How deductions are made
The DWP or local authority has three options when applying for a DEA:1Reg 20 SS(OR) Regs •apply at a standard rate allowing a maximum of 20 per cent of net wages to be taken; or
•apply at a higher rate allowing a maximum of 40 per cent of net wages to be taken. (This is potentially used for fraudulent overpayments); or
•apply at a fixed rate.
The DEA must leave the client with no less than 60 per cent of their net income.2Reg 17 SS(OR) Regs When the DEA is either on a standard or higher rate, a sliding scale is used. How much is deducted is based on a percentage and what the client’s earnings are daily, weekly or monthly. Deductions from earnings rate (standard) 3Sch 2 SS(OR) Regs
Daily earnings | Weekly earnings | Monthly earnings | Deduction rate to apply (%) |
|---|
Up to £15 | Up to £100 | Up to £430 | Nil |
£15.01–£23 | £100.01 to £160 | £430.01–£690 | 3% |
£23.01–£32 | £160.01–£220 | £690.01–£950 | 5% |
£32.01–£39 | £220.01–£270 | £950.01–£1,160 | 7% |
£39.01–£54 | £270.01–£375 | £1,160.01–£1,615 | 11% |
£54.01–£75 | £375.01–£520 | £1,615.01–£2,240 | 15% |
£75.01 or more | £520.01 or more | £2,240.01 or more | 20% |
Deductions from earnings rate (higher)4Sch 2 SS(OR) Regs
Daily earnings | Weekly earnings | Monthly earnings | Deduction rate to apply (%) |
|---|
Up to £15 | Up to £100 | Up to £430 | 5% |
£15.01–£23 | £100.01 to £160 | £430.01–£690 | 6% |
£23.01–£32 | £160.01–£220 | £690.01–£950 | 10% |
£32.01–£39 | £220.01–£270 | £950.01–£1,160 | 14% |
£39.01–£54 | £270.01–£375 | £1,160.01–£1,615 | 22% |
£54.01–£75 | £375.01–£520 | £1,615.01–£2,240 | 30% |
£75.01 or more | £520.01 or more | £2,240.01 or more | 40% |
These amounts are updated every April.5 The following payments are classed as earnings for a DEA:6Part 6 SS(OR) Regs •wages;
•salary;
•fees;
•bonuses;
•commission;
•overtime pay;
•occupational pensions, if paid with wages or salary;
•compensation payments;
•statutory sick pay;
•payment in lieu of notice;
•most other payments on top of wages.
The following payments are not classed as earnings for a DEA:
•statutory maternity pay;
•statutory adoption pay;
•ordinary statutory paternity pay;
•statutory shared parental pay;
•any pension, benefit, allowance or credit paid by DWP, HMRC or local authority;
•a guaranteed minimum pension under the Pensions Schemes Act 1993;
•amounts paid by a public department of the government of Northern Ireland or anywhere outside the UK;
•sums paid to reimburse expenses wholly and necessarily incurred in the course of the employment;
•pay or allowances as a member of the armed forces, other than pay or allowances payable to them by you as a special member of a reserve force;
•statutory redundancy payments.