The End Of Ignoring Unearned Income (The Bertie Wooster Clause)
The Department for Work and Pensions has finally published its response to a consultation of proposals that had previously been outlined to modernise and improve the Child Maintenance Service. The response seeks to address those paying parents who earn a proportion of their income by way of for example, dividends. This is classed as “unearned income”. Presently, when contacted the Child Maintenance Service make an assessment based upon the paying parent’s earned income (salary/self-employed earnings). That may ignore the fact a small or rather substantial part of the paying parent’s income is technically unearned income. They are proposing that when a case is first identified it will be included in the paying parent’s overall income. However, if it is identified between implementation of an assessment and the next annual review they will ensure the receiving parent can apply for “a variation” to address the additional income so those already in the system do not have to wait until the annual assessment is carried out which could be as much as 12 months after the case is first raised.
The DWP is also proposing to make maintenance calculations based on a paying parent’s statement of projected earnings if they are newly self-employed. Of course, if that appears to be underestimated then when the figures are finalised (having been obtained from HMRC if necessary) at the annual review, then the matter of any arrears accruing will form part of the maintenance due. They also plan to address any misrepresentations or failures to disclose information in any revisions.
As regards notional income on investment assets (any other assets, savings and investments excluding the paying parent’s home), they intend to introduce legislation to enable them to contact private pension providers, academy proprietors, the Motor Industry Bureau and many types of companies that offer, promote or sell investment management services or facilitate share trading so they can glean the necessary information to make an assessment and as necessary collect and enforce the child support.
For further information on any of the above or any other family matter contact Marie Whittaker or Lee Marston for a free, no obligation interview on 0161 764 5266 or via email info@clough-willis.co.uk
