Calculation examples
You can use the following examples as a basis for calculating how much to deduct from your employee's earnings. Refer to the deduction tables to work out the percentages.
Example 1
Employee is paid fortnightly.
Calculate attachable earnings, for example £600 per fortnight.
Divide by 2 to convert to weekly figure = £300.
Identify the deduction rate from table 2: Exceeding £225 but not exceeding £355 = 12%.
Calculate the amount to be deducted on a weekly basis: £300 x 12% = £36.
Multiply by 2 to convert to a fortnightly deduction = £72.
This leaves £528 remaining of the fortnightly earnings.
Send £72 to the council.
Deduct £1 if you wish.
Pay your employee £527.
Example 2
Employee not paid in whole weeks or months.
If an employee is paid at regular intervals, but not at intervals of whole number of weeks or months, then net earnings should be divided by the number of days. The daily deductions table should then be used to work out the appropriate daily rate, which should then be multiplied by the number of days in the period.
Employee paid on 10th, 20th and last days of each month.
The pay period is 21 to 28 February.
Calculate your employee’s attachable earnings, for the pay period, for example: £560.
Find the daily attachable earnings: £560 divide by 8 days = £70.
Identify from table 3 the correct percentage deduction rate:
Exceeding £52 but not exceeding £72 = 17%
Calculate the amount to be deducted: £70 x 17% = £11.90.
Multiply the deduction by 8 = £95.20.
Example 3
More than one series of regular payments is made.
For example, you pay earnings to a salesperson on a weekly basis and pay them commission monthly.
In this case you should apply the appropriate table to work out the deduction for the series with the shortest interval between payments. If this is the case, you should apply the appropriate table to work out the deduction for the series with the shortest interval between payments.
This means that, if they are paid on a weekly basis but also receive a regular monthly sum, you should apply table 1 to their weekly earnings. In addition, you should deduct 20% of the attachable earnings payable on a monthly basis.
Calculate your employee’s weekly attachable earnings: for example, £200
Identify from table 2 the correct percentage deduction rate:
Exceeding £185 but not exceeding £225 = 7%.
Calculate the amount to be deducted: £200 x 7% = £14.
Calculate your employee’s monthly attachable earnings: for example, £500.
Calculate the appropriate deduction: £500 x 20% = £100.
Add the £14 and £100 together for payment to the council, deduct £1 for each deduction and pay the remaining amount to your employee.
Example 4
Employee is not paid at regular intervals.
Divide their attachable earnings by the number of calendar days since the last payment.
Use table 3 to work out the appropriate daily deductions, and multiply this figure by the number of
days in the period.
Calculate your employee’s attachable earnings for each pay period: for example.
£270 for 9 days (1 April to 9 April).
£1,100 for 11 days (10 April to 20 April).
£500 for 10 days (21 April to 30 April).
Calculate the daily rate of attachable earnings for each pay period:
£270 divided by 9 = £30.
£1,100 divided by 11 = £100 and
£500 divided by 10 = £50.
Identify the correct percentage deduction rate from table 3 (: 7%; 17% on the first £72 and 50% thereafter: and 12% respectively.
Calculate the daily deduction rate: £30 x 0.07 = £2.10; £72 x 0.17 + £28 x 0.50 = £26.24; and £50 x 0.12 = £6.00 respectively.
Multiply by the number of days in the pay period to find the total deduction:
9 x £2.10 = £18.90
11 x £26.24 = £288.64 and 10 x £6.00 = £60.00 respectively.
Example 5
Employee receives both regular and irregular payments.
You should apply the appropriate table to regular payments made to your employee. If you also make an irregular payment to your employee but not on the same pay day as the regular payments, you should deduct 20% of the irregular payment.
You pay your employee their regular monthly salary on 30 November and Christmas bonus payment on 10 December. Calculate your employee’s attachable earnings for example £1,000 for the November salary and £200 for the Christmas bonus.
Identify the correct percentage deduction rate from table 1 for the monthly salary payment: Exceeding £900 but not exceeding £1,420 = 12%.
Calculate the deduction on the monthly salary: £1,000 x 0.12 = £120.
Calculate the deduction on the Christmas bonus: £200 x 0.20 = £40.
Example 6
Regular and irregular payments fall on the same day.
If both a regular payment and an irregular payment fall due on the same pay-day, you should combine the two payments for the purpose of calculating a deduction and treat the combined payment as if it were a single payment made on the regular pay-day, applying the appropriate table to the whole sum.
Use the facts, in example 5, except now the Christmas bonus is paid on 20 December at the same time as the regular monthly salaries for December.
Calculate your employee’s attachable: £1,200 for the December salary and Christmas bonus together.
Identify the correct percentage deduction rate from table 1 for the monthly salary payment: Exceeding £900 but not exceeding £1,420 = 12%.
Calculate the deduction on the monthly salary: £1,200 x 0.12 = £144.
Example 7:
Advances for holiday pay.
The amount to deduct is the aggregate of:
- the amount that would have been deducted on the pay day if there had been no advance of pay; and
- the amounts that would have been deducted if the amounts advanced had been paid on the normal pay day or days.
In addition to their weekly salary, you are paying your employee two week’s holiday pay in advance.
Calculate your employee’s attachable earnings excluding the advance, for example one week at £200.
Apply from table 2 the appropriate percentage deduction rate: Exceeding £185 but not exceeding £225 = 7%.
Calculate the deduction: £200 x 0.07 = £14.
Calculate your employee’s attachable earnings relating to the advance: for example, £400 for two weeks.
Divide this total equally between the future pay periods for which the advance is given: £400 divided by 2 = £200.
Apply from table 2, the appropriate percentage deduction rate: Exceeding £185 but not exceeding £225 = 7%.
Calculate the deduction: £200 x 0.07 = £14.
Multiply the weekly deduction by the number of weeks in the advance pay period: £14 x 2 = £28.
Pay the council the total deduction: £14 + £28 = £42.
Note that since you are making a deduction from a single payment, only £1 may be deducted for administration costs.
Example 8
Company loans.
Loans made, for example, for a season ticket are not advances of pay and should not be counted as earnings.
Net earnings should be reduced by the amount of the loan repayment.