How Child Maintenance Works

 

Comprehensive Guide: How the Child Maintenance Service (CMS) Works

The Child Maintenance Service (CMS) is a government agency in the UK responsible for ensuring that non-resident parents contribute financially to their child's upbringing. CMS operates with policies designed to calculate, manage, and enforce child maintenance payments between parents.  Parents do not have to use the Child Maintenance Service.  Over 1 million children are supported through Child Maintenance Service payments.    

Understanding how the CMS functions, from the calculation of payments to handling arrears, can help both paying and receiving parents.  In this guide, we'll explore all aspects of the CMS, including its history, how child maintenance is calculated, the payment process, dealing with arrears, and what to do if things go wrong.

1. What is the Child Maintenance Service?

The CMS replaced the now-defunct Child Support Agency (CSA) in 2012, taking over its role with a more streamlined process for managing child maintenance. The CMS role is to ensure that the non-resident parent (the parent who does not live with the child) makes regular financial contributions towards the child's welfare. 

Before we dive into the details of how CMS works, let's establish the two primary parties involved:

a.    Receiving Parent (RP): The parent who has the child living with them most of the time.

b.    Paying Parent (PP): The non-resident parent or NRP who is responsible for making child maintenance payments.

2. How CMS Calculates Payments

One of the key functions of the CMS is to calculate the amount of child maintenance the paying parent must pay. The amount is based on the paying parent's gross income and the number of children they are responsible for.  It is not based on their partners income, their home value, or the receiving parents income, assets or partners.

Factors Considered in CMS Calculations:

a. Gross Weekly Income: CMS uses the paying parent’s gross income to calculate payments. Gross income includes salary, bonuses, overtime, and any other taxable income. It does not include deductions such as taxes and National Insurance contributions.  An annual bonus paid via salary is therefore included.  

b. Number of Children: The amount owed increases with the number of children the paying parent is responsible for.

c. Shared Care Arrangements: If the paying parent shares overnight care of the child, the amount they pay in maintenance can be reduced.

d. Special Circumstances: CMS may also take into account any other children the paying parent supports or other complex family arrangements.

Basic Payment Rates:

For gross weekly income under £100:  A flat rate of £7 per week is applied.

For gross weekly income between £100 - £200:  Payments range from 12% to 19% of gross income.

For gross weekly income above £200:  The rates range between 12% and 19%, but there are more detailed calculations based on income bands.

Example Calculation:

If a paying parent earns £400 gross per week, they will pay:

- 12% for one child: £48 per week.

- 16% for two children: £64 per week.

- 19% for three or more children: £76 per week.

If someone is not working and they are being supported by relatives or savings, a nil rate will be applied.

3. CMS Payment Process

Once the CMS calculates the payment amount, the paying parent is expected to make regular payments. There are two main methods for handling these payments:

3.1. Direct Pay

- **What is Direct Pay?**: In this method, the CMS calculates the maintenance amount but leaves the actual payments between the parents to handle directly. It is the most straightforward method and avoids additional fees.

- **Advantages:** No extra costs, and both parties have direct control over payment dates.

- **Disadvantages:** There is a risk of disputes or missed payments without CMS oversight.

3.2. Collect and Pay

- **What is Collect and Pay?**: If the paying parent misses payments or if there is a history of non-compliance, CMS will step in to collect payments from the paying parent and forward them to the receiving parent.

- **Fees Involved:** Both the paying and receiving parent incur fees. The paying parent is charged an extra 20% on top of their payments, and the receiving parent loses 4% of the payment in fees.

- **Enforcement:** If the paying parent defaults, CMS can escalate enforcement measures, such as wage deductions, freezing bank accounts, or even legal action.

4. Dealing with Arrears

Arrears, or missed child maintenance payments, can quickly build up, causing confusion and stress for both parents. Here’s a breakdown of how arrears accumulate, how CMS handles them, and why you shouldn't panic if you find yourself in this situation.

4.1. What are Arrears?

Arrears refer to child maintenance payments that have not been made according to the CMS's repayment schedule. However, the concept of arrears can sometimes be misleading due to recalculations and backdating, causing anxiety for the paying parent.

For example, CMS payments are often calculated on a daily basis, but the first payment may only be due after 14 days, which can lead to initial arrears being recorded at the start of a case. If backdating is involved, the arrears can grow without the paying parent even missing a payment.

4.2. How Arrears Accumulate:

- Missed Payments:  Any missed payments are added to the arrears figure. Even a single missed monthly payment can trigger arrears.

- Recalculation: CMS recalculates child maintenance payments annually, and if you missed any payments during the previous 12 months, they’ll be added to your new payment plan.

- Backdated Adjustments: If a change in circumstances (such as a change in income or care arrangements) results in a recalculation, CMS may backdate the payments, leading to additional arrears.

