Magistrates Court Attachment of Earnings Order (AEO)

This guide explains what to do in Payroll Manager if a Magistrates Court issues a formal notice to an employer instructing them to implement an Attachment of Earnings Order (AEO) in respect of an employee, typically for the payment of FINES.

Moneysoft Payroll Manager has all of the relevant rules and tables for the various types of AEO built in, and so once the relevant details have been entered into the software the amounts to be deducted from an employee in each pay period will be calculated automatically.

You should read the guidance provided by the Court before proceeding.

How a Magistrates Court AEO operates

Since 5 April 2004, new fines AEOs issued under the Courts Act 2003 (“the 2003 Act”) by magistrates’ courts in England and Wales have been deductible by fixed tables (see ‘Links’ section, below).

The attachment order is issued to the employer, requiring them make deductions from the employee’s pay, and to pay these amounts over to the Court until the amount owing has been paid in full.

The AEO will specify:

1. The name of the debtor, and their payroll number (if known).
2. A reference, specific to that particular order.
3. The total amount of charge to be paid.

The employer should then start making deductions from the employee’s pay as soon as possible, according to a set of tables as prescribed in the regulations. It is likely that the Court will include a copy of these tables when issuing the AEO to the employer. Payroll Manager has these tables built-in, and so can perform the necessary calculations automatically.

How to enter the details of the Magistrates Court AEO in Payroll Manager

1) Select the appropriate employee on the ‘Pay Details‘ screen.

2) Click on the ‘Attachments‘ tab, then click on the (blue spanner) ‘Settings‘ button in the next available column.

 

3) Choose the Magistrates Court AEO (fixed table) type from the drop-down list:

 

4) Complete the other fields on this screen as per the instructions below:

– Description: – Enter a description for this particular attachment – this can be whatever you like (e.g. Magist-AEO) and is only used as a column ‘label’ on the ‘Pay Details’ screen for that particular attachment, and also appears on the employee payslip.

– Reference: The issuing Court will include a reference specific to that particular order, which you should enter here.

– Date made: Enter the date that appears on the formal notice letter received from the Court.

– Date to apply from: Enter the next pay date for that particular employee. You should make sure that the date that you enter is for a pay period for which the employee has not yet been paid.

– Date to stop: Leave this field blank. Payroll Manager will automatically stop making deductions once the ‘Total Amount to be paid’ (see below) as been reached. If the Court contacts the employer to request that deductions are should be stopped for any reason, then the relevant date can be entered here.

– Amount per pay period: This field will be greyed out in all cases as it is not applicable to Magistrates Court AEO cellulations which are made by way of ‘fixed tables’ ,built into Payroll Manager.

– Protected earnings: This box will be greyed-out in all cases, as it does not apply to Magistrates Court AEO attachments.

– Total amount to be paid: Enter the ‘Outstanding Amount‘ of the debt be recovered, as specified on the AEO documentation issued by the Court.. Payroll Manager will automatically stop calculating deductions once this limit has been reached.

– £1 admin charge: AEO rules state that the employer is allowed to deduct £1 for each pay period in which a AEO deduction is made if they wish, to cover their own admin costs. This is optional – tick/untick the box accordingly.

– Brought forward at start of year – Total amount paid so far: this field is for situations where you are using Payroll Manager for the first time for a particular employer, and an employee has a Magistrates Court AEO which has been in operation before the start of the tax year, or if you are starting to use Payroll Manager mid way through the tax year, having used other software previously. The box allows you to enter the amount that has already been paid by the employee, effectively reducing the ongoing balance.

Click ‘OK‘ when you have finished entering information on this screen.

How Magistrates Court AEO deductions are calculated

Payroll Manager automatically calculates the amount to be deducted from the employee each pay period, according to the rules and deduction tables specified by the regulations.. These rules and tables are built into the software. The calculated deduction amounts are then shown in the ‘Attachments‘ column of the ‘Pay Details‘ screen and are also itemised on the employee payslip.

If you wish to see a full breakdown of how Payroll Manager has calculated the Magistrates Court AEO deduction then click the button marked ‘Click here to show calculation‘ towards the bottom-left of the Pay Details screen, and select ‘Attachments‘.

 

Note that the actual deduction is based on the  ‘Attachable Earnings‘, which is not the same as the gross pay, but instead is the employee’s pay after the deduction of tax, national insurance, student/postgraduate loans, pension contributions and statutory parenting payments such as SMP.

The applicable deduction table in use is shown at the bottom of this report.

Ending or editing a Magistrates Court AEO – changes of circumstances

Payroll Manager will continue to calculate Magistrates AEO deductions until the ‘Total amount to be paid’ has been reached, or if an employee leaves employment. If the employer is contacted by the Court asking them to end the AEO then this can be done as per the instructions below:

1) Click on the (blue spanner) ‘Settings‘ button in the column relating to the Magistrates Court AEO (i.e. the one that is ‘ending’).

2) Enter a ‘Date to stop‘ and click ‘OK‘. The ‘Date to stop’ should be the pay date of the last period for which you wish the AEO to operate. Make sure that the date you enter is NOT in a pay period that has already been paid.

Reports in Payroll Manager

Payroll Manager has a number of reports available to help with the administration of Magistrates Court AEO.

Click ‘Analysis‘ then ‘Attachments‘ from the main menu in Payroll Manager to view a report which gives the details of all attachments in operation for each employee.

Click ‘Pay‘ then ‘Payments‘ and select ‘Attachments report’ to see a list of attachment payments due in any one particular pay period.

Making payments to the Court

Payment is always to the Court which raised the AEO. The documentation provided by the Court to the employer when issuing the AEO will give details of how and when to make payments.

FAQ

If an employee has a number of different attachments in operation at the same time, which one takes priority? – Different attachment orders take priority over each other according to their type (e.g. Child Maintenance, Council Tax, DEA etc) and the date that they were issued. Payroll Manager has all of the rules regarding priority built-in, and will automatically apply attachments in the correct priority order.

Links

Tables and calculation method – The Fines Collection Regulations 2006