New – Council Tax Attachment of Earnings Orders (CTAEO)
From 8th July 2019, the HMRC are leading a trial with 29 different Council areas in England and Wales to recover debts directly from employees’ wages. Individuals who live in one of these 29 Council areas (see the list below), who are in significant Council Tax arrears, may find these arrears being taken directly from their wages, as Councils will have the power to deduct such sums directly from their earnings via their employer’s payroll.
In 2017 the Digital Economy Act (2017) was introduced which allows debt information sharing powers between specified public authorities for the purpose of managing and reducing debt. This is the first use of the debt information sharing powers and allows local authorities to obtain an individual’s employer and income information from the HMRC. (Currently, councils can only use data supplied by the resident to recover their debts).
In this pilot, 29 councils are able to obtain HMRC employer and self-assessment data for a sample of residents who have not paid their council tax.
The council will supply HMRC with a title, forename, initial or middle name, surname, debt address or contact address for debtors to obtain their employment information. HMRC will compare those details against their internal records. Where there is an exact match HMRC will provide the requested details back to the council.
The council will the contact the individual to decide how best to recover the debt. The Council could then raise a Council Tax Attachment of Earnings Order (CTAEO) in order to enforce the payment of Council Tax against employed debtors. The Employer must then comply with this order.
The pilot is intended to reduce the use of bailiffs in reclaiming unpaid bills but has been criticised by debt advice charities. The pilot will run for one year, after which time it will be evaluated. If the pilot is successful, it may be rolled out to all England and Welsh councils on a permanent basis.
The 29 Councils involved in the pilot are:
- Brighton & Hove
- Coventry City
- Kensington & Chelsea
- North Hertfordshire
- Tower Hamlets