Revised guidance for dealing with Direct Earnings Attachments
4 February 2014 by Crystal HR & Payroll Ltd
The Department for Work and Pensions (DWP) has issued revised guidance for dealing with Direct Earnings Attachments (DEAs).
The changes relate to how pension contributions should be considered when calculating net earnings, and how irregular earnings should be calculated.
Net earnings – in the original guidance all pension contributions were deducted from gross earnings, along with Income Tax and National Insurance contributions, in order to arrive at a net earnings figure. It has now been agreed that Stakeholder Pensions and Free Standing AVCs are excluded from this calculation. The DWP guidance leaflet therefore now states:
for the purposes of calculating a DEA deduction, net earnings means earnings after the deduction of:
· Income Tax
· Class 1 National Insurance and
· Superannuation contributions
As this definition is consistent with that set out for other orders (e.g. Council tax orders) the assumption is that developers (and employers) will apply pension/superannuation contributions as set out above.
Irregular earnings – the calculation of irregular earnings has now been amended to bring it into line with the treatment of other orders, such as Council Tax Attachment of Earnings Orders.
The DWP has revised its guidance leaflets and these are both available on the Gov.uk website.