Family law update following the recent Spring Budget

The Spring Budget, announced by Jeremy Hunt in March 2024, confirmed an investment of £170 million to deliver “a justice system fit for the modern era”, with £55 million being specifically assigned to the Family Courts. The objective being to facilitate access to legal advice and support with the focus on non-court dispute resolution in a bid to reduce the current extensive Court waiting times, and to reduce the administrative burden on Court staff.

Child Maintenance Service

Significant funds have also been apportioned to the Child Maintenance Service, with the intention of developing an online platform. The idea is to take matters away from the current paper-based procedure, with the objective of simplifying and increasing efficiency including response times.

Early Legal Advice Pilot

Following the 2023 consultation on mediation, the Government declined to implement compulsory mediation in family law proceedings. Instead, it announced plans to introduce an Early Legal Advice Pilot, with the intention of developing the scope of Legal Aid to encompass early legal advice for parties considering an application to the Court for child arrangements. It is not entirely clear who will be entitled to Legal Aid, and many people will not qualify for this.

One Stop Shop

The Government also confirmed plans to introduce a ‘One Stop Shop’: an online information platform providing advice on alternative methods of dispute resolution. The ‘One Stop Shop’ will offer information and guidance on how to resolve disputes without going through court proceedings. The aim is to encourage early dispute resolution and widen the use of non-court remedies by educating families on the various options available to them. With parties being more aware of the available routes, the hope is that the number of cases will be resolved without the need for formal Court hearings.

Child Benefits

The threshold for Child Benefits has been increased from £50,000 to £60,000 thereby increasing the number of families who qualify for support.

The government has also confirmed that it is focusing on tackling the unfairness for single-parent/ single-earning families by introducing the High-income Child Benefit Charge on a household rather than on an individual basis. However, these changes are not due to be implemented until April 2026.

Capital Gains Tax

Capital Gains Tax is the tax paid on the disposal of an asset e.g., the sale/ transfer or disposal of property/ shares or land. A reduction in the higher rate of Capital Gains Tax for residential property has now been confirmed from 28% to 24%. The lower rate, however, remains at 18%.

This can  be particularly relevant where parties own more than one property or own shares (which may be transferred as part of a divorce). It will depend on the specific circumstances but, as part of the divorce process, parties may be required to sell assets in order to liquidate capital as part of a financial settlement. Capital Gains tax can often be a significant consideration when assets are sold or transferred, and the financial impact of Capital Gains Tax should be taken into account. Parties will need to give consideration to the costs associated with selling, transferring or disposing of property and other assets. Therefore, the changes made to the higher rate of Capital Gains Tax are likely to have an impact on any financial settlement where parties are higher rate taxpayers.

We always advise our clients to obtain separate tax advice as part of that process.

If you do require further advice and information in relation to the above, or on separation and divorce, please contact us to speak to a member of our Family Team.

Paul Wild
Legal Director, Family
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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