Council tax attachment of earnings orders frequently asked questions

• What is a council tax attachment of earnings order?
• What duties does this order place on an employer?
• How long does this order last?
• How much should be deducted?
• What are net earnings?
• What are earnings?
• Are youth training allowances earnings?
• How do I use the tables in Annex C?
• How do I know which table to use?
• What do I deduct if there is an advance for holiday pay?
• How should I deal with loans made for other purposes?
• What do I do if there is an attachment of earnings order already in force?

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What is a council tax attachment of earnings order?

Where there is non-payment of council tax the local authority can apply to a Magistrates’ Court for a liability order against the defaulter. If a court grants a liability order an authority has a number of options for recovering the outstanding amount. One of these is a council tax attachment of earnings orders (CTAOE).

The CTAOE will be in a form prescribed in regulations see Annex C. It contains the name of the debtor, his payroll number (if known) and the local authority reference. It confirms that the named person is liable for council tax and specifies the amount of charge that still has to be paid. Deductions in line with the order should be made as soon as possible after the order has been received.

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What duties does this order place on an employer?

This order is a legal document and places certain duties on an employer, so it is important that you know the governing principles.

If the person who is the subject of the order is in your employment you should make deductions from his or her earnings as explained below. These deductions should begin as soon as possible after the receipt of the order. The amount deducted should then be forwarded to the Authority by the 18th day of the month following the month in which the deduction was made.

As well as the amount to be deducted and paid to the authority you may also deduct £1 per transaction from your employee towards your administrative costs. With each deduction made a written statement of the cumulative amount deducted, including any £1 deducted from your employee in respect of your administrative costs, should be supplied to your employee. This can normally be done when a pay statement is issued, but if this is not convenient may be done as soon as possible after the deduction is made.

If the employee has moved on or has never been in your employment, you should inform the issuing authority within 14 days and your liability to do anything under the order will cease.

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How long does this order last?

Deductions should be made each pay day until:

• the total amount specified on the order has been paid over to the authority
• the person has left your employment
• the order is discharged by the authority

When the employee leaves your employment and you have notified the local authority nothing further is required of you. The local authority will have to serve a copy of the order on the new employer, which will state the amount remaining to be deducted.

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How much should be deducted?

The amount to be deducted is dependent on the total net earnings received by the employee. Annex C includes tables, which specify the percentage to be deducted according to the amount of net earnings and the frequency of the pay period.

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What are net earnings?

For the purpose of these orders net earnings means earnings after the deduction of income tax, primary class 1 national insurance contributions, superannuation contributions and any deduction with a higher priority.

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What are earnings?

Earnings are defined as sums payable by way of:

• wages or salary (including any fees, bonus, commission, overtime pay or other emoluments payable in addition to wages or salary payable under a contract of service)
• statutory sick pay

Earnings do not include:

• sums payable by public departments of the Government of Northern Ireland or of a territory outside the United Kingdom;
• pay and allowances of members of the armed forces;
• benefit or allowances payable under any enactment relating to Social Security (this includes maternity pay);
• allowances payable in respect of disablement or disability; and
• wages payable to a person as a seaman, other than as a seaman of a fishing boat.

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Are youth training allowances earnings?

No

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How do I use the tables in Annex C ?

Column 1 of each table details pay bands which correspond to net earnings. Column 2 details the percentage of earnings to be deducted. Locate the earnings band in column 1 and then read across to column 2 to find the percentage and then calculate the amount to be deducted.

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How do I know which table to use?

Since the majority of people are paid at regular intervals this should normally be straightforward but there will be cases of irregular payment. The examples listed below may help you to decide which deductions should be made.

Weekly - if the person is paid weekly then deductions should be made in line with Table A.

Monthly - if the person is paid monthly then deductions should be made in line with Table B.

Other weekly intervals - if the person is paid at intervals of a whole number of weeks then the net earnings should be divided by the number of weeks in the pay period. Table A should then be used to work out the appropriate weekly deduction and the resulting amount multiplied by the number of weeks in the period.

More than one month - if a person is paid at intervals of a whole number of months the net earnings should be divided by the number of months in the pay period. Table B should then be used to work out the appropriate monthly deduction and the resulting amount multiplied by the number of months in the period.

Regular intervals (not whole weeks or months) - if a person is paid at regular intervals, but not at intervals of a whole number of weeks or months then net earnings should be divided by the number of days. Table C should then be used to work out the appropriate daily rate, which should then be multiplied by the number of days in the period.

