Tax levy and wage garnishment: what the words mean, and what payroll has to do

Two different readers search for "tax levy". One wants to know what the word means when a government imposes a charge. The other has a letter on the desk telling them to take money out of a colleague's wages next payday.

This article answers both, because search results mix them and because getting the second one wrong is expensive. An order on someone's pay fails at the handover, not the arithmetic: a letter opened by the wrong person, a deadline nobody owned, a leaver whose order was never cancelled. See how New Dynamics workflows make each step's owner and due date explicit. New Dynamics does not run payroll. It holds the people data and approvals payroll depends on.

This is general information about the United States and the United Kingdom, not legal or tax advice, and a wrong answer here causes real harm. Take advice on your own case: Acas for a UK employment question, the authority named on the order, and the IRS or a licensed tax professional in the United States.

Two things "levy" means, and why the searches mix them

In ordinary British usage, to levy a tax means to impose and collect it. A levy in that sense is a charge named by statute, with a rate and a reference period.

In American tax administration the word sits at the other end of the process: it is the act of taking property. The IRS page What is a levy?, last updated 13 March 2026, puts it in one line: "A levy is a legal seizure of your property to satisfy a tax debt."

Wage garnishment is the related American term, meaning a legal process that diverts part of someone's pay to a creditor before the employee receives it. The IRS Levy page, also last updated 13 March 2026, says a levy "can garnish wages, take money in your bank or other financial account, seize and sell your vehicle(s), real estate and other personal property". It also instructs the employer: "If you receive an IRS notice of levy against your employee, vendor, customer or other third party, it is important that you comply with the levy."

A levy is not a lien. Publication 594, The IRS Collection Process, revision 1-2026: "While a federal tax lien is a legal claim against your property, a levy is a legal seizure that actually takes your property." A lien claims; a levy collects.

So "what is a levy tax" depends on whose paperwork you hold. Neither GOV.UK nor IRS.gov publishes a general definition of the word, so this article does not borrow one. It shows how each publisher uses it instead, with the date of the page.

Levy as a tax: how GOV.UK uses the word

In the United Kingdom, a levy is a tax or charge created by legislation and collected by a named authority. The Apprenticeship Levy is the clearest payroll example, and it is covered in full below. GOV.UK's guidance on paying the Apprenticeship Levy, published 12 December 2016 and last updated 6 April 2026, states that it "is an amount paid at a rate of 0.5% of an employer's annual pay bill", and refers to the rates and thresholds for employers for the tax year 2026 to 2027.

The Climate Change Levy is another, outside payroll: GOV.UK's Climate Change Levy rates, last updated 27 November 2025, gives the main electricity rate as £0.00801 per kilowatt hour from 1 April 2026. Neither touches anybody's wages.

Rates change each year, so every figure here is quoted from the publisher's page with its date. If your question is "what is the rate now", look it up for the year you are in rather than trusting an article, including this one.

The IRS levy on wages (United States)

This section is about federal tax collection in the United States. State garnishment, child support withholding and private creditor garnishment run under separate rules not covered here. General information, not legal or tax advice.

The notice sequence before a wage levy

A wage levy does not arrive first. The What is a levy? page lists what comes before it:

• "The IRS assessed the tax and sent you a Notice and Demand for Payment (a tax bill)"
• "You neglected or refused to pay the tax"
• "The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy"
• "The IRS sent you advance notification of Third Party Contact"

Publication 594 names exceptions, such as where "the collection of the tax is in jeopardy".

What the employer must do

A wage levy is not reissued each pay period. Publication 594: "we will serve a levy once, not each time you're paid." The IRS page for employers, last updated 6 March 2026, is the operative one for payroll. The duty: "you must turn over to the IRS any property you have that belongs to the person levied against". The form: "The IRS generally uses Form 668-W(ICS) or 668-W(ACS) to levy an individual's wages, salary ... or other income." Employers "generally have at least one full pay period" after receiving it "before they are required to send any funds", and the levy "continuously attaches until it is released". That page states no penalty amount for a non-complying employer, so this article gives none.

