How the CMS Calculates Maintenance
The Child Maintenance Service uses a formula based on the paying parent's gross weekly income as recorded by HMRC. The basic rates are 12% of gross weekly income for one child, 16% for two, and 19% for three or more. These percentages apply to income between £200 and £800 per week.
The CMS uses the most recent tax year data from HMRC. If the paying parent's income has changed significantly since that tax year, the calculation may be out of date. Both parties can request a current income review.
Direct Pay vs Collect and Pay
Direct Pay means the CMS calculates the amount but payments are made directly between parents. Collect and Pay means the CMS collects and forwards payments, but a 20% surcharge is added to the paying parent's liability and a 4% deduction is made from what the receiving parent receives.
Start with Direct Pay if there is any prospect of compliance. Move to Collect and Pay if payments become unreliable. Once on Collect and Pay, significant enforcement powers become available.
Do not wait too long before requesting a move to Collect and Pay. The longer non-payment continues, the larger the arrears and the harder enforcement becomes.
What the CMS Will Not Tell You
The CMS formula, variations including lifestyle inconsistent with income, the self-employed paying parent, enforcement powers, and the interaction with financial remedy on divorce.
Challenging the Calculation: Variations
A variation is a formal request to change the maintenance calculation on the grounds that the formula does not reflect the paying parent's true financial position. Receiving parents can apply on the grounds of lifestyle inconsistent with declared income, assets, or diverted income. The lifestyle variation is the most powerful tool available.
The Self-Employed Paying Parent
Self-employment is where the CMS formula most frequently fails. Through expenses, salary structuring and profit retention, the declared income can be dramatically lower than the paying parent's actual financial position. A lifestyle variation and a variation on the grounds of diverted income are the available remedies.
Enforcement When Maintenance Is Not Paid
The CMS has significant enforcement powers on Collect and Pay. These include deduction from earnings orders, deductions from bank accounts, liability orders, driving disqualification, and in serious cases, commitment to prison. If payments stop, contact the CMS immediately and request enforcement action.