Treatment of Child Maintenance lump sum

Hi

I’m going round and round in circles.  I know child maintenance is disregarded as income but what if a client receives £21,000 lump sum representing 17 years of unpaid child maintenance?  UC are ignoring this as capital for 12 months but CPAG states ” arrears of regular child support maintenance should be treated as income for a past period. Arrears are ignored as income if, for HB, they cover a period since 27 October 2008 or, for other benefits, since 12 April 2010”.

Thanks
Jo

Hi Jo.

I’d say any part of it paid for a period since 12th April 2010 or 27th October 2008 for HB is ignored.  Based on your quote ‘Arrears are ignored as income…....for other benefits, since 12 April 2010.’  CPAG goes on to say ‘Before that, arrears may mean that you have been overpaid benefit….’

I’d read that to mean that the arrears are only counted as income for periods they are paid pre 12 April 2010 which I assume is when child maintenance was no longer taken into account as income when assessing benefits.  So only a portion of your client’s arrears would fall to be taken into account as income for benefit purposes.  Do you know if they were in receipt of means-tested benefits this would apply to before those dates?

Afraid I’ve come to this thread very late. The principle that a lump sum payment of arrears of child support maintenance should be treated as income attributable to the periods to which it would have been attributed if paid at the right time is of course right and should apply to universal credit even though the income payments are not within the meaning of unearned income. So it is also right that, once the period of attribution as income is over, the amount changes into capital, just as amounts saved out of any past income would. But then I struggle to see how the capital could be disregarded for universal credit, as the reference to 12 months appears to suggest. I don’t see how child support maintenance could be regarded as a social security benefit so as to come within para.18 of Sched.10 to the UC Regulations on the disregarding of payments of arrears. And there is no other category that would cover the payment. Given that the amount was £21,000, that raises obvious problems, but it may be that the amount has already been reduced by expenditure that is not to be regarded as a deprivation of capital, e.g. by reducing or paying debts run up during the long period of non-payment.

Hi John

I agree with you that child maintenance is not a social security benefit, so it is impossible for the 12 month disregard to apply. It seems a little bit like we have no idea how to treat this capital from child maintenance in UC, so lets make up some rules to give a 12 month disregard!

However, under the IS/JSA/ESA capital rules, capital treated as income is disregarded as capital indefinitely. This was clearly set out in the capital chapters of the old DMG.

ADM Memo 14-23 about disregards for Post Office compensation payments, Grenfell Tower payments, & Vaccine Damage payments says something similar “if it is capital, is to be disregarded indefinitely in the calculation of the person’s capital and, if it is income, is to be disregarded in the calculation of the person’s income.

I know the UC ADM memo makes no mention of capital from child maintenance being disregarded indefinitely, but do you think this an omission in UC law and guidance? The ADM and legislation seem silent about the treatment of child maintenance paid in a lump sum.

From a past life within DWP, I thought the policy intention from 2010 was to disregard all child maintenance whether it is paid on a regular basis or in a lump sum, so that the child always benefits from the payment(s) . If capital from child maintenance over £6,000 or indeed over £16,000 is not disregarded indefinitely within UC, it seems contrary to the policy intention which applied to IS/ESA/JSA to ignore child maintenance as both income and capital. So in the case described with the £21,000 is seems the client would be punished if say it took the Child Maintenance Service over 17 years to secure payment through ongoing payment or lump sums. Also it would mean the client does not need to spend the capital and deprivation would never be a consideration.

Even if for IS etc capital deriving from payments of child maintenance were disregarded indefinitely (which I don’t accept - see below), I don’t think it could help the interpretation of the UC legislation. The way that unearned income is dealt with for UC and the radical simplification of the treatment of capital means that the starting point and often end point is to look at the UC Regs independently. Then there is simply nowhere to allow the disregard of capital derived from past payments or lump sum arrears of child support. A case could be made that if a payment of arrears of a benefit that does not count as unearned income is to be disregarded (Sched.10, para.18(1)(c)), so should a payment of arrears of child maintenance, but that would be an argument for amending the Regs.

On capital treated as income, reg.46(1)(b) of the UC Regs in effect provides for disregarding (by saying not to be taken into account) capital treated as income under reg.46(3) or (4). But that is only saying what is to happen in a particular assessment period. So a sum paid regularly and by reference to a period would, though having some capital element, be treated as income (para.(3)) and not as capital, by necessary implication for the assessment periods covered by the period to which the payment relates. If the claimant retains some of the money after the end of the last assessment period covered then I don’t see why that does not become part of the claimant’s general capital.

For IS etc I think the position is essentially the same. After the restructuring in 2008 (for IS), child maintenance comes under the general regime of liable relative payments and though para.73 of Sched.9 to the IS (Gen) Regs disregards such payments as income, there is nothing in Sched.10 to disregard arrears as capital for any period. Though capital treated as income by virtue of reg.41 or 66A is disregarded as capital by para.20 of Sched.10 and the DMG says that it is disregarded indefinitely I think that can only be read as reflecting that there is no limit (e.g. 12 months or 6 months) in the provision. It seems to me the disregard as capital operates for the weeks for which the particular capital payment is treated as income, on the principle that the same sum should not be treated as income and capital in the same period, but does not operate on money derived from the payment retained after those weeks.

All that said, the DWP does apparently adopt a rather simplistic approach to the continuing effect of capital disregards (see pages 594 - 5 of the 2023/24 edition of Vol.II of Sweet & Maxwell’s Social Security Legislation).