What is exempt, and the three day trap

Part of the pay is protected. The IRS page Information about wage levies, last updated 13 March 2026, says the exempt amount "is based on the standard deduction and an 'amount determined' calculated in part based on the number of dependents you are allowed for the year the levy is served". The employer does not guess: "The IRS mails Publication 1494 with the levy which explains to your employer how to determine the amount exempt."

Publication 1494, revision 12-2025, states that its tables "show the amount of an individual's income (take home pay) that is exempt from a notice of levy used to collect delinquent tax in 2026". For a single filer paid weekly the 2026 table gives "309.62 plus 101.92 for each dependent". Its worked example: "A single taxpayer who is paid weekly and claims three dependents has $615.38 exempt from levy."

The figure turns on one short deadline: "The employer gives this statement to the employee to complete and return within three days." Then: "If the employer does not receive the statement in three days, the exempt amount is figured as if the person is married filing separately with no dependents (zero)." That is the worst outcome available, and it happens by default when a form sits unopened.

How it ends

Deductions continue, in the words of the wage levies page, "until: You make other arrangements to pay your overdue taxes, The amount of overdue taxes you owe is paid, or The levy is released." The IRS page How do I get a levy released?, last updated 24 April 2026, lists when a release is required, including that "You paid the amount you owe" and that "The levy creates an economic hardship". For the employer the end is a document: "the IRS will issue a Form 668-D, Release of Levy/Release of Property from Levy". Until then, the deduction continues.

The United Kingdom: four orders, none called garnishment

If you are a UK payroll team searching "wage garnishment", you will not find it in UK law under that name. You will receive one of four things, each from a different authority, with its own calculation and deadlines: an attachment of earnings order from a court, a Direct Earnings Attachment from the Department for Work and Pensions, a council tax attachment of earnings order from a billing authority, or a deduction from earnings order from the Child Maintenance Service.

The legal ground for deducting at all is the same for all four. Acas's guidance on deductions from pay and wages, last updated 1 October 2026, lists the closed set of reasons an employer may deduct under the Employment Rights Act 1996. One is "it's a result of a court ordering the employer to make debt payments from a worker's wages to a third party". Acas also says "deductions must be clearly stated in a worker's payslip".

For how these sit beside everything else on a payslip, see payroll deductions and the payroll process. Scotland's own machinery is named below but not covered in detail.

Attachment of earnings order (England and Wales)

This section describes England and Wales, and is general information rather than legal advice.

The statute is the Attachment of Earnings Act 1971. Section 6(5) defines the two figures on the order: the normal deduction rate, "the rate at which the court thinks it reasonable for the debtor's earnings to be applied to meeting his liability", and the protected earnings rate, the rate "below which ... the earnings actually paid to him should not be reduced".

Section 7(1) sets a grace period: the employer, once served, "shall comply with it; but he shall be under no liability for non-compliance before seven days have elapsed since the service". GOV.UK's employer guide, Make debt deductions from an employee's pay, last updated 21 April 2016, puts that in payroll language: "You must start making deductions from your employee's pay from the next time you pay them, unless it's within the next 7 days." Section 7(2) requires the employer, "within ten days from the date of service", to tell the court if the person is not theirs.

The floor, the shortfall and the £1

GOV.UK is blunt: "You cannot make the normal deduction if it would take the employee below the protected earnings rate." A priority order covers "maintenance or fines" and you "carry the unpaid difference over to the next payday"; a non-priority order covers "civil debts" and you do not. Its worked example: on earnings of £190 with a protected earnings rate of £150 and a normal deduction of £25, "you pay your employee £164 (£190 minus £26). You send £25 to the court and keep £1 towards your costs." Where no deduction is possible, "you're not allowed to deduct £1 for your own costs".

On that £1, the two instruments fit together rather than conflict, and it is worth seeing how. Section 7(4)(a) of the 1971 Act, as the revised text stands on legislation.gov.uk, entitles the employer "to deduct, in addition, five new pence, or such other sum as may be prescribed by order made by the Lord Chancellor". That other sum is set by The Attachment of Earnings (Employer's Deduction) Order 1991, in force from 1 April 1991, at "£1.00 towards his clerical and administrative costs". So the Act sets a default of five new pence and a power to replace it, the Order exercises that power, and £1 is the figure. GOV.UK uses £1 too. One limit either way: "You can still deduct the £1 if it takes your employee's income below their protected earnings rate - but not if it takes their income below the National Minimum Wage."

