Bonuses and Child Maintenance
Bonus season is upon us once again, a source of agony or ecstasy as the case may be!
How does this impact on child maintenance given that bonuses are typically discretionary and, in many cases, unpredictable.
Many people pale at the thought of engaging the Child Maintenance Service (CMS). However, in relation to high earners, it’s role may be limited to making a maximum assessment: income above that does not count for CMS purposes.
The current maximum assessment under the CMS legislation requires a gross income of £156,000 per annum.
Many in the city will receive higher bonus sums, and therefore the CMS is of limited importance.
This means, however, that the courts retain a role in assessing any additional maintenance which can be paid by one parent to the other (a “top up order”).
Note: this applies to married or unmarried families, the only requirements being parentage and separation.
If a maximum CMS assessment has been made, the party with care of the children can apply to court for additional maintenance.
The courts approach is less clear because it is based on case law and this is generally fact dependent. Indeed, judges have been at pains to point out that there is no one size fits all approach and have in fact rejected applying the CMS formula to higher incomes.
The current position is slightly unclear. High earners will pay a maximum CMS assessment, and then potentially also a discretionary additional sum depending on the exact circumstances.
If the parties are married, the position may be different. The court has emphasised that child maintenance claims in divorce cases cannot be abstracted from the whole. This means that it will generally not be appropriate to apply the percentage deduction to the whole of the gross salary and make an order in those terms, especially with very high incomes. Other factors come into play, for example, the standard of living, the needs of the parties, etc etc. This has a tendency to reduce rather than increase the value of a claim for children of married parties on divorce. However, in cases of unmarried families, the situation may be different, and the maintenance claim may be very much at the forefront. In divorce cases it is unlikely that budgets will be closely scrutinised and a broader brush is generally taken. This is not so in unmarried cases, where parties can expect to produce and analyse respective budgets for children.
It is currently unclear exactly how this will play out in the future, given the differing approaches set out in the various cases. While judges have attempted to set out guidelines, for example, the concept of a household expenditure award which essentially looks to support a child by considering the reality of their circumstances within a separated home, but whether this is followed in the future has yet to be tested.
Clearly, to get the right balance, legal advice is required. If you have recently separated and are unsure what you should be paying, or if this is impacting on your relationship with your ex and therefore perhaps the arrangements for seeing your children, we can assist in clarifying the approach to be taken, as part of a broader financial analysis.
Rather than worry or argue, please contact us to have a chat and discuss this further.
Family Law in the City
Tel: 020 4579 5360