Child tax credits for separated parents

Tax credits for separated parentsWhen couples separate or divorce, their respective family lawyers, if involved, will try to  agree a financial settlement and, as ever, the issue of child support is usually first on the list.  Some parents may have agreed upon shared care arrangements so that the child or children spend extensive periods of time with both mum and dad.

In such arrangements, the child support needs to be more ‘fluid’.  It should, if possible, reflect the fact that the financial burden under such shared care arrangements will be more evenly distributed between two households.  So, the black and white distinction used by agencies such as the CSA, for the ‘parent with care’ and the ‘non-resident parent’ (NRP) look old-fashioned and inflexible.  You may think they are only labels, but language is a powerful tool.

The CSA can take into account the fact that the NRP has the child or children for a significant number of nights during the year and this reduces the amount of child support that will be paid.  It’s better than nothing but it will still be a major irritant to the so-called NRP who has almost has much care of the children as the so-called parent with care.

To make matters worse, valuable additional sources of income to meet children’s needs suffer from a similar administrative straitjacket:

    • Child benefit cannot be split between two claimants.  This single payment rule means that separated parents who share the care of their children can decide which one of them is to receive the benefit.  In the absence of agreement, HMRC can exercise a discretion over who should receive it.  I have known cases where child benefit has been allocated for one child in one household and the child benefit for another child allocated to the additional household.  Of course, the payment for the first (older) child is greater than the second child so there will still be a differential.
    • Child Tax Credit (CTC) like Child Benefit can cater for separated parents to agree who should receive the credit.  In the absence of agreement, HMRC must consider the “main responsibility test” i.e., which parent has the main caring burden for the child.  So, HMRC cannot share the CTC out between the separated parents but must pay it in its entirety to just one of them.  This can seem manifestly unfair to the parent who may fall short of the “main responsibility test” by just a few hours in any given week because of the significant level of shared care.

I have often wondered whether this inflexibility would be judicially challenged.  Now it has:

Humphreys (FC) (Appellant) v The Commissioners for Her Majesty’s Revenue and Customs (Respondent).  Judgment was given on 16 May 2012.  The Appellant father had argued that the denial of sharing of CTC indirectly discriminated against men because men were more likely to have less care of children after separation.  HMRC conceded that the discrimination was real.  However, the court held that this discrimination, the ‘no-splitting rule’ was justified on public policy grounds as it was the best way to tackle child poverty and was therefore a reasonable approach for the state to adopt.  As an aside, Baroness Hale, in giving the unanimous judgement, thought it unhelpful that the family court did not have the power to make orders about splitting such benefits when it made orders about the welfare of children.  She said:

Unfortunately, the advent of the child support scheme has removed the possibility of doing justice from the courts. To restore it would obviously be the more rational solution to the problem under discussion. 

That seems sensible to me and most other family lawyers I know.  Is the Government listening?

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  1. Julie Peterson’s avatar

    Does anyone know what happens with Child Tax Credits when separated parents have equal share of the responsibility of their children?

    thank you

    Reply

    1. DivorceFT’s avatar

      Hi Julie, my understanding is that HMRC will only pay the entirety of the benefit to one person. It was this inflexibility that was judicially challenged, but unsuccessfully so. However, there is nothing to stop two parents taking into account the receipt of CTC by one parent alone and adjusting the amount of voluntary maintenance paid by the other to give a more equitable result, especially in cases where the sharing of child care is very close to being equal.

      Reply

    2. JC’s avatar

      Because my partner earns more than the new benchmark for Child Benefit, we are going to lose it. My ex, who has shared care for our daughter would be able to claim it. However if I stop claiming Child Benefit will this have any bearing on my “rights” as in for maintenance or say in what happens to our daughter? As I understand it, where the child goes to school (his village but registered at my address), where they are registered at the Doctor’s (his village under his address because it’s a better surgery) and who claims Child Benefit are the three key factors. We are amicable but I don’t entirely trust him. Courts have never been involved.

      Reply

    3. DivorceFT’s avatar

      Yes, the Government’s decision to use the tax system to claw back child benefit payments from those individuals earning more than £50,000 a year is causing all sorts of complications. The calculation is on the highest earner in the ‘household’ even if that person is not the parent of the children.

      The other appalling anomaly is that you can have two people in the household each earning £49,000 a year (so nearly a £100,000 combined income) and the household gets to keep every penny of the child benefit. If anyone can persuade me that is an equitable outcome, I will go out, buy a big hat, and then eat it.

      So, JC, what happens when you stop claiming child benefit? Well, it is a ‘gateway’ benefit which means that eligibility for child benefit usually means eligibility for child tax credits or housing benefit. This may not be so relevant in your circumstances. You ask, firstly, whether it affects your ‘rights’ for maintenance.

      I’m presuming that you and your ex have agreed the amount of child maintenance. If not, and you want some guidance or template agreements have a look at the Child Maintenance Options website http://www.cmoptions.org/ – I always think it is a good idea for parents to consider adjusting the amount of maintenance paid according to the amount of time the children spend with each party and also the receipt (or non-receipt of benefits).

      If agreement is not possible, then recourse to the CSA (or whatever it is going to be called in future) is possible. It is likely that the parent with the most overnight care of the children will be deemed to be the parent with care and therefore able to ask for a maintenance determination against the other parent.