The penalty for ignoring one

Section 23(2)(a) makes it an offence where a person required by section 7(1) to comply "fails to do so", and section 23(3) sets the exposure: liability "on summary conviction to a fine of not more than level 2 on the standard scale", or a court-ordered fine "of not more than £250". Section 122 of the Sentencing Act 2020 sets the standard scale, and for an offence committed on or after 1 October 1992 level 2 is £500. Section 23(5)(a) gives a defence where the employer can "prove that he took all reasonable steps to comply". A dated record of what you did, and when, is what that looks like on paper.

Direct Earnings Attachment (United Kingdom)

This section describes the United Kingdom, and is general information rather than legal advice.

A DEA is the closest thing in UK practice to the American wage levy, because the authority imposes it directly. DWP's Direct Earnings Attachment: a guide for employers, published 4 August 2020 and last updated 8 May 2026, traces the power to "the Welfare Reform Act 2012" and says: "We do not have to go through the civil courts to do this." The first deduction is dated from the notice, not from service: "The DEA notice issued to you has effect from the next pay day which falls on or after 22 days after the date on the notice letter."

The duties, and the fine

The employer must calculate a deduction on net earnings "for each pay date", or apply a fixed amount if DWP asks; must "pay us the amounts deducted (other than your administrative costs) by the 19th day of the month following the month in which the deduction is made"; must quote the employee's National Insurance number as the reference; and must keep a record of every deduction. Then: "If you fail to comply, you may be subject, upon conviction, to a fine of up to £1,000 per notice."

A ten day clock runs from the date of the notice to tell DWP Debt Management that the person "does not work for you", or has left. The employee must be told in writing of "the amount of the deduction taken, including any amount taken for administrative costs" and "how the deduction amount was calculated".

Net earnings and the 60% floor

For a DEA, "net earnings means earnings after the deduction of: Income Tax, Class 1 National Insurance, and superannuation contributions". Earnings include wages, bonuses, commission, overtime pay and statutory sick pay. They exclude statutory maternity, adoption, paternity and shared parental pay, "statutory Redundancy Payments" and any benefit paid by DWP, a local authority or HMRC.

The floor is a percentage rather than a cash figure on the order: "you must consider what is known as the Protected Earnings amount which is an amount equal to 60% of an employee's net earnings". Where adding the DEA "would increase the overall amount of deductions to more than 40% of the net wage", it "must be adjusted to an amount that will leave the employee with 60% of their net earnings". Where other orders have already reached that line, "you should not deduct any DEA amount calculated for that pay period", while still checking every later period.

The rate tables, the £1, and the stop

DWP tells you which of two rates to apply, and it can change "from Standard to Higher and vice versa". Table A, the standard rate, runs on weekly net earnings from "Up to £100" at "Nil" through 3%, 5%, 7%, 11% and 15% to 20% at "£520.01 or more"; its monthly bands run from "Up to £430" at Nil to "£2240.01 or more" at 20%. Table B, the higher rate, uses the same bands at 5%, 6%, 10%, 14%, 22%, 30% and 40%.

On the charge: "You may take up to £1.00 from your employee's earnings towards your administrative costs", and "you can take this charge even if it reduces the employee's income below the 60% protected earnings amount". The guide warns it "may bring the employees pay below the National Minimum Wage", which is a criminal offence. Deductions continue "every pay day" until DWP advises you to stop, "the employee leaves your employment", the employee dies, "the amount to recover is no longer outstanding", or DWP asks for a fixed rate deduction instead.

Two more UK orders: council tax and child maintenance

Both of the following are general information, not legal advice.

Council tax attachment of earnings order (England and Wales)

This order is made by the billing authority itself, after a court grants a liability order, under the Council Tax (Administration and Enforcement) Regulations 1992. Regulation 37(3) puts the duty on the employer: a person served with a copy "who has the debtor in his employment shall comply with it". Regulation 37(4) caps one authority at two orders in force against one debtor.

