Attachment of Earnings Orders
An Attachment of Earnings Order (AEO) is a legally binding instruction from a court to an employer. It directs the employer to begin deducting an amount from an employee’s pay in each pay run. This article summarises the basics of AEOs.
|For more comprehensive information, see this article.
Or for HMRC’s own guidance on how AEOs work, see these HMRC examples.
The purpose of the AEO is the enforce the employee’s obligation to pay one of the following:
- spouse or child support
- outstanding Council Tax
- a debt or fine
The court order specifies the type of AEO to be applied. The court sends the employer a form containing the following information:
- the AEO type
- the total amount payable by the employee during the lifetime of the order
- the employee’s ‘Protected Earnings Rate’ (PER)
- the employee’s ‘Normal Deduction Rate’ (NDR)
- the order in which AEO amounts should be deducted, if more than one AEO applies to the employee’s income
‘Attachable earnings’ is the portion of the employee’s income in a pay run that can be subject to AEOs.
Attachable earnings include:
- Wages and Salary
- Pension payments (although these are not subject to Council Tax AEOs)
- Statutory Sick Pay
Residual pay can be subject to AEOs after the following types of deduction:
- Income Tax (PAYE)
- Pension, allowances or any benefits relating to social security
- National Insurance contributions
- Superannuation or pension contributions
The following types of employee income are not subject to AEOs:
- Disability Pension
- Statutory Maternity / Paternity / Adoption pay
- Tax Credits
- Guaranteed minimum pension
The AEO may specify a protected Earnings Rate (PER).
This is the minimum amount the employee must be left with in each pay run after the AEO amount has been deducted.
It is designed to enable the employee to meet essential living expenses, such as food, rent, and other bills.
The AEO amount actually deducted may be reduced to ensure that the employee is left with the protected earnings amount.
If the employee’s net pay falls below this amount in a particular pay run, no attachment amount is deducted in the pay run.
There are various types of AEOs. These are organised into two broad categories:
- Value-Based AEOs
- Table-Based AEOs
There are two kinds of value-based order:
- “Priority” Orders (shortfalls carried forward to the next pay period)
- 1971 Priority AEO (Maintenance) (Based on a weekly rate.)
- 1971 Priority AEO (Court Fines) (Based on a weekly rate.)
- Child Support DEO (Based on a weekly rate.)
- “Non-Priority” Orders (shortfalls not carried forward to the next pay period)
- 1971 Non-Priority AEO (Civil Debts) (Based on a weekly rate.)
- Current Maintenance Arrestment (Based on a daily rate.)
These are AEOs that apply a fixed deduction amount specified in the relevant deductions table.
- Council Tax AEO
- Court Fines (Post April 2004)
- Earnings Arrestment
|Earnings Arrestment is the Scottish equivalent of the Attachment of Earnings mechanism, which operates in England and Wales. This type of order is used to enforce the employee’s obligation to pay a civil debt, fine, community charge arrears or council tax arrears.
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