The Welsh Council Tax Attachment of Earnings Order

When Local Authorities need to issue an Order for the collection of unpaid Council Tax, the type of Order depends on the UK nation where the underpayment arose.

There are three different Orders that could apply:

1. In England and Wales, the local authority will raise a Council Tax Attachment of Earnings Order
2. In Scotland, the local authority will issue an Earnings Arrestment
3. In Northern Ireland, Council Tax does not apply but an underpayment of rates will result in a civil debt Attachment of Earnings Order that is payable to the Enforcement of Judgments Office

Importantly, three different Orders with different thresholds that employers have to facilitate and software developers have to accommodate.? However, this is only reflective of the three judicial systems that apply in the United Kingdom.

Things are different in Scotland and Northern Ireland; however, the Council Tax Attachment of Earnings Order CTAEO) is the same in England and Wales.? The CTAEO applies deductions from net earnings based on the amount earned in the pay period, as per Schedule 4 in the Council Tax (Administration and Enforcement) Regulations 1992, updated:

• In England (via the Council Tax and Non-Domestic Rating (Amendment) (England) Regulations 2006) effective 31 January 2007, and
• In Wales (via the Council Tax (Administration and Enforcement) (Amendment) (Wales) Regulations 2007) effective 01 April 2007??

Devolution has always meant Wales had always had the power to diverge from thresholds set to apply to Orders issued by English Local Authorities.? This can be seen from the effective date of the amending legislation.

Yet, there is often only one Council Tax Attachment of Earnings Order (CTAEO) in payroll software.

Importantly, whilst the legislation is different, the rates and thresholds are mirrored:

An interesting consultation was published by the Welsh Government on 08 October 2021, one that employers and software developer professionals will want to consider.? This proposes to increase the CTAEO thresholds and will apply to Orders issued by Welsh Local Authorities.

In 2007, the English and Welsh Regulations uprated the thresholds in line with the Average Earnings Index (AEI) which was 36.5% (reflecting the AEI increase between April 1998 and April 2006).? The AEI indicator was replaced with the Average Weekly Earnings (AWE) measure.? For the period between April 2006 and March 2021, average earnings rose 41.8% using this measure and the consultation looks to increase the CTAEO thresholds accordingly, rounded to the nearest ￡1 (for daily), ￡5 (for weekly) and ￡10 for monthly.

From April 2022, CTAEOs issued by Welsh Local Authorities are proposed as follows:

There are 6 questions:

Question 1

‘Do you agree with the policy intention to uprate the earnings thresholds used to determine the amounts which may be deducted through a liability order??Please give reasons for your response.’

Well, it seems to make sense to me and is in line with the Welsh Government’s objective of ensuring that fairness in the system is maintained, even if there is no statutory obligation to review these thresholds.

Question 2

‘Do you agree the proposed method of uprating is an appropriate approach for determining the new earning limit rates?? Please give reasons for your response.’

If average earnings growth to March 2021 is the latest value that they have, again, it seems fair to me.

Question 3

‘How often do you think the earnings thresholds should be updated?? Please give reasons for your response.’

This is in line with the Welsh Government’s ‘interest’ in views on whether there should be a regular updating of these thresholds.? Given that the last update was in 2007 (and Scotland review their thresholds every 3 years), it does seem that more regular updates are required.

Question 4

‘We would like your views on the effects that the proposed policy would have on the Welsh language, specifically on opportunities for people to use Welsh and on treating the Welsh language no less favourably than English.? What effects do you think there would be?? How could positive effects be increased, or negative effects be mitigated?’

I cannot comment here.

Question 5

‘Please also explain how you believe the proposed policy could be formulated or changed so as to have positive effects or increased positive effects on opportunities for people to use the Welsh language and on treating the Welsh language no less favourably than the English language, and no adverse effects on opportunities for people to use the Welsh language and on treating the Welsh language no less favourably than the English language.’

Again, no comment from me.

Question 6

‘If you would like to raise any points about this matter, please take this opportunity to record them here.’

Surely, a matter to raise is how the Welsh Government intends to publish this information to the employer and software developer community.

The Consultation says that the proposed changes will be from 01 April 2022 and legislation will state that.? I cannot see that England has proposed similar threshold reviews and, even if they do, will they review the thresholds in the same way as Wales are doing?

So, if there is only one CTAEO in payroll software, maybe we are looking at:

1. CTAEO (Wales) using the new thresholds from April 2022, and
2. CTAEO (England) using the existing thresholds

Payroll and reward plus software developer professionals should take note of these possible changes and consider the three ways to respond to this consultation:

Online

Read the consultation document and respond online.

Word Document and E-Mail

Download a Word document and E-Mail to [email protected].

Word Document and Post

Download the Word document and post to:

Council Tax Policy Branch

Welsh Government

Cathays Park

Cardiff

CF10 3NQ