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New child support formula will cost parents

Single parent charity Gingerbread has claimed that around 100,000 parents stand to lose an average of £6 a week due to a little known technical change to the child support assessment system.

Under Government proposals, tax credit payments received by a non-resident parent will not be counted as part of their income when calculating how much child maintenance they should pay.

The proposed change is one of a number the Government is making through new ‘Maintenance Calculation’ regulations. Gingerbread is concerned that the detail and complexity of the regulations will mean that MPs will pass the proposals without fully considering the full implications for the some two million parents currently using the Child Support Agency (both parents expected to pay maintenance and those due to receive it).

The Government wants to base child maintenance in future solely on HMRC gross income data obtained from PAYE returns or self-assessment returns. This does not include tax credits. Gingerbread argues that, if the paying parent is getting extra tax credits on top of earnings, this additional income should be counted when assessing ability to pay for children. Given that HMRC also calculates and pays tax credits, this information could easily be transmitted to the new Child Maintenance Service.

According to Gingerbread, the Government has so far rejected objections to its proposals.

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