Recommendation 9

The Department also told us that some issues identified with the integration of child maintenance were the result of legislation. For example, the rates for calculating child maintenance are outlined in legislation and mean that some paying parents on Universal Credit may see that as their earnings increase the resulting change in improvement in their disposable income is significantly reduced. This is because the combined effect of increases in their child maintenance payment, council tax reductions and reductions in their Universal Credit award can create ‘effective marginal tax rates’ of up to 100%. The Department also told us that child maintenance legislation means it cannot take partial deductions from the Universal Credit award to repay child maintenance arrears.13 Take-up and outcomes for the most vulnerable separated families and their children