CS1 - The Algebraic Formula
- The CSA works out the maintenance requirement. This is the amount of maintenance they want to collect. This amounts to the total amount of income support you could receive were you to be in receipt of benefits. Even if you are not in receipt of benefits this element of the calculation is always carried out. The maintenance requirement is the cornerstone of the CSA calculation.
- Calculating your assessable income. This is done by taking your gross income, deducting Tax, NI and half pension.
- Determining the net income of your ex. This is carried out by taking their gross income and deducting Tax, NI and half pension.
- Calculate your exempt income. This consists of approximately £50 per week for you to live on, set income support allowances for the children and rent or mortgage payments on the home you live in.
- Determine your ex’s exempt income. This is calculated by adding together your ex’s mortgage or rent on the property he lives in, £50 per week for him to live on and income support allowance figures for any children that live with him.
- Determine your assessable income. This is done by deducting the exempt income from the net income.
- Determine your ex’s assessable income. This is done by deducting the exempt income from the net income.
- Comparing the percentage income you and your ex have between you and calculate a reduction of the maintenance requirement. In reality in most cases the parent with care is in receipt of benefits or Child Tax or Working Tax Credit and therefore they have no income for CSA purposes. Hence therefore this part of the calculation is skipped.
- Your maintenance is then deducted at 50p in the pound against your assessable income until you reach the maintenance requirement figure (or the adjusted maintenance requirement figure if your ex has assessable income). Once the maintenance requirement figure is reached the deduction then reduces to 15p in the pound for one child, 20p in the pound for two children and 23p in the pound for three children until the reminder of your income is utilised or the maximum assessment is reached. The maximum assessment varies on a case-by-case basis dependant on the number of children for whom maintenance is payable and their ages.
- Working out your projected income. This is a combination of income support allowances you would receive where are you in receipt of benefits together with your mortgage interest or rent (note only mortgage interest is used in this part of the calculation – all mortgage payments are used in determining exempt income) a further £30 is added to the figure and a further tolerance adjustment is applied, if this figure is higher than the maintenance determined above then the protected income figure is ignored, if this figure is lower than the figure determined above then this becomes the assessment subject to the final check.
- The final check – the 30% rule. The 30% rule says that no non-resident parent should pay more than 30% of his net income by means of child support. Therefore if any of the above calculations result in more than 30% of the non resident parent’s income being payable, the amount of maintenance is reduced to 30% of that pay.
Phew, and that is the simplified version of this algebraic system. There are a variety of other allowances that can be made (but in most cases do not apply) some elements of income are disregarded (not many) and additional elements of protected income can also be applied. Nonetheless, this is the simplest way of describing this legacy system. The only thing that is surprising is that it managed to last as long as 10 years. It will nonetheless come as no surprise to know that this extremely complex calculation takes a long time to carry out, with huge delays and of course being so detailed there is enormous scope for error. If you have a case being calculated under this system it is vital that you obtain clear advice and we would suggest that you call us on 03456 588 683.