REFORM THAT WORKS - Why Tax Reform Must Be Matched With Child Maintenance Reform
A Call for a Mandatory Three-Tier Evidence-Based Child Maintenance Assessment Framework
By Deanna Newell
Founder – DN Family Law
Campaign Lead – Reform That Works
Bright Blue is proposing major changes to taxation → Government is considering how different forms of income should be treated → therefore Government should also examine whether CMS adequately assesses complex income → introduce a three-tier evidence-based system.
Children Should Not Lose Out Because the System Has Failed to Keep Up
The way people work and earn money has changed dramatically.
The modern workforce includes PAYE employees, self-employed workers, sole traders, company directors, entrepreneurs, contractors, shareholders and people operating through closely held companies.
Yet our systems for assessing financial responsibility for children have not necessarily kept pace with this changing economy.
Child maintenance is not a tax.
It is a parent’s financial responsibility to their children.
Every child deserves appropriate financial support, regardless of whether their parent is employed, self-employed, a company director or a business owner.
That is why I am calling for the Government to pilot a;
Mandatory Three-Tier Evidence-Based Child Maintenance Assessment Framework
The principles are simple:
Straightforward cases should remain straightforward
Complex cases should receive a more detailed assessment
The level of scrutiny should be determined by evidence — not assumptions, stereotypes or gender
The Wider Tax Debate
Recent proposals from the centre-right think tank Bright Blue have highlighted the changing relationship between employment, taxation and social protection.
Bright Blue has proposed abolishing employer National Insurance contributions while bringing National Insurance contributions for self-employed workers more closely into line with those paid by employees.
To help fund the changes, it has proposed increasing income-tax rates, including:-
The basic rate from 20% to 31%
The higher rate from 40% to 48%
The additional rate from 45% to 52%
Introducing a 13% income-tax band on earnings between £5,000 and £12,570
The proposals are designed to create a different balance between taxation and social protection, including improved access to protections for self-employed workers.
The Government should consider these proposals carefully however there is another issue that must not be overlooked.
The 52% Additional Rate Proposal — And Why It Matters For Child Maintenance
A recent proposal from the centre-right think tank Bright Blue has called for a significant restructuring of the UK’s tax and National Insurance system.
Among it's proposals is an increase in the additional rate of income tax from 45% to 52%. Bright Blue also proposes:-
Increasing the basic rate of income tax from 20% to 31%
Increasing the higher rate from 40% to 48%
Introducing a new 13% income-tax band for earnings between £5,000 and £12,570
Abolishing employer National Insurance contributions, and;
Bringing National Insurance contributions for self-employed workers closer to those paid by employees
Bright Blue argues that these changes could create a fairer relationship between taxation and social protection, while giving millions of self-employed workers greater access to protections such as pension provision, statutory sick pay and parental leave.
But there is another question Government must ask
If Government is prepared to fundamentally reconsider how different forms of income are taxed, it must also consider whether the Child Maintenance Service is sufficiently equipped to assess different forms of income fairly and accurately.
A parent receiving a straightforward PAYE salary may have an easily identifiable income.
A sole director and shareholder of a limited company may have a completely different financial structure.
That does not mean that one person should automatically pay more child maintenance than another.
It means the assessment system must be capable of identifying the relevant financial resources where there is credible evidence that the standard calculation does not provide a complete picture.
Tax reform should not leave child maintenance behind.
The Government should therefore consider the implications of any major tax and National Insurance reform for the Child Maintenance Service.
If the tax system is being redesigned to better reflect modern employment and different forms of income, child-maintenance policy should also be modernised.
This is why I am calling for a Mandatory Three-Tier Evidence-Based Child Maintenance Assessment Framework.
The principle is simple:-
Tier 1: Straightforward income → straightforward assessment.
Tier 2: Complex or disputed financial circumstances → enhanced evidence-based assessment.
Tier 3: Exceptional complexity, serious discrepancies or other circumstances requiring specialist intervention → court or multi-agency review.
The proposed 52% additional tax rate is ultimately a matter for Government to determine. My campaign is not advocating a particular income-tax rate.
I am asking Government to ensure that whatever tax reforms are introduced, they are accompanied by a serious examination of whether the Child Maintenance Service is capable of accurately assessing modern and complex financial circumstances.
Because tax reform affects the wider economy. Child maintenance affects children’s lives directly. Both systems need to work fairly.
Tax Reform and Child Maintenance Cannot Be Considered Completely Separately
If Government is reconsidering how income, taxation and National Insurance operate across employment and self-employment, it should also ask whether the Child Maintenance Service is sufficiently equipped to assess modern and complex forms of income.
A tax return may provide important evidence. However in some circumstances, it may not tell the whole financial story relevant to a child’s support.
That is particularly important where a parent has control over a company.
