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Redundancy payment not income for purpose of child support

Should a redundancy payment be treated as part of an NRP’s current income for the purpose of assessing child support liability?

It must be a very common scenario whereby a non-resident parent (‘NRP’) receives a redundancy payment. As the payment, or at least part of it, is designed to be compensation for loss of income, it would surely be logical to assume that the payment would be taken into account as income, when calculating the NRP’s child support liability. However, as we will see, that is not so.

However, as we will also see, that is not necessarily the end of the matter.

A straightforward question

The matter fell to be determined in the recent Upper Tribunal decision BB v Secretary of State for Work and Pensions and CB (CSM) (Child support – calculation of income).

The relevant facts of the case were as follows (as usual, I will do some simplification, for the sake of clarity).

  1. The parents married in 2002 and have three children, now aged 15, 13 and 12.

  2. The father was employed in a well-paid senior role at a City merchant bank.

  3. The parents separated in 2012.

  4. In 2014 the court made a financial remedy order, which included provision for the father to pay child maintenance at the rate of £500 per child per month.

  5. The father’s gross salary in the 2015/16 tax year was £187,771. However, in March 2016 his employers notified him that he was being made redundant – he was then sent on “gardening leave” for three months. In June 2016 he applied to the Child Maintenance Service (‘CMS’) for a child support assessment. The CMS calculated his child support liability as £413.13 a week, based on his historic gross income for the 2015/16 tax year, as provided by HMRC. The assessment was equivalent to £1,795.15 a month, approximately £300 a month more than the court-ordered level of child maintenance.

  6. The father then asked for a reconsideration of the assessment, advising the CMS that he made been made redundant on the 20th of June 2016. He had received a redundancy payment of some £75,000, net of tax. The CMS revised its assessment, substituting a nil assessment, as a result of concluding that he now had a nil income. The mother appealed.

  7. In February 2017 the father took up new employment, at a salary of some £43,000.

  8. The mother’s appeal was heard by the First-tier Tribunal in January 2018. It found that the redundancy payment was income for the purpose of child support, and it, therefore, directed that the child support should be reassessed, on the basis that the redundancy payment comprised the father’s gross income until February 2017, when he took up his new employment. The father appealed, to the Upper Tribunal.

As the Upper Tribunal judge said at the beginning of his decision, it seems a straightforward question:  is a redundancy payment treated as part of an NRP’s current income for the purpose of assessing his child support liability? As he went on to explain, it was far from straightforward. However, thankfully for the purpose of this post, I do not need to go into the technical details. Suffice to say that he found that, somewhat bizarrely, it does not count as income. Accordingly, the appeal was allowed, and the nil assessment reinstated.

Notional income

That may have been the end of the matter in this case but, as I have indicated, it is not necessarily the end of the matter in all cases, and certainly not in new cases. As the judge pointed out, the child support rules were altered on the 31st of December last, so that if the NRP has assets exceeding a prescribed amount, currently £31,250, a notional income of 8% can be applied to the value of those assets. That amount is added to the NRP’s gross weekly income when calculating their child support liability.

You can read the full decision of the Upper Tribunal here.

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If you would like any advice on child law, you can find further articles here or please do contact our Client Care Team to speak to one of our specialist children lawyers here. 

John Bolch often wonders how he ever became a family lawyer. He no longer practises, but has instead earned a reputation as one of the UK's best-known family law bloggers, with his content now supporting our divorce lawyers and child custody lawyers

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  1. Donna says:

    Hello thank you for This post.
    I have a question my ex husband has just been made redundant from a job he has held for 15 years and a salary of £50k
    I am not sure what his redundancy will be however my question is is he allowed to reduce his maintenance payments that we have had agreed since separation.?
    We have a consent order in place for this and my maintenance stands as £600 a month which he has reduced to £450 a month during furlong. Our concent order states of his salary should reduce the maintenance will need to be reviewed from the existing agreement.

    What will be his lawful payment to me for our child? He is currently looking for a job but at present he will be living off his redundancy.

    Please help I’m worried sick as this may contribute to us loosing our home as I’m currently furlong also and not sure if I have a job to go back to.

    • Kate Nestor says:

      Thank you for your enquiry – I have passed your details to our Client Care Team who will be able to advise you. Best wishes,

      • John says:

        Was there an answer to this question?

        • Kate Nestor says:

          They would have been contacted by our client care team to discuss further. Are you looking for some legal advice?

          • jane bradley says:

            I am in the same situation and wondered where I also stand.

          • Dan says:

            My wife is in a similar situation with her ex, they have shared care 50/50 and because she earns more than him he wants CSA Payments! If she was made redundant would he be entitled to some of her redundancy is it classed as earning?

  2. Fiona says:

    Hello. My brother was made redundant and received a 10 grand redundancy package. He has managed to go straight into another job. But we would like to know if the 10 grand he received will put his monthly maintenance payments up?

  3. Anthony says:

    Hi I am in a very similar situation as the above and need to understand if redundancy is taken into account.
    I am due to finish in April 2021.

  4. John Booth says:

    Dear All

    I’m due to be made redundant on 30th July this year from Honda, I pay my ex wife £330 per month for child maintenance for my two daughters

    I may possibly get a little over £60k of which I’ll then need to buy another car to get around in and to job interviews etc, yet my ex wife still seems to think that I’ll pay her the £330 per month ? Is it not the case that since I’ll be without a job from end of July that I do not have to pay maintenance?

    • Mitch Harris says:

      Hi there, im in the same position as you & imwondering did you get a resolve to this?

    • Julie says:

      I think it’s ridiculous asking if you need to pay for your children? You made these little people our future generations, 60k and you ask if you need to pay for the kids I think it’s terrible ??

  5. Sean says:

    I am in the same boat with – has anybody had an answer to this question – I have no money to be able to get proper legal advice on this subject…

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