How long does this Order last?
Deductions should be made each pay day until:
- the total amount detailed on the order has been paid over to the council
- the person has left your employment
- the order is cancelled by the council
When the employee leaves your employment and you have told the Revenues and Benefits Service, you don’t need to do anything else. Walsall Council will serve a copy of the order on the new employer, which will state the amount remaining to be deducted.
What duties does this Attachment of Earnings Order place on an Employer?
An Attachment of Earnings Order (AOE) is a legal document. It places certain duties & obligations on employers.
If the person who is the subject of the order is in your employment, you should make deductions from his or her net 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 Council immediately
As well as the amount to be deducted and paid to the council, 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 the £1 deducted from your employee in respect of your administrative costs should be given to your employee. This can normally be done when a pay statement is issued, but if this is not convenient then it can 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 contact the Council Tax department within 14 days and your legal obligation to do anything under the order will cease.
What are Net Earnings?
For the purpose of these orders, Net Earnings means earnings after the deduction of Income Tax; National Insurance Contributions; Superannuation Contributions; Pension, allowances or benefit payable under any enactment relating to Social Security; and any deduction with a higher priority.
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
- Benefit or Allowances payable under any enactment relating to Social Security (this includes Maternity, Paternity and Adoption pay)
- Tax Credits
- Redundancy Payments (unless it is advance pay in lieu of notice. Advance pay is classed as earnings and is subject to deductions)
- Allowances payable in respect of Disablement or Disability
- Wages payable to a person as a Seaman, other than as a seaman of a fishing boat
How much should be deducted?
The amount to be deducted is dependent on the Total Net Earnings payable to the employee. A Guidance booklet is sent with the Attachment to Earnings paperwork explaining how the deductions are calculated. Please see page 7 for the Table of Deductions.
How do I use the Council Tax Attachment of Earnings deduction tables?
The first column details Pay Bands which correspond to Net Earnings.
The second column details the Percentage of Earnings to be deducted.
Locate the earnings band in the first column and then read across to the second column to find the percentage and then calculate the amount to be deducted
How do I know which Attachment of Earnings deduction 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 table should be used.
- Weekly - if the person is paid weekly then deductions should be made in line with the table entitled Deductions from weekly earnings
- Monthly - if the person is paid monthly then deductions should be made in line with the table entitled Deductions from monthly earnings
- 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. The Deductions from weekly earnings table 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. The Deductions from monthly earnings table 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. The table entitled Deductions from daily earnings should then be used to work out the appropriate daily rate, which should then be multiplied by the number of days in the period.
If my employee has two Liability Orders that require deductions; do I take both deductions at the same percentage?
The amount for the first Liability Order should be deducted from your employee’s wages. Then check if that deduction has reduced their salary/wages to the point where they now fall into a lower percentage bracket. If so, you must make the second deduction on the lower percentage rate
The liable person’s net weekly earnings are £250.00. Two attachment orders are to be set up:
AOE 1 = The weekly wage of £250 means the employee’s net earnings exceed £225 but to do not exceed £355. According to the Table of Deductions the first deduction will therefore be 12% of the £250 wage = £30.00
This reduces the wages to £220, which now fits into the ‘Exceeds £185 but does not exceed £225’ bracket.
AOE 2 = Deduction of £15.40 (7% of the remaining £220)
The council therefore will receive a total of £30 + £15.40 = £45.40. The employee would have extra £2 employer fee deducted, retained by your company. Total deduction £47.40
What do I deduct if there is an advance for Holiday Pay?
The amount to deduct is the sum of:
i) The amount that would have been deducted on the pay day if there had been no advance of pay and
ii) the amounts that would have been deducted if the amount advanced had been paid on the normal pay day or days
An employee receives £800 on the pay day. This comprises £300 for the week in which the pay day falls and includes overtime of £100; and £500 for two weeks holiday advance, i.e. two weeks of standard pay at £250 per week.
The weekly wage of £300 means the employee’s net earnings exceed £225 but to do not exceed £355. Therefore the amount to be deducted is:
(12% of £300 = £36.00) + (12% of £250 x 2 = £60) = £96.00
How should I deal with Loans made for other purposes?
Loans made, for example, for the purchase of a car or for helping with moving house, are not advances of pay and should not be counted as earnings.
Where an amount is deducted for the repayment of such advances, net earnings will be as calculated in the normal way less the amount of this deduction.
What do I do if there is an Attachment of Earnings Order (AOE) already in force?
If there is already an AOE in place, the new AOE is still applied in date order, with the latest order being applied to the remainder of earnings. However, if there are already two or more AOEs in payment, then no further AOE can be applied and the council should be notified. Any other non-priority orders against the employee are to be applied (in date order) after all other orders.
See Regulation 42 of Council Tax (Administration & Enforcement) Regulations SI 1992/613 as amended
Are Youth Training Allowances regarded as earnings?
What are the Statutory Duties placed on Employers?
The AOE is a legal document and places certain duties on employers and debtors.
An employer could be liable for a fine for:
- Failure to comply with the order unless he/she can prove all reasonable steps were taken to comply
- Failure to give all required notifications relating to the Council Tax Attachment of Earnings Order
- Making a statement which he/she knows to be false in a material particular or recklessly make a statement which is false in a material particular
What are the 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
How do I ensure the amounts deducted from my employee’s wage/salary are paid to the Council?
Deductions can be paid to the Council by one of the following methods below. In all cases, please ensure that you quote the customer’s 8 digit Council Tax reference number which begins with a 7
Through the Bank
You can pay by BACS (Bank Automated Clearing System). The Council’s bank details are:
Sort code: 20-90-73
Account number: 00075795
Please ensure that you quote the customer’s Council Tax account number (8 digit number beginning with a 7) when submitting these payments.
Cheques and postal orders should be made payable to Walsall Council and sent to:
Walsall Council, PO Box 23, Walsall, West Midlands. WS1 1TW
Please note the customer’s Council Tax account number on the reverse of the cheque. If you are making payments for more than one employee please specify how much is to be paid against each employee’s Council Tax Account. You should enclose a stamped addressed envelope if you need a receipt.