Last week saw the biggest daily rise in petrol prices in 17 years. The cost of living is fast increasing. Ofgem has recently confirmed that the energy price cap will increase to £2,800 a year, meaning energy bills could rise by up to £800 annually.
In addition, the Bank of England anticipates inflation will continue to rise over the forthcoming year. For couples organising their finances upon separation, this is likely to affect their anticipated living costs and resulting income needs.
As part of financial remedy proceedings, or financial agreements via negotiations, couples are required to produce schedules of income needs confirming what they anticipate their outgoings will be in the future. These usually account for any adjustments to their needs to support themselves in their new lives, such as rises in childcare costs or increases in mortgage or rental payments for a new property.
The increased cost of living may affect parties’ future outgoings sections of the schedule of income needs. If energy prices are to rise by up to £800, then it may be prudent to factor this in on the schedules. Given that in some cases individuals will be expected to front the costs of their separate lives alone, it is important that their financial projections accurately record what a party’s outgoings may be.
Particularly in cases where there is a question of spousal maintenance, it may be sensible to include this in the ‘any significant changes to income’ at section 4 of the Form E. If one individual does not work, or has a lower paid job than the other, then an increase in energy prices may affect the amount being claimed in spousal maintenance. If there are children, then the parent with whom the children spend more time may need to consider including increasing food prices in this section also.
If the increases in cost of living are accounted for within the schedules, it may help inform which orders are sought, and proposals from each party that will be put forward by either side. The court and the parties need to have an accurate idea of what each party’s future income needs will be. Given the sharp rises in the cost of living, it may not be possible to have an accurate picture without these issues being considered.
If you are in a situation where you need advice or assistance on organising your finances on separation, then please contact our Family and Matrimonial team.