Child support for higher earners.

Many couples continue to meet their expenses out of a shared joint account for a while after they separate , or the person who has left contributes ad hoc sums of money from time to time, to meet the needs of the other person or the children as the need arises. There is nothing wrong with doing that but it can give rise to arguments at a later stage, so it is often better to move towards an arrangement where a regular amount is paid each month. That allows both the payer and the person receiving maintenance to budget with reasonable confidence, and without having to discuss their finances with the other.

But it can be difficult to arrive at an agreed figure. Where the couple have been married, or where the person receiving the maintenance is not able to work full-time, the question of child support often becomes part of a broader assessment of the amount of maintenance needed to support both that person and the children.

The starting point for child maintenance is the CMS formula, and there is a good calculator on the gov.uk website for that. But CMS only takes account of the first £156,000 of the payers gross annal income. A person earning more than that can expect to pay above CMS rates.

There is no simple answer to the amount of child support/maintenance higher earners should should pay. Liability for maintenance relating to gross income over £156,000 is the province of the court. If the parents have been married, it is an exercise of judicial discretion under Matrimonial Causes Act 1973. That calls upon the judge to take account of the needs of the children, as well as the resources available to the payer, and to take appropriate account of the standard of living the family enjoyed during the marriage. If the parents have not been married it is an assessment under Schedule One Children Act 1989, where the criteria are stated slightly differently and there is no specific reference to the standard of living enjoyed during the marriage. In reality it won’t make much difference, the discretionary assessment is much the same.

But discretionary regimes are necessarily inconsistent, so there have been attempts to introduce some consistency and clarity, primarily by Sir Nicholas Mostyn J, who was a High Court Judge, and the National Lead Judge on Financial Remedy issues until he retired in late 2023. A case called James -v- Seymour was his last attempt to introduce clarity by proposing a mathematical formula which he called his Adjusted Formula Methodology (AFM).  Although the actual amount of maintenance payable in any individual case remains a matter of the judge's discretion,  Judge Mostyn said that his AFM formula should be the starting point, and in most cases the endpoint too.

He was always seen by some as quite controversial. Not all judges agreed with him and he is, of course, retired so it remains to be seen how much his AFM formula will be followed, and for how long. But on the whole it seems to be adopted by the courts reasonably enthusiastically as giving a clear answer to what is otherwise a difficult and slightly arbitrary question.

The basic formula is as follows. The key figure is the payers gross earnings (i.e. pre-tax) but after deduction of pension payments made. The CMS formula should be applied up to the first £156,000. Where there is one child that is a liability of £15,300 per annum, where there are two children  it is £10,200 per annum per child and for 3 children it is £8400 per child per annum. The excess income between £156,000 and £650,000 is then adjusted for school fees paid, on the basis that it would be unfair to expect the payer to support their children with school fees as well as maintenance payments in this part of formula. So school fees paid are divided by 0.55,i.e. roughly grossed up for the tax which payer is assumed to have paid on the income out of they pay the school fees, and deducted. Where there is one child the maintenance liability is then 2.4% of the remainder. Where there are two or three children it is 3% for each child.

So, applying the AFM formula let’s assume there are two children, let's assume the payer’s gross earnings are £550,000, with no pension contributions in payment and let’s assume they are paying £20,000 per annum school fees. The calculation is fairly straightforward.

First they would pay £20,200 out of the first £156,000 of their gross income. Then from the remaining £394,000 we deduct school fees grossed up to roughly £36,000, leaving a balance of £358,000 of which they pay 3% per child, i.e. £21,480. So the total would be £41,480 per annum, plus they pay the school fees.

It should be fairly easy to rerun that calculation with different numbers.

As always, there are some complications .

First there is an adjustment to the formula if the payer has other children living in their household – e.g. he is living with a new partner and her child. The payer’s gross income is reduced by a percentage factor according to the number of children,  at the beginning of the calculation.

Second there is an adjustment if the children (ie the children for whom the maintenance being calculated ) are spending overnights with the payer, providing it is more than 104 nights per annum. Essentially the final figure is reduced by 1/7, or by 2/7 if they are spending more than  is208 nights per annum and so on.

Third, some people fall outside the jurisdiction of CMS altogether, for example where the payer is resident overseas. In that case all of the income falls for consideration by the judge. I think that is something of a technicality and that if a judge were looking at it s/he would probably apply exactly the same approach whether the payer is living in the UK or overseas. But if for example the payer is living under a lower tax regime the judge might be more generous in their assessment for the children.

Fourth this formula doesn’t apply if there are four or more children, or if the payers gross income is more than £650,000 per annum, or if their income is mostly from investments or capital based rather than earned income.

So if you are looking at a gross income over £156,000 you should take individual advice about your situation, but hopefully this explanation will help.

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Warning :This post is intended as a general guide only – It is important to obtain expert advice about your own situation, I can certainly accept no responsibility for any loss you might suffer as a result of relying purely on the information on this website.

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John Pratley is an expert divorce lawyer, who has more than 25 years’ experience advising clients purely about divorce and related family law issues, such as the financial consequences of separating and divorcing. After establishing the first niche family law practice in Bristol, and going on to senior management roles in a national firm, John set up Apple Tree Family Law in 2018. Apple Tree Family Law solicitors specialise in advice about divorce and financial issues.

We are based in Bristol and Exeter, but we have clients all over the UK and further afield. We offer, simply, clear and accurate advice about divorce and family law issues, and the very best client service, for a clear and reasonable price.