Two or more series of payments at regular intervals - if the person is paid in two or more series and payments are made in regular intervals, then select the series with the shortest interval between payments and use the tables as described above. In addition, deduct 20% of the net earnings payable in every other series. If the person is paid in two or more series and all the intervals are the same length, then select one of these, make deductions as described above, and in addition deduct 20% of the net earnings payable in every other series.

Example - An employee’s net pay is £150 weekly and £600 monthly.

A deduction of £7 is made for the weekly pay and £120 for the monthly pay, (ie 20% of £600)

Irregular intervals - if the person is paid at irregular intervals the net earnings should be divided by the number of days since the last payment and Table C should be used to work out the appropriate daily deductions, which in turn should be multiplied by the number of days in the period.

Example - an employee’s net pay

(a) £90 (from 1 April to 9 April - 9 days)
(b) £120 (from 10 April to 19 April - 10 days)
(c) £165 (from 20 April to 30 April - 11 days)

The deductions to be made would be:

(a)	90/9 = £10		Daily deduction = £10 x 3% ie 30p		Deduction to be made for period = 9 x 0.30 = 2.70
(b)	120/10 = £12		Daily deduction = £12 x 3% ie 36p		Deduction to be made for period = 10 x 0.36 = £3.60
(c)	176/11 = £16		Daily deduction = £16 x 5% ie 80p		Deduction to be made for period = 11 x 0.80 = £8.80

Regular and irregular and intervals

If on the same pay day the person is to be paid regular period earnings and irregular period earnings these amounts should be added together and treated as earnings payable at the regular interval, the appropriate table being used.

Example - an employee receives £250 as normal net weekly pay. In addition £350 is received every 15 days for a different task.

The deductions to be made would be for weekly earnings (Table A) of £250 = £350 = £600.

The deduction rate for £600 is 17% of the first £370 plus 50% of the remainder ie £62.90 = £115 = £177.90.

What do I deduct if there is an advance for holiday pay?

The amount to deduct is the aggregate of:

(a) the amount that would have been deducted on the pay day if there had been no advance of pay and
(b) the amounts that would have been deducted if the amount advanced had been paid on the normal pay day or days.

Example - an employee receives £1000 on the pay day. This comprises £300 for the week in which the pay day falls and includes overtime of £100, and £500 for 2 weeks holiday advance ie two weeks of standard pay at £250 per week.

The amount to be deducted is 17% of £300 = £51 + 12% of £250 x 2 = £60 = £111

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How should I deal with loans made for other purposes?

Loans made, for example, for the purchase of a season ticket or for helping with moving house, are not advances of pay and should not be counted as earnings.

The way that repayments of such loans are treated in calculating a deduction depends on the date that the CTAEO was made:

• for calculating a deduction under a CTAEO made before 1 April 1995, net earnings should be reduced by the amount of the repayment made to the employer; and,
• for CTAEOs made on or after 1 April 1995, the AEO deduction should be based on net earnings before any loan repayment.

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What do I do if there is an attachment of earnings order already in force?

See Annex B for full details of how to deal with multiple orders. The following examples will, however, cover most situations:

• if there is already a CTAEO in place the new CTAEO is still applied, in date sequence, with the later order being applied to the residue of earnings. However, if there are already two or more CTAEOs in payment, then no further CTAEO can be actioned and the local authority should be notified accordingly.
• if there is already a community charge AEO (CCAEO) in place then the new CTAEO is still applied, in date sequence, with the later order being applied to the residue of earnings. However, please note that, unlike part (a) above, a single CTAEO should still be actioned irrespective of the number of CCAEOs, or other non-council tax orders, already in force.
• any 1971 Act non-priority orders are to be applied (in date order) after all other orders.

Statutory duties placed on employers

A CTAEO is a legal document and places certain duties on employers and debtors. A summary of these legal duties is below. An employer could be liable for a fine if he:

• fails to comply with the order unless he can prove all reasonable steps were taken to comply
• fails to give all required notifications relating to the Council Tax Attachment of Earnings order
• in giving notification makes a statement which he knows to be false in a material particular or recklessly make a statement which is false in a material particular

Statutory duties placed on debtors

Debtors could be liable for a fine for:

• failure, without reasonable excuse, to supply information
• making a statement which they know to be false in a material particular

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