PAYE, Self-Employment and Fairness
PAYE employees contribute through income tax and National Insurance towards the wider system that supports public services. This includes services such as:-
The NHS
Social security
Pensions
Public services, and;
The wider infrastructure of the state
Self-employed workers can have a different tax and National Insurance position and may have fewer employment protections.
That is why the wider debate about fairness is important.
However child maintenance is different.
Child maintenance is not a contribution to the Government. It is money intended to support a parent’s own children.
Therefore, the ultimate question for child maintenance should be: Are we accurately assessing the financial resources available to support the child?
The Owner-Managed Company Question
One area that requires greater attention is the treatment of parents who operate through closely held companies. For example, a paying parent may be:-
The sole director
The sole shareholder
A majority shareholder
Both director and significant shareholder
The owner of a family company, or;
Involved in multiple businesses
This does not mean that every company director is avoiding child maintenance.
It does not mean that every business owner is hiding income.
And it certainly should not mean that legitimate entrepreneurs are automatically treated with suspicion.
But the financial structure of an owner-managed company can be more complicated than a straightforward PAYE payslip.
A parent may receive financial resources through:-
Salary
Dividends
Company profits
Retained profits
Director’s loan arrangements
Benefits in kind
Company-paid expenses where relevant
Other business interests, or;
Other financial arrangement.
Therefore, where there is credible evidence that a standard income assessment may not reflect the wider financial circumstances, the system should have a proportionate mechanism for further assessment.
Closing the Potential Gap
The Government should examine whether the current Child Maintenance Service adequately captures relevant financial resources where a paying parent has substantial control over a closely held company.
This should not become a blanket investigation of business owners.
Instead, it should be evidence-based.
Being a director or shareholder alone should not automatically trigger additional scrutiny. However, where there are credible indicators of financial complexity or a significant discrepancy between declared income and the wider financial circumstances, the case should be capable of moving to:
Tier 2 – Enhanced Financial Assessment
This is where a modern child-maintenance system could become more sophisticated without making every case unnecessarily complicated.
Follow the Evidence. Follow the Money Trail.
My campaign’s principle is:
Follow the Money Trail.
That does not mean assuming someone is dishonest. It means asking the right questions when there is evidence that the standard calculation may not provide the complete picture.
The system should be capable of considering relevant evidence concerning:-
Salary
Dividends
Company accounts
Retained profits
Director’s loan accounts
Multiple income sources
Relevant business interests, and;
Other appropriate financial evidence
Where appropriate and legally permissible, better information-sharing between relevant government systems should also be considered.
The objective should be accuracy — not punishment.
What About Cash-In-Hand Income?
This is another area where the Government needs to think carefully.
The more significant the difference between someone’s reported taxable income and their actual financial resources, the greater the potential risk that some individuals may seek to structure or conceal income.
This could include situations involving:-
Cash payments
Undeclared work
Multiple income sources
Non-cash benefits
Business arrangements, or;
Other forms of financial remuneration
But again, the answer is not to assume wrongdoing.
The answer is to build a system capable of identifying credible discrepancies and investigating them proportionately.
Evidence should trigger assessment — not assumptions about the person.
The Three-Tier Model
TIER 1 — STANDARD ASSESSMENT
For straightforward cases where income is transparent and uncontested.
Existing reliable financial information should be used wherever possible.
There should be no unnecessary bureaucracy.
TIER 2 — ENHANCED FINANCIAL & FAMILY ASSESSMENT
For cases involving credible evidence of:-
Complex income
Disputed income
Significant business interests
Owner-managed companies
Multiple income sources
Financial discrepancies, or;
Circumstances that cannot reasonably be assessed through the standard calculation alone
Relevant financial evidence could be considered proportionately. This is where company accounts, dividends, retained profits, director’s loan accounts and other appropriate evidence may become relevant.
TIER 3 — COURT & MULTI-AGENCY REVIEW
For the most complex cases. This could include circumstances involving:-
Significant unexplained financial discrepancies
Serious non-compliance
Complex financial structures
Serious safeguarding concerns, or;
Cases where specialist intervention is required
The purpose would be to ensure that the right professionals and agencies are involved when the circumstances genuinely require it.
Fairness Must Work Both Ways
Reform must protect both parents and children.
Paying parents should be protected from:-
Inaccurate assessments;
Assumptions;
Unnecessary investigations;
Unfair treatment, and;
Inappropriate inclusion of legitimate business income
Children should be protected from:-
Inadequate financial support
Inaccurate income declarations
Deliberate avoidance
Financial manipulation, and;
A system that cannot properly assess complex financial circumstances
There must be no assumption that a company director is dishonest.
But equally, there should be no assumption that a standard taxable-income figure always represents the complete financial picture.
Do Not Penalise Small Businesses
Small businesses are an essential part of the UK economy. Therefore reform must not create unnecessary burdens for legitimate entrepreneurs.
