of recent cases regarding how to calculate appropriate child maintenance in a top up case and in the recent case, James v Seymour  EWHC 844 (Fam) High Court Judge Mostyn J has sought to provide more clarity to his new so called ‘Mostyn formula’.
This was established in the case of CB v KB  EWFC 78  where Mostyn J set out his view that he believed it would be an appropriate starting point for top up cases that the set formula continue on income of over £156,000 up to £650,000. For cases with earned income of over £650,000 the starting place would be the formula up to £650,000 but with ‘full discretionary freedom to depart from it having regard to the scale of the excess’. This starting principle was then followed in a number of subsequent cases: G v T  EWHC 1613 (Fam), W v H (divorce: financial remedies)  EWFC B10 and OG v AG  EWFC 52 
However, his formula came under criticism including in CMX v EJX (French Marriage Contract)  EWFC 136, where Moor J felt following the CB v KB approach would be in excess of Wife’s and children’s need and so made an order based on Wife’s own budget which resulted in an order of less than half of what the formula would have provided.
Mostyn himself has sought to clarify that it is not a rule but a starting point and in Collardeau-Fuchs v Fuchs (Rev1)  EWFC 135 suggested that CB v KB was focused on cases where child maintenance is a subsidiary claim, not the main claim. The reported cases above almost exclusively dealt with court making a child maintenance order as part of a wider order on finances rather than a stand alone top-up maintenance claim as part of a Schedule 1 claim.
The historic case reports of stand alone top-up maintenance often involved ‘big money cases’ and largely these were done with reference to the NRP and child’s needs. Due to the high costs involved in court proceedings, there are therefore a scarcity of reported cases dealing with modest assets which is why they are much more likely to be reported as part of a matrimonial case when other assets and disputes are also in issue.
However, Mostyn has now sought to address these issues, and provide his much desired certainty to the issue of top up maintenance in James v Seymour. In this judgment Mostyn J has introduced an ‘Adjusted Formula Methodology (AFM)’ for calculating top-up awards for paying parties with an income exceeding the threshold of £156,000 up to the upper limit of £650,000. This methodology is intended to give what he called a ‘Child Support Starting Place’ (CSSP). Tables are set out in the appendix and the first step is to calculate what he called the paying parent’s ‘Exigible income’. To calculate this he has provided a formula :
E = (G x (1-Z)) – P – (S/0.55)
E = exigible income
G = Gross income per P60/tax return
Z = the reducing factor due to the number of children living in the paying party’s household
P = the amount of pension payments currently being paid
S = the amount of school fees and extras currently being paid.
This shows a marked refinement from his previous proposal of just continuing the set formula as this now provides for a deduction of school fees or other extras for the children being paid. This also sets this at odds with the CMS formula which does not deduct these amounts. This therefore could lead to the strange situation of a paying parent earning £155,000 then paying less maintenance once they go over the £156,000 threshold as they can then apply deductions.
Once the Exigible income is calculated this is then applied to the AFM table in the judgment which provides columns depending on the amount of shared care discount that should be applied due to the number of nights the NRP has care up to, and including it appears, equal shared care.
Mostyn also makes clear in his judgment that this is a ‘starting place’ and hopes it will be used by parties to settle the growing number of top up child maintenance cases. He also recognises that even this new, refined, formula, is not suitable for every situation and in particular says he does not expect it to apply where:
- There are 4 or more children
- The exigible income is over £650,000
- The paying party income is largely unearned or
- The paying party has no income and lives on capital.
In those circumstances he sets out clearly that child maintenance should be worked out from the principles in S.25 (3) Matrimonial Causes Act 1973 of Schedule 1 of the Children Act 1989 and are therefore likely to include a more budget focused approach. There are also further situations where it is unlikely to be appropriate for example when a child has a disability.
Therefore while Mostyn’s attempt to provide certainty to parties is welcome it is likely there are still a number of issues that will need to be ironed out and so further test cases are likely. At present, however, there is a new ‘starting point’ and where parties are amicable and wish to avoid expensive litigation this is likely to be welcomed. Those more complex cases, whether they fall under Mostyn’s exceptions or not, are still likely to require particular expertise to resolve.
How can Hanne & Co help you?
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