4.3. How to Manage Arrears:

CMS payments are made in arrears.  Exceptionally, NRPs may be ahead of the plan where a calculation change in their favour is backdated and it is discovered they have overpaid.  Maintenance will still be payable, but the rate will be reduced to a lower amount, so they pay less in lieu of a refund.  

Key points about arrears.

Stick to the Payment Plan:  Continue making the regular payments as specified in the CMS repayment schedule. The arrears will be spread out over future payments, so you won’t need to pay a lump sum.

Do Not Pay Arrears Separately: Avoid paying arrears in a lump sum, as CMS usually incorporates them into the future payment plan.

Debt Steer Policy: CMS offers a “Debt Steer” policy that allows paying parents to spread their arrears over a period of two years, easing the financial burden. You can even request to pay as little as £5 per week if you have significant debt arrears.

Communication: If the arrears and regular payments create financial strain, contact CMS to discuss alternative payment arrangements.

5. The Role of Child Benefit in CMS Payments

Child benefit is a significant factor in CMS cases. It determines which parent receives the maintenance payments and can impact payment arrangements.

5.1. Child Benefit and Primary Care:

When the child lives with a parent for most of the time, that parent can claim child benefit. If the child moves in with the paying parent for a significant amount of time (or permanently), the paying parent must file for child benefit themselves to transfer the child maintenance responsibilities.

5.2. Important Tip:

If your child comes to live with you, make sure to claim child benefit immediately. Failing to do so could mean CMS continues to assume the child lives with the other parent, leaving you responsible for maintenance payments even when you're the primary caregiver.

If you have two children, this means the child who comes to live with you, should be removed from the CMS case.  Both parents will have to confirm that with the CMS.  This would reduce payments from 12 to 16 percent of salary.  The new parent will then need to submit a counter claim in order to receive 12% from the former resident parent, who is now a non resident parent for that child.

6. CMS and Court Orders

CMS typically handles child maintenance matters independently of the court, but in certain cases, parents may have pre-existing court orders that dictate child support payments. CMS can supersede these court orders, at 12 months.  The CMS cannot open a new case if there is a court ordered maintenance plan, until 12 months has passed.  

7. When to Contact CMS

You should contact the CMS if:

- You experience a change in income that affects your ability to make payments.

- Your child’s living arrangements change, or they move in with you.

- You have missed a payment and need advice on managing arrears.

- There is a dispute over arrears or you require clarification about your payment schedule.

It should be noted that if a receiving parent reports a missed payment, that payment will be added to arrears, and the case may be changed to Collect and Pay payments, where the CMS charge both prents.

8. Key CMS Terms and Concepts

Effective Date: The date from which child maintenance payments are calculated. Payments will be due 14 days after the CMS calculation is issued.

Annual Review: CMS reviews the paying parent’s income every 12 months to recalculate child support payments.

Collect and Pay: A method where CMS collects payments from the paying parent and transfers them to the receiving parent.

Direct Pay: A method where parents manage payments directly without CMS intervention.

Shared Care: A system where child maintenance payments are reduced if the paying parent shares overnight care of the child.

9. CMS Enforcement Methods

If a paying parent fails to meet their payment obligations, CMS has several enforcement options, including:

Deductions from Wages: CMS can arrange to have child maintenance deducted directly from the paying parent's wages.  These are called Deduction from Earnings Orders and can be done without a court approving as CMS have their own powers.

Freezing Bank Accounts: CMS can freeze the paying parent’s bank accounts to recover unpaid child maintenance.  Again, they do not need a court order to do this.  

Legal Action: In extreme cases, CMS may pursue legal action to recover arrears.

10. Final Thoughts

The Child Maintenance Service is there to ensure children receive financial support.  They are not there to resolve disagreements.  As calculations are based on a formula, its not possible for parties to ask to pay more or less. 

While the process can be confusing, especially with issues like arrears and recalculations, understanding the system will help you manage your payments effectively.

Remember, you are not required to pay arrears as a lump sum, if you are a paying parent.  There are options available to spread repayments and ease financial strain. If you're facing difficulties, communication with CMS is key to resolving disputes and ensuring smooth management of your child maintenance obligations.


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Bank Deductions How To Protect Cash In Your Bank

 

Banks
I am often asked if Revolut is safe to protect money being taken by the CMS. Well here are my thoughts.

Revolut will soon be fully regulated in the UK, which means CMS can ask for bank deductions. However CMS have to know you bank with Revolut, because they dont make speculative applications to the nearly 400 regulated banks and financial institutions in the UK. So they will check your credit report to see who you bank with.

I have a Revolut account, that I don't use often. I took it out for the signup bonus and havent got round to closing it. Unlike all my other current accounts, Revolut is not reported to a credit reference agency. So in theory not visible to CMS.

That said, I also dont think people have to worry if they are paying their CMS. Again I do see people asking the question, can they protect their money, when actually they are paying on time anyway so CMS are not going to do a bank deduction.

