A guide to direct earnings attachment
A direct earnings attachment gives the government the power to deduct a calculated amount of money from your earnings. It happens if you have tax credit and benefit overpayments. Anyone who has these benefits is liable to direct earnings attachment, which means a fixed amount will be deducted from salary. Deductions continue until all the payment is carried out. In addition, a direct earnings attachment is displayed on your payslip.
What is a DEA ? How does it work?
If someone enjoyed overpaid benefits or had tax credit overpayment, they are liable to direct earnings attachment. The Department of Work And Pensions (DWP), Her Majesty’s Revenue and Customs(HNEC), or other relevant authority will send details to the employer about the payment deduction.
A DEA works by three options that are available to DWP or any local authority. The options include DEA at the standard rate, higher rate, or a fixed rate. As per the standard rate not more than 20% be deducted from an income. In case of the higher rate, if a person is earning well then up to 40% of the deduction can occur from his income.
Can you avoid direct earnings attachment?
Fortunately, the answer is a yes! DWP Debt Management will notify the employer before starting a direct earnings attachment. You can avoid it by agreeing to pay in installments. Direct earnings attachment doesn’t need a court hearing like other attachments. In other words, you can contact the creditor and offer monthly installments. You need to be clear about the monthly installment that you can easily afford.
Amount of deduction from wages
The payment depends upon your earnings. Those who have high income will pay a large percentage of their income to direct earnings attachment. There are three possibilities for deduction of a direct earnings attachment. Firstly, a standard rate can be applied. At the standard rate, only 20 % of the income is deducted. Secondly, a higher rate is applied for high-income earners. In the case of a higher rate, about 40% of the income is deducted. Lastly, you can request fixed rates if you have difficulty paying. In this way, each month a fixed amount of payment will be given as part of the informal agreement, and DEA is lifted.
Protected earnings
Protected earnings give you the right that 60%of your income remains after deduction of DEA or other orders that are taking place. In cases, where the deducted payment is more than 40 % of the total income, it needs to be adjusted for that pay period. The direct earnings adjustment must be adjusted to an amount that leaves the employee with 60% of the remaining income. In instances, where other orders are already in process and the deduction of an employee’s pay gets more than 40% if you add DEA, then deduction should be put to hold for that period. However, the DWP department can check on every pay period if deductions apply. The earnings on which direct earnings attachment is applied includes:
- Wages, salaries, and payment of overtime
- Commissions
- Occupational pensions
- Bonuses