The deduction is a percentage of net earnings from Schedule 4, and the two nations publish different figures. The consolidated text of Schedule 4 gives Table A, weekly earnings, as 0% on net earnings "Not exceeding £75", rising through 3%, 5%, 7%, 12% and 17%, and for earnings "Exceeding £505", "17 in respect of the first £505 and 50 in respect of the remainder"; the amendment notes attribute those figures to England regulations applying "in relation to financial years beginning on or after 1 April 2007". For Wales, Schedule 4 was substituted from 1 April 2022 by the Council Tax (Administration and Enforcement) (Amendment) (Wales) Regulations 2022, whose Table A starts at 0% "Not exceeding £105" and ends, for earnings "Exceeding £715", at "17 in respect of the first £715, then 50 in respect of the remainder". Both are official, and they apply to different nations, but an employer reading the English table while paying a Welsh council will deduct the wrong amount.

Regulation 39 allows the employer, on each deduction, to "also deduct from the debtor's earnings the sum of one pound towards his administrative costs", and requires written notice to the employee of the total deducted. The notification clock is longer here than under the 1971 Act: "within 14 days of the day on which the copy of the order was served on him or the debtor ceased to be in his employment". A new employer who learns an order is in force has 14 days too.

Deduction from earnings order for child maintenance (United Kingdom)

GOV.UK's guide, Make child maintenance deductions from an employee's pay, last updated 8 November 2024, describes a DEO as "a way of collecting child maintenance directly from a paying parent's earnings or pension".

By law the employer must give information when asked, "send payments as soon as possible, to arrive no later than the 19th day of the month after the month you made the deduction", report problems immediately, and "make regular deductions". The penalty is in cash: "You can be fined £500 for each missed payment and up to £1,000 for not providing information you've been asked for."

The calculation: "Calculate 60% of your employee's net earnings (known as their 'protected earnings')", then "make the deduction from your employee's net earnings - as long as it leaves them with their protected earnings", then "take off an extra £1 towards your administrative costs (if you want to)". Where the full amount does not fit the shortfall carries, and in GOV.UK's example "the unpaid difference of £50 is carried forward".

A ten day clock applies again, for a person who does not work for you, a problem setting the order up, a leaver, or a business that stops trading. And: "You must tell your employee in writing about each deduction when you give them their payslip."

When more than one order lands (United Kingdom)

Three official sources describe priority in three different ways. This article quotes all three rather than picking one.

DWP's employer guide. Where any of the following are in place, or arrive after a DEA notice, "these will take priority over a DEA (and are known as priority orders)". For England and Wales it lists a "Deduction from Earnings Order (DEO) from Child Maintenance Group (CMG)", an "Attachment of Earnings Order (AEO) for Maintenance or Fines" and a "Council Tax Attachment of Earnings Order (CTAEO)"; for Scotland, a DEO, a conjoined arrestment order, an earnings arrestment and a current maintenance arrestment. After those, a DEA "will then take priority over any other orders, known as non-priority orders or notices", ordered "by the date of the notice". A student loan being recovered "is treated in exactly the same way as a priority order".

The Child Maintenance Service guide. "In England, Wales and Northern Ireland, a DEO takes priority unless you have received a priority Attachment of Earnings Order (AEO) for your employee." And: "In Scotland, a DEO takes priority over other deductions." That sentence does not mention a council tax order at all.

The Council Tax Regulations. Regulation 42 says that where an employer would otherwise have to comply with attachment of earnings orders and one or more "deduction order", they must "deal with the orders according to the respective dates on which they were made", and must leave one made for "the payment of a judgment debt or payments under an administration order" until last.

A date rule, a status rule and a hierarchy, from three authorities. What a payroll team should take from that is a phone call, not a resolution. Each order names the authority that issued it, and each publishes an employer helpline. Where two or more are live on one employee, ring the issuer of the later one and record the answer with the date and the name of the person giving it.

The Apprenticeship Levy: the other levy UK payroll meets

For a British payroll team, "levy" almost never means a seizure. It means the Apprenticeship Levy, and sometimes an industry training levy on top. GOV.UK says an employer pays it monthly if they "have an annual pay bill of more than £3 million", or are connected to other companies or charities "and have a combined annual pay bill of more than £3 million". The allowance reduces the bill "by £15,000 across the year", cannot be carried over, and connected companies or charities "will only have one £15,000 allowance to share between them". The pay bill is "all payments to employees that are subject to employer Class 1 secondary National Insurance contributions such as wages, bonuses and commissions", including payments to "apprentices under the age of 25". Reporting is monthly, "through your Employee Payment Summary", and the levy does not displace a sector levy: "You'll still need to pay Apprenticeship Levy even if you already contribute to an industry-wide training levy arrangement (for example the Construction Industry Training Board Levy)."

