An Attachment of Earnings Order (AEO) is where a creditor applies to the court for an order to allow them to take funds direct from someone’s wages if the person has failed to keep up repayments on a debt. The type of debts where a creditor applies for an AEO can include:
- Rent, mortgage or council tax arrears
- Income tax, VAT or TV licence arrears
- Credit debts, e.g. credit cards and bank loans
- Student loans
- Court fines
An AEO is a legal document that is sent to an employer which requires them to take money from someone’s wages to pay an outstanding debt or bill. An employer can also take an extra £1 for per deduction for their administration costs.
How much to deduct
The amount deducted is calculated based on a percentage of a person’s net pay as detailed in the tables below.
|Net weekly earnings||Weekly deductions||Deduction rate|
|Over £75 but not exceeding £135||£2.25 to £4.05||3%|
|Over £135 but not exceeding £185||£6.75 to £9.25||5%|
|Over £185 but not exceeding £225||£12.95 to £15.75||7%|
|Over £225 but not exceeding £355||£27.00 to £42.60||12%|
|Over £355 but not exceeding £505||£60.35 to £85.85||17%|
|Over £505||Minimum £85.85||17% in respect of the first £505 and 50% of the remainder|
|Net monthly earnings||Monthly deductions||Deduction rate|
|Over £300 but not exceeding £550||£9.00 to £16.50||3%|
|Over £550 but not exceeding £740||£27.50 to £37.00||5%|
|Over £740 but not exceeding £900||£51.80 to £63.00||7%|
|Over £900 but not exceeding £1,420||£108.00 to £170.40||12%|
|Over £1,420 but not exceeding £2,020||£241.40 to £343.40||17%|
|Over £2,020||Minimum £343.40||17% in respect of the first £2,020 and 50% in respect of the remainder|
Is overtime included? Yes. Deductions are worked out using net earnings. If someone works extra hours and their pay increases, the amount deducted will also increase.
Are deductions made on sick pay? Yes. Although, deductions are worked out using net earnings so if someone’s earnings reduce then the amount deducted will also reduce.
Are deductions made from redundancy payments? No.
Are deductions made from statutory maternity pay? No, but an employer can make deductions from contractual (non statutory) maternity pay.
How will people know how much is left to pay? The employer keeps a record of how much is left to clear the bill and should stop making deductions once the amount is paid in full. A person’s payslip should also state how much has been taken for the attachment of earnings order. Employer can take an extra £1 for each deduction for administration costs.
Can someone ask their employer not to make deductions? No. An attachment of earnings order is a legal document. An employer must make deductions or they could be prosecuted.
Can a person make an alternative arrangement to pay so that an employer does not have to make deductions? No. Once an order has been sent it will not be stopped unless the outstanding amount is paid in full. If the amount is paid in full the person needs to contact the creditor so that they can arrange for the order to be stopped.
What if someone changes jobs or stops work? If a person changes jobs, they must tell the creditor their new employment details. If someone stops working, they must contact the creditor to discuss their situation. They may be entitled to some benefit to help them pay their bill. They will also be able to discuss payment of the outstanding amount to stop any further recovery action.
What if someone does not agree that they owe the money? If they think the amount on the order is wrong, or that the order should not have been sent, they need to contact the creditor straight away.