Is revolut safe to bank with? At the moment Revolut does not have FSCS protection, so money with Revolut is at risk if the bank fails. It website mentions it has an alternative form of protection.

If you are concerned about losing your money to CMS, particularly as CMS are not immune to making mistakes, maybe Revolut is the answer. If you want to join me and over 40 million users who love Revolut. Sign up with my link below:

Click Here

Credit Cards

Credit cards dont normally allow a credit balance.  Often it breaches the credit card terms and conditions, but one card does, and thats the Capital on Tap Card.  And the best bit, is that they have an offer at the moment.  £75 for you if you apply for a card and complete one transaction.

First of all before you get too excited the card is not for consumers.  The only people that can take out the card are the self employed / and Limited company directors. You can pre load money onto the credit card. If you want to draw on it however you will have to spend it. The card does have benefits, points and cash can be accumulated, or you can use it to collect Avios points, They currently have a £75 sign up incentive.

To qualify, sign up through this link:

Open a Credit card

and get £75 when you make your first transaction on your card! The card is currently free, unless you choose to collect Avios Points. Only for self employed / business. Share Trading Accounts There are many companies that allow you to trade shares, and they often allow you to deposit money. That money is not normally disclosed to credit reference agencies, so its potentially a lot harder for a deduction mistake to happen. Companies to look at include Hargreaves Lansdown and Interactive Investor. As these are share trading companies you should be aware of the risks, and read their disclaimers. Interactive brokers is a US company but its possible to open an account with them in the UK, and convert monies in dollars and back into pounds when needed. They also have sign up incentives from time to time. To qualify, sign up through this link. Premium Bonds This may be answer for some. Prizes are tax free and dont have to be disclosed. I am slightly wary as the CMS is a government department, and National Savings are connected to the government. But again, Premium Bonds dont report data to credit reference agencies. Summary The CMS do makes mistakes and this information is provided to allow people to make a choice, if they are concerned for their money. However these mistakes are not common, and provided you do not go into arrears with child support payments, the CMS are unlikely to raid your bank account. The best form of protection is to avoid getting into arrears. Easier said than done in some cases. Disclaimer: Some links are affiliate links, if you buy something through, I may make a small commission at no additional cost to you. As an Amazon Associate, I earn from qualifying purchases. #csa #childsupport #childmaintenance #childmaintenanceuk #childmaintenanceservice #childsupport #CMS #ChildMaintenance #UKBanking #ChildSupport #CreditCheck #FinancialAdvice #SavingsAccount #ProtectYourMoney #CMSAdvice #ParentingTips #keithcms #creditcard #bankaccount

When does CMS stop? Child Support Answers.

 

Understanding when child maintenance payments via the Child Maintenance Service (CMS) in the UK should stop can be a complex process. Here’s a comprehensive guide to help you work out when child support stops. Child maintenance typically ends when a child reaches 16 or up to 20 if they are in approved education or training. This includes full-time non-advanced education (such as A levels, Highers, NVQs up to level three) and certain approved training courses. However, if a child is in a paid apprenticeship and only attends college one day a week, maintenance payments should stop. If a child leaves school in the summer, they still qualify for child benefit until the 31st of August following their 16th birthday, meaning child maintenance continues until the end of August. Most CMS cases pay at least a month in arrears, so payments often extend into September and October. Payments can continue up to age 20 if the child is in approved education or training. If the child starts working more than 24 hours a week, payments may stop, but if they are in education while working, payments generally won't stop. Maintenance will cease if the child marries, enters a civil partnership, or receives certain benefits in their own right. Other scenarios where child maintenance stops include:

1. The child dies.
2. The paying parent dies (liability ends, but arrears may be claimed from the estate).
3. The parent with care dies (maintenance may be payable to the new caregiver).
4. The child goes to prison or a young offender's institution, or is sectioned for mental health reasons for 12 weeks or more.
5. Both parents agree, and the case is closed by the receiving parent.
6. The child or parent with care moves overseas (exceptions apply for armed forces, diplomatic service, or certain education).
7. The child has their own child and claims child maintenance.
8. If the child over 16 refuses a DNA test
9. Or if the child leaves education and then returns after their 19th birthday, child benefit cases cannot be reopened.

One thing that does not stop child benfit is bankruptcy. Bankruptcy does not stop child maintenance arrears or liability, though some parents have attempted to pay arrears with a credit card and then declared bankruptcy.

Disclaimer: Some links are affiliate links, if you buy something through, I may make a small commission at no additional cost to you. As an Amazon Associate, I earn from qualifying purchases.

#cms #csa #childsupport #childmaintenance #childmaintenanceuk #childmaintenanceservice #CMSUK #UKBenefits #ParentingSupport #ChildSupport #ApprovedEducation #CMSPayments #ChildBenefit #PersonalFinance #FamilyLaw