Case Study 2 - Bizarre child support changes as the
new partner's income changes
The changing situation
(Some of the tax credit amounts date to pre-April
2001. This should not affect the totals by more than about £1
This article looks at the child support paid by a low-earning non-resident
parent as his new partner's earnings overtake his own, while his earnings
||Just after separation, he is living alone. He
is an "absent father", paying child support. He isn't entitled
to any benefits or tax credits, so may not be able to afford to share
the care of his children.
||He then meets someone else, who moves in with
him. She already has a young child. He continues to work and earns
the same as before. She works and earns, although not as much as him.
They are now entitled to claim Working Families Tax Credit (WFTC).
They have to use childcare for the child because there is no one left
at home to look after the child. But they can claim some of this back
from the WFTC scheme as childcare tax credit.
||She gets a pay rise and so now she earns as much
as him. He continues to work and earns the same as before. They still
claim WFTC and childcare tax credit.
||She gets another pay rise and so now she earns
more than him. He continues to work and earns the same as before.
They still claim WFTC and childcare tax credit.
The specific amounts assumed in this case are:
- His net income: £140 per week throughout this case study
- She starts (stage 2) at £120 per week, increases (stage 3) to
£140 per week, then increases again (stage 4) to £160 per
- Their individual working hours per week: 30
- Childcare cost per week: £100
Stage 1 - he is living alone
This is quite a typical case. Most NRPs earn less than the mean
NRP income, and well under the national average male full time earnings.
He is not entitled to any sort of benefit or tax credit relating
to children - even if he shares the care of his children.
This stage is probably quite plausible - the £15 child support
is much less than a child costs, but the NRP is not wealthy.
Stage 2 - he has a (lower earning) working partner with
He now has a new (working) partner. They have to use childcare
because they are both working.
There is now nearly twice as much money coming in to the household.
Indeed, their retained income (after all deductions), is nearly
twice as much as stage 1.
The household has become entitled to a tax credit because of the
child. Although he is not financially responsible for the child,
in this case it has increased his liability to his own child. This
has nearly doubled (in spite of the fact that his own income has
not changed at all).
The household is much better off than when he lived on his own.
This appears to be a sensible situation all round. (Although Anne
may wonder why Arnold's child support liability has increased even
though he is not earning more. Is it because "her" WFTC
- it is her child - is being diverted into child support?)
Stage 3 - his new partner now earns the same as him
His new partner gets a pay rise. She now earns the same as him.
He pays less child support because when both partners earn the
same, the amount of tax credit that is added to his net income for
child support purposes is half of the total. (The legislation doesn't
define what "the same" means. To the penny? How close?)
Note that the total amount of WFTC received is well under the amount
they pay for childcare, yet half of it is being assumed to be available
income that can be treated along with other income for child support
Betty probably says to their child Brenda "gosh, your daddy's
new partner is earning more, and they are all better off, so your
child support has been reduced by £8 per week!"
(She is very careful not to speak her mind when Brenda is around!
Her real views cannot be published!)
Stage 4 - his new partner now earns more than him
His new partner gets another pay rise. She now earns more than
As a result, the household's WFTC is no longer attributed to him.
It is not income as far as his child support liability is concerned.
The household is even better off.
Betty may say to their child Brenda "gosh, your
daddy's new partner is now earning even more, and they are
now all even better off, so your child support has been reduced
even more by £6 per week!"
(It is unlikely that she says this - she has probably gone way
beyond "gosh"! She is now getting less than half
of what she was getting when Anne was earning less, yet Arnold's
earnings haven't changed).
The government says "children should share in the wealth of
their parents". Well, Arnold appears to be getting wealthier
(with Anne's massive help), but Arnold's own child Brenda doesn't
share in this!
 The following statement in the CSA Reform White Paper will probably
haunt the government!
"Tax credits ... The new tax credits can be paid to either
partner. Tax credits will be used to assess maintenance where the nonresident
parent is the principal or only earner. If the nonresident parent and
his new partner are earning exactly the same, only half of the tax credit
will be used in assessing child support liability. In cases where the
new partner is the principal earner, we will ignore any tax credits
regardless of whose wage packet they are paid into. This reflects the
way that Family Credit is treated in the current child support system."
 The legislation is in Schedule Part IV "Tax Credits" of:
The Child Support
(Maintenance Calculations and Special Cases) Regulations 2000