With economists and financial forecasters predicting that inflation in the UK could reach 18% in 2023, it is little wonder that you may be concerned about how you are going to continue to pay the bills and manage your budget – especially if you rely on maintenance and are already feeling the strain on your family’s finances.
Will my maintenance payment go up because of rising inflation?
This depends on the financial order, and whether or not it is drafted in such a way that it is automatically reviewed each year. Increases are normally made in reference to either the CPI or RPI figure. Not all maintenance orders are index-linked, i.e., varied according to annual inflation, however. This may be because at the time it was made it did not seem necessary or it was simply the last thing on your mind amidst everything else that needed sorting at the time the spousal maintenance or civil partner maintenance order was made. Child maintenance is not linked to inflation and so legal advice should be taken to guarantee payments continue to meet the costs of childcare. The annual review of the Child Maintenance Service will affect many child maintenance orders.
Can maintenance orders be changed?
Your Court order for maintenance may have been in place for many years, or since you initially separated or divorced from your former partner and therefore the value, in real terms, of the regular payments you receive each month has effectively decreased. Although an Order made by the Family Court of England and Wales can nearly always be varied at a later date. This means the amount to be paid in maintenance can go up or down, the length of time for payments to be made can be increased or decreased, or the order can be terminated completely if it is determined to be no longer necessary. It is important to note that either party is entitled to apply to the court to vary the terms of the maintenance order.
Now is definitely a good time for anyone with an existing spousal or civil partnership maintenance order to check the terms of their financial order.
If the Court is requested to vary an original order it will take into consideration all of the personal circumstances of the parties involved and decide whether the amount of maintenance meets the needs of the recipient. It will also consider whether the amount is affordable for the payer. The enormous rise in prices that we are seeing currently would amount to a change in personal circumstances and would almost certainly warrant a revised periodic payment order. It might be possible to agree this without having to go to court, or via a fast-track application with only one court hearing. Your lawyer will be able to help you if you wish to vary an existing order.
Why do RPI and CPI figures matter?
The Office for National Statistics publishes Retail Prices Index (RPI) and Consumer Prices Index (CPI) figures every month based on the prices of specific goods and services, as a way of measuring how the cost of living is changing. The CPI figure covers the cost of food, transportation and health while the RPI includes house prices, rents and interest rates and therefore the RPI figure is often higher. The UK uses both the CPI and RPI to measure inflation but the difference between them matters because different costs and payments for consumers are linked to them.
If there is a provision in your maintenance order for an annual increase, it is not difficult to calculate the changed amount of a maintenance payment as it is usually linked to either the RPI or CPI figure, or the average of the two. If you are unsure or worried because your former partner has not paid the correct amount, a family lawyer will help you understand how to calculate the figure each year and how to ensure you receive the right amount.
With the cost of living continuing to rise for the foreseeable future, you may be pleased to learn that the Family Court can order that maintenance payments are recalculated annually in line with inflation. This can save yearly disputes with your ex about how much should be paid.
If you or someone you know wants more information or needs help or advice, please contact us on (01904) 217225 or (020) 36332301 or (0161) 3273677 or email [email protected].