The principle should therefore be: Business ownership should not automatically mean higher child maintenance. However, business structures should not automatically shield relevant financial resources from proper assessment where there is credible evidence that they are relevant.
That is the balance Government should seek.
Do Not Create Perverse Incentives
Government policy should also consider whether differences between tax treatment and child-maintenance assessment could unintentionally create incentives to restructure income.
The objective should be to ensure that the method through which income is received does not unfairly determine a parent’s financial responsibility to their children.
A child should not lose out simply because one parent’s income is straightforward while another parent’s financial circumstances are more complex.
This Is About Children — Not Taxing Businesses
It is important to be clear about what this campaign is not proposing. It is not:-
An attack on entrepreneurs
An attack on self-employed people
A proposal to treat all company directors as dishonest
A proposal to take company assets automatically, or;
An attempt to increase child maintenance because someone owns a business
It is a proposal for better assessment where the evidence demonstrates that a standard assessment may not be sufficient.
A Modern System for a Modern Economy
The modern economy is more complicated than a single payslip.
People can earn through employment, self-employment, companies, dividends, investments and multiple sources.
The Child Maintenance Service must be capable of responding to that reality.
It must do so proportionately.
That is why triage matters.
A three-tier system allows Government to concentrate resources where they are actually needed.
Simple cases - Assess quickly.
Complex cases - Assess properly.
Exceptional cases - Escalate appropriately.
That is a more intelligent use of public resources than treating every case in exactly the same way.
Further Recommendations to Government
I am calling on Government to:-
1. Pilot a Mandatory Three-Tier Evidence-Based Child Maintenance Assessment Framework
Test the model in selected areas before considering nationwide implementation.
2. Review Owner-Managed Companies
Examine whether current CMS rules adequately capture relevant financial resources where a paying parent is a sole director, sole shareholder, majority shareholder or significant owner of a closely held company.
3. Establish Clear Tier 2 Criteria
Create transparent and objective criteria identifying when enhanced financial assessment is justified.
4. Strengthen Evidence Verification
Explore proportionate information-sharing between relevant government systems, including HMRC and CMS, subject to appropriate legal safeguards.
5. Examine Complex Income
Review how salary, dividends, retained profits, director’s loans and other relevant financial resources should be treated in appropriate child-maintenance cases.
6. Address Undeclared Income
Improve mechanisms for identifying credible discrepancies between declared income and financial circumstances.
7. Protect Legitimate Businesses
Ensure that small businesses and entrepreneurs are not subjected to unnecessary investigations or treated as dishonest simply because they operate through a company.
8. Consider the Wider Tax Reform Debate
The Government should consider the implications for child maintenance when implementing major reforms to income tax, National Insurance and self-employment.
The proposed Bright Blue reforms — including its proposed 52% additional rate of income tax — demonstrate how significantly the Government may be reconsidering the relationship between taxation, employment and social protection.
Whatever tax reforms are ultimately adopted, child maintenance policy must keep pace with the modern financial landscape.
9. Measure the Outcomes
The pilot should measure:-
Assessment accuracy
Collection rates
Arrears
Administrative costs
Parental experience
Impact on children
Impact on legitimate small businesses
iIentification of previously unrecognised relevant income, and;
Outcomes for complex company-owner cases
10. Publish the Evidence
Government should publish the results of the pilot so that future reform is based on evidence rather than assumption.
A Fairer Social Contract
The wider debate about taxation raises a fundamental question:
What does fairness look like when people have increasingly different ways of earning and receiving income?
PAYE employees, self-employed workers and company owners can have very different financial circumstances.
The Government should therefore build systems capable of distinguishing between:
income, business resources, legitimate expenditure and genuine financial need.
But for child maintenance, the ultimate test remains straightforward:
Are we accurately assessing the resources available to support the child?
We do not need a system that assumes every paying parent is dishonest.
We do not need a system that assumes every receiving parent is automatically right.
We need a system that assesses the evidence.
We need a system that recognises that genuine domestic abuse exists — while also recognising that allegations and family conflict can occur in both directions and must be assessed fairly.
We need a system that recognises legitimate small businesses — while also ensuring that complex financial structures cannot automatically prevent appropriate assessment where credible evidence exists.
We need a system that understands modern employment. And above all, we need a system that remembers why child maintenance exists; For the children.
My call to Government is simple
Let’s pilot it.
Let’s test it.
Let’s build the evidence.
Let’s identify what works.
Let’s protect children.
Let’s support responsible parents.
Let’s protect legitimate businesses.
Let’s create a Child Maintenance Service that is fairer, safer, more transparent and evidence-based.
Reform That Works
Fairer assessment.
Better evidence.
Stronger accountability.
Children first.
Deanna Newell | Founder - DN Family Law | Campaign Lead - Reform That Works
Advocacy for truth-tellers, survivors, and the children who deserve better