      Secondly, you ask whether a removal of Child Benefit will affect your say in what happens to your daughter. No, it will not. Decisions about the welfare of a child involve the exercise of parental responsibility (PR). You automatically have PR for your daughter if you are her birth mother or adoptive mother. If you and your ex are at loggerheads about an important decision for your daughter then the family court can make an order if so required. But, try mediation first.

      Reply

    4. diana’s avatar

      hi my partner is claiming child benifit and child tax credit for my kids,,now we are seperated will they stop the benefit

      Reply

    5. Gary’s avatar

      At last – someone else in my situation. My youngest daughter (now 18 and studying for A-levels) has enjoyed 50/50 shared residence since my separation 6 1/2 years ago. My Ex receives Child Benefit and Child Tax Credits. My Ex originally applied to the CSA as the Child Benefit is the “gateway” to this. I therefore challenged the Child Benefit and it was held that we each claim for one daughter – I got Benefit for the eldest who is now 22. I could therefore counterclaim CSA from my Ex for her. In the end we settled on me paying 50% of everything – only fair! My older daughter is now an adult and chooses to live 100% of the time with me. As she still cannot support herself financially I still have to finance her but yet get no support for this.
      In the meantime, my Ex has spat her dummy out over her divorce solicitor’s bill and has texted me threatening to resurrect the CSA claim if I do not pay it. It is not my responsibility! I have my own legal bill to pay!
      My intention is now to challenge the Child Benefit again to thwart her frivilous claim. Can anyone help me – what do I need to evidence to support my appeal as the “prime Carer”?

      Kind Regards

      Gary

      Reply

    6. p’s avatar

      My problem is I have no way of proving ive had the majority care and my ex gives me nothing to support them

      Reply

    7. Gary N’s avatar

      My wife and I have been separated since 2008. We have two children together and I pay child support. She does not work and receives SSI benefits. Am I able to claim the child tax credits for my children because she does not file taxes. Now she does have her boyfriend living with her but they are not married, and he has no bearing on my children does this effect my claim?

      Reply

    8. Claudette’s avatar

      Hi, my ex-partner and i have separated, we share custody of our little 3yr old, i receive the child benefit and child tax credit, we split the nursery fees in half, however now that i have been recently awarded my ex wants to split the tax credit so he can pay less towards nursery fees. He claims that the tax credit is to be shared, i am confused is he right ? should i let him pay less? we are supposed to pay £390 each every month, but he wants to pay £245 as he thinks that’s fair since i receive child tax credits !! HELP ??

      Reply

    9. zoe’s avatar

      Does anybody know if my ex husband has our 3children 11 night’s a month who would be the person to claim chikdtac and child benefit

      Reply

    10. Danielle’s avatar

      Hi, can anyone help.. Me and my ex have been split for 2 months now after a 5 year relationship, he is finding it dificult to understand the term of only one parent can be in receipt of benefits and doesn’t like the idea he can’t apply for anything but he is trying to say he can still apply for working tax credit. Is this possible? Because I am the one in receipt of child benefit.. Just don’t know what to do. Please help

      Reply

    11. Jamie’s avatar

      I have custody of my daughter And claim ctc. She is going to stay with her mother for a week during summer holidays. Her mother is trying to get a weeks ctc off of me is she entitled to anything

      Reply

    12. Steve’s avatar

      My ex has had the tax credits stopped for our 2 children as she has a new partner who has moved in, we split the care of the children exactly 50/50 7 days with her 7 days with me.
      As she received all child benefit and tax credits she paid for the childminder from that whilst I have been paying for schooldinners trips etc.
      She is now saying that as she no longer gets tax credits I must pay half of the childcare costs. I earn a lot less than she does and have considered making my own claim for tax credits for one of the children however I have been told that this would be seen as fraud by hmrc surely I would be entitled to some form of assistance?

      Reply

    13. Garry’s avatar

      If 1 of us was to claim child benefit and child tax and also have the child 50% of the week and my ex partner has him the other 50% how would that would. would it better to share the amount out?

      Reply

    14. Sarah’s avatar

      My ex and I have shared 50/50 care of the children. I receive no maintenance from him on the basis that as the lower earner I receive the CHB and CTCs to top up my income. He is predicting that his company is not going to do so well next year and is now asking for a share of these benefits – is he entitled to them? We were not married and the courts have never been involved. I want to be fair and keep things amicable, but feel this is unfair so just wanted to know where I stand.

      Reply

    15. Si Kellow’s avatar

      I’m curious about all this – I have a court order which states 50:50 shared care, week on week off. This isn’t an agreement between parents, but an order made at the family court.

      CSA – 50/50 care so no payment required
      Child benefit – 1 child to me, 1 child to her
      Tax credits – you aren’t 100% responsible for either child so we’ll pay her both

      Umm, discrimination methinks!!

      Reply

    16. Emma’s avatar

      Can one parent claim the child benefit and the other claim for the child tax?

      Reply

    17. Larissa Heise’s avatar

      My ex ex s s high earner and wouldn’t not get ctc or wtc and child benefit would cost him in taxes. However, he insists on putting into our separation agreement that we are to apply for those on alternating years as we have 50/50 shared care for our daughter (just do that he can make use of his right and I won’t receive anything in the year he applies and gets nothing). If I do not renew my claim next year, let him claim, and claim again the following year, I will be automatically transferred to universal credit and will lose out hugely.
      Does anyone know how to get around that?

      Reply

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