High earners and child maintenance: James v Seymour and the Adjusted Formula Methodology

Following the breakdown of a relationship, it is often the case that one parent becomes the primary carer of a child. It is widely accepted that there is greater financial demand on the parent with whom the child spends a greater proportion of their time. In these circumstances, the non-resident parent is generally liable to provide financial support to the other parent by way of child maintenance payments.  

How is child maintenance calculated? 

Child maintenance is calculated in accordance with the Child Maintenance Services’ (CMS) statutory formula. The formula establishes what the gross annual income of the paying parent is (after deductions for pension contributions) and calculates the liability by reference to a percentage of that gross income. 

The percentage applied to gross income can vary based on several factors, the most common of which are: 

1. the number of children
2. how many overnight stays the child(ren) have with the paying parent and 
3. whether the paying parent has any other children for whom they are responsible, such as from a former relationship

Whilst praised for ensuring standardisation and certainty, the statutory formula is limited in that it cannot calculate a liability where the paying parent’s gross annual income is more than £156,000. 

What happens if the paying parent is a high earner? 

If a paying party earns more than £156,000, the court has jurisdiction to award a ‘top-up’ payment. The question of how to correctly assess the quantum of any such top up payment has long been considered a ‘grey area’ for practitioners. 

In CB v KB [2019] EWFC 78, Mr Justice Mostyn suggested that the starting point to calculate the correct level of child maintenance was by reference to the CMS’ statutory formula. In practice however, this often produced a liability which could be deemed excessive and not readily proportionate. 

James v Seymour

The position has recently been clarified, if not simplified, by Mostyn J in James v Seymour [2023] EWHC 844. The case concerned a husband and wife who were married in 2010 and separated in 2012. The parties’ reached an agreement about their financial matters in 2014, which included an order for the husband to pay the wife periodical payments for the benefit of both her and the two children (a ‘top up’ order). 

In 2022, the wife made an application to increase the periodical payments she was receiving, on the basis that she argued the existing order was insufficient to meet the children’s needs. The wife was a journalist, but not working at the time of the appeal. The husband was a banker, earning a high income of around £400,000 a year. 

Although the wife’s claim was unsuccessful, she was granted permission to appeal on the basis that the Judge did not follow the approach set down in CB v KB [2019]. In considering the appeal, Mostyn J acknowledged that his approach in CB v KB [2019] was too simplistic and he proposed a new formulaic approach for calculating a top-up award where the paying parent has a gross income of between £156,001 to £650,000. This led to the introduction of an 'Adjusted Formula Methodology ' (AFM) which sets out a new framework to calculate revised maintenance payments for those with higher incomes. 

The AFM includes a number of helpful tables, which allows parents to easily identify a paying party’s liability for child maintenance according to their level of gross income. A copy of the schedules can be accessed here: Kirsten James v Stephen Seymour - Find Case Law - The National Archives.

The Adjusted Formula Methodology has some limitations and will not be relevant in circumstances where for example:  

• There are four or more children
• The paying party’s gross income is more than £650,000
• The paying party’s income is largely unearned, or
• The paying party lives on capital

The efficiency and simplicity of the guidance in James v Seymour [2023] is a welcome sight for practitioners, but it is important to recognise this does not override the court’s overall discretion when determining issues, nor its obligation to apply the relevant statutory factors when assessing what a fair outcome looks like. 

How we can help

If you would like any further information in connection with the contents of this article, please contact Evie Jenkins or Mark Heppinstall.  

Please note this guidance note is a general summary of the law and cannot replace tailored legal advice.