Introduction to AEOs

An attachment of earnings order (AEO) is an official form issued to an employer, usually by a court, instructing them to deduct an outstanding debt from an employee directly from their wages. Attachments can be issued for a number of reasons, including unpaid fines and child support.

Enforcing an employee’s obligation

The purpose of the AEO is to 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

Attachable earnings is the portion of the employee’s income in a pay run that can be subject to AEOs. These 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.

Income exempt from AEOs

The following types of employee income are exempt from AEOs:

  • Disability Pension.
  • Statutory Maternity, Paternity, Adoption pay.
  • Tax Credits.
  • Guaranteed minimum pension.

Protected earnings

The AEO may specify a protected earnings rate (PER).

The PER is the minimum amount the employee must be left with 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 may be reduced to ensure that the employee is left with the PER amount. If the employee’s net pay falls below the PER amount in a particular pay run, no AEO deduction is made in the pay run.

Types of AEO

AEO types are organised into two broad categories:

Value-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).
Table-Based AEOs

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.

The AEO amount to deduct is determined by attachment band parameters.

For HMRC’s own guidance on how AEOs work, see these HMRC examples.

You can find further information from HMCS Attachment Orders – a guide for employers.

Let us know what you think...