Description of the reformed system
The reformed child support system mostly treats benefits and tax credits in a similar way to the existing system, with a few very important exceptions. Much of what follows applies to the existing system as well, and is included for completeness. The important exceptions are clearly identified.
There are dozens of benefits and a few tax credits. Only certain benefits make a lot of difference.
This paragraph applies to both systems. A key influence of Child Benefit is that if the parents share the care of the qualifying children equally, the parent who claims Child Benefit (nearly always the mother) can be treated as the Parent With Care, and the other parent as the Non-Resident Parent, whatever their other circumstances.
PWC on benefits or tax credits
This paragraph applies to both systems. The only benefits that force CSA cases to be started (becoming "benefits cases") are Income Support and Job Seeker's Allowance (Income Based). No other benefits, and no tax credits, do this, and so all other cases are private cases. In all private cases (hence all except Income Support and JSA (IB) cases) the child support paid makes no difference to the amount of benefit or tax credit paid. (The child support is not used for benefits reduction).
As with the existing system, a "reduced benefit decision" can be made if the PWC refuses to cooperate (eg. name the other parent) when required to do so in a benefits case.
Because the PWC's income is ignored in the reformed formula, so are the PWC's benefits and tax credits.
The major change with the reformed system is that the first £10 per week of child support received is "disregarded" - the PWC can receive up to £10 of child support without the benefit being reduced. (This is incorrectly called a "child maintenance premium"). The amount beyond £10 causes the benefit to be reduced pound-for-pound. (So £11 of child support will reduce the benefit paid by £1).
NRP on benefits or tax credits
The way NRPs' benefits are treated is simpler under the reformed system. An NRP receiving just benefits (no other income) will normally be required to pay £5 per week. Any Child Benefit, non-contributory disability benefits, Housing Benefit and Council Tax Benefit that an NRP receives will not be treated as income - they will be ignored.
If the NRP's household claims a tax credit such as WFTC, then the amount of the tax credit that is treated as net income is:
A: if the NRP is alone or earns most, 100%.
The CSA can find this tax credit information from the Inland Revenue
directly, and in fact the CSA rules talk about "who earns most at
the time of the tax credit claim" to ensure this.
The legislation that introduces the £10 disregard in Income Support
& Job Seeker's Allowance (Income Based) is:
The legislation for the handling of tax credits in the NRP's household
|Page last updated: 17 December, 2003||© Copyright Barry Pearson 2003|