Option 2 recommended for the 2024 Regulations

The Scottish Government has recommended Option 2, an uprating of the figures in the diligence against earnings tables with minor amendments to the bandings, for the Diligence against Earnings (Variation) (Scotland) Regulations 2024¹. If approved by Parliament, the Regulations will come into force on 6 April 2025¹. The Regulations update figures in Part 3 of the Debtors (Scotland) Act 1987, which set how much an individual keeps before a payment can be taken from their wages to recover debts, and the scale of payments taken above that level¹.

The protected minimum amount for deductions from monthly earnings will increase from £655.83 to £750¹. The percentage paid above the protected minimum amount will reduce from 19% to 15% for those earning up to £1,500 a month, and an additional banding has been added for those earning up to £2,500¹. The Scottish Government said this means someone earning £1,000 a month would pay around £37.50 under the new proposal compared to £65 now¹. It said the additional adjustment to the earnings bands means those who