The cost of living crisis and relationship breakdown

All the news at the moment seems to be that energy bills are going up, shopping is getting more expensive, mortgage interest rates are rising, and it can feel like life is getting more expensive across the board. Inflation is at a level not seen since the 1980s and could rise even further. All this combines to mean that families in the UK are facing increased costs this winter while incomes are being squeezed. This could be particularly acute for you if you are reliant on maintenance from a former spouse or partner or the parent of your child as part of your income. How this precisely affects you will depend on your particular circumstances but below are some issues to think about.

What is maintenance and how does it relate to inflation?

When a relationship breaks down, a couple will have to face the reality of trying to tease out two households from one household. No longer being able to pool income and costs means separating couples can face an increased cost of living. Sometimes after separation one party may not be able to meet their needs on their own and may need some financial support from their ex. Alternatively, a couple may have children together that need to be looked after and one party’s income may simply not be enough to meet their needs. In these circumstances, the court can order maintenance to be paid, either for you or for the benefit of your children. 

If you are receiving maintenance under a court order, you may have been receiving the same fixed income for some time since the agreement or court order was made. The amount of maintenance will have been set at a rate to meet your living costs at the time the order was made. Those living costs may have been calculated some time ago. With inflation hitting double figures, living costs calculated even a few months ago may already be out of date. That might not have been a problem but, with prices shooting up, will the maintenance you receive cover what you need? 

The cost of living is rising – what can I do about maintenance?

The first thing to do in this situation will be to look at your court order that sets out the requirement to pay maintenance. The court order may have a paragraph that refers to changing the maintenance yearly to manage the effect of inflation on the payments you receive. This is known as “index-linking”. This paragraph might have a heading like “Annual Variation of Periodical Payments” or “Index-Linking of periodical payments” or similar. Also look out for references to either the consumer price index (“CPI”) or retail price index (“RPI”) over the course of the last year.  These are both measures of the economy and show the effect of inflation on the buying power of your money. Any increases in your maintenance could be linked to these.

The amount that is due to you will change automatically but someone will need to work it out. An index-linking provision will set a mechanism to change the amount you receive in line with either the CPI or the RPI over the course of the last year. The formula to calculate the increased rate of maintenance will look like this:

For example, say you are receiving £2,500 per month in maintenance, to be varied each year by CPI, and the variation date is in August. You would first look at the CPI figure for July 2022, which is 122.5, then the CPI figure for August 2021, which is 111.3. Your new rate of maintenance would then be 

This is an increase of £251 per month which could make a real practical difference.

There’s an index-linking provision in my order but I haven’t done anything about it for a long time – what can I do?

Just because you haven’t checked in or updated the amount you are receiving, doesn’t mean this entitlement lapses. For a long time, the rates of CPI and RPI were very low and it would not have made much difference to have increased maintenance by 1 or 2 per cent. The rate that is due should still increase each year and the increases should be compounded each year. If this section is included in the court order and it hasn’t been reviewed for some time you could be due a substantial increase. For example, if your order said you should receive £2,500 per month maintenance in July 2017 to be varied annually by CPI then this should have increased five times over the years so the proper rate now should be £2,967.54, nearly £400 a month more. This could make a big difference to help you meet the cost of living.

The court order says that my maintenance should have been varied but my ex has just been paying the same amount each month – what can I do?

The first thing to do will usually be to try and have a conversation with your former partner. Point them to the relevant part of the order and let them know that you expect them to increase maintenance accordingly. If your ex does not increase the amount that is being paid then they could be in breach of the court order. This is a serious matter; there could be serious consequences for a party refusing to comply with an obligation to increase the rate of maintenance. You should then think about speaking to a solicitor.

My court order doesn’t say anything about index-linking or variation. Is there anything I can do?

If you are struggling to make ends meet on your maintenance you may be able to apply to apply to the court to request an increase. 

My partner and I were not married but we have a child together and I receive child maintenance through the CMS – will this increase with inflation?

Statutory child maintenance is calculated by reference to the paying parent’s income. There is no index-linking for this. You may want to check with the paying parent that you have up-to-date information about their income. If their income has increased, the child maintenance payments ought to increase also. If you are struggling to meet your child’s needs on child maintenance alone, it is possible to apply to the court for an order that the other parent pays you additional maintenance. This is not always available and will depend on your particular circumstances.

My ex and I were not married and I receive maintenance for our child(ren) under a court order – how does this affect me?

If you are already receiving maintenance for your child or children after a court order, the principle is the same as for divorced couples. You should look at the court order and see if there is a paragraph providing for the maintenance payments to vary by RPI or CPI each year. 

My ex and I are still in the process of negotiating a financial settlement – will the rising cost of living affect this?

One of the most important considerations in determining if maintenance should be paid, and the rate of maintenance, will be the needs and living costs of you and your former partner. If living costs increase then you need to bear this in mind when negotiating. You should also think about including a provision for index-linking in any agreement. If in any doubt, you should speak to a legal advisor.

How Moore Barlow can help

We are particularly skilled in navigating your differences when it comes to issues centred around family and divorce. We will help to avoid confrontation which can make finding a resolution harder. There are a number of options provided by our skilled lawyers, many of whom are trained as mediators and in the collaborative practice. Contact one of our family law experts for advice.