For how that sits beside PAYE, National Insurance and the American idea of a payroll tax, see payroll tax and income tax.

Frequently asked questions

What is a levy tax?

It depends which country's paperwork you are holding. In the United Kingdom a levy is normally a tax or charge created by statute, such as the Apprenticeship Levy, which GOV.UK describes as "an amount paid at a rate of 0.5% of an employer's annual pay bill" for employers with "an annual pay bill of more than £3 million". In the United States the word means a seizure: the IRS states that "a levy is a legal seizure of your property to satisfy a tax debt". General information, not legal or tax advice.

What is wage garnishment, and does it exist in the UK?

Wage garnishment is an American term for a legal process that takes part of someone's pay to settle a debt before the employee receives it. No order of that name exists in UK law. A UK employer instead receives an attachment of earnings order from a court, a Direct Earnings Attachment from DWP, a council tax attachment of earnings order from a billing authority, or a deduction from earnings order from the Child Maintenance Service.

How much of someone's pay can a UK order take?

It depends on the order. DWP requires an employer operating a Direct Earnings Attachment to leave "an amount equal to 60% of an employee's net earnings", with rates from Nil to 20% at the standard rate and 5% to 40% at the higher rate. A child maintenance order uses the same 60%. A court order instead states a cash protected earnings rate, below which GOV.UK says "you cannot make the normal deduction". A council tax order uses Schedule 4 of the 1992 Regulations, where England and Wales publish different figures.

What happens if an employer ignores an order on an employee's pay?

In the United Kingdom, DWP says of a Direct Earnings Attachment: "If you fail to comply, you may be subject, upon conviction, to a fine of up to £1,000 per notice." For child maintenance, GOV.UK says "you can be fined £500 for each missed payment and up to £1,000 for not providing information you've been asked for". For a court order, section 23 of the Attachment of Earnings Act 1971 makes non-compliance an offence punishable by a fine "of not more than level 2 on the standard scale", which the Sentencing Act 2020 sets at £500.

How does an IRS wage levy work, and how does it end?

In the United States the IRS generally serves Form 668-W on the employer once rather than each payday, and the levy "continuously attaches until it is released". The employer gives the employee a Statement of Dependents and Filing Status to return "within three days", then uses Publication 1494 to work out the exempt amount. The levy ends when the overdue tax "is paid", when other arrangements are made, or when "the levy is released", and the employer stops on receipt of Form 668-D.

Can an employer charge for processing an order?

In the United Kingdom, yes, within a fixed amount. GOV.UK tells employers to "take off an extra £1 towards your administrative costs (if you want to)" for a court order and for a child maintenance order, DWP allows "up to £1.00" for a Direct Earnings Attachment, and regulation 39 of the Council Tax (Administration and Enforcement) Regulations 1992 allows "the sum of one pound". The charge cannot take pay below the National Minimum Wage.

Your next step: make the order a process, not a letter

The duties above are the floor. The rest is process. The DEA clock starts 22 days after the date on the notice; the IRS statement has to come back in three days. A letter sitting in a general inbox for a week has already eaten the margin.

1. Name the person who opens post and email addressed to payroll, and the deputy who covers them.
2. Build a one page log: employee, issuing authority, order reference, start date, rate, protected earnings, where you pay, review date.
3. Add "check for live orders" to your leaver checklist and diary the notification duties.
4. Write the standard letter to the employee now: what arrived, what comes off, the £1, and where to get free independent debt advice. You are the collecting agent, not the adviser.
5. Where two orders are live on one person, ring the issuing authority and record the answer, the date and who gave it.

An order reveals a debt, sometimes a family court matter, so restrict access to those who must act on it. Read and download our employee data protection guide for a clear approach to records of this kind. It is free to read, and the PDF uses our short download form.

Want the starters, leavers and approved changes to reach payroll on time, with an owner and a date against each? Book a New Dynamics demo and bring your current process, or email contact@new-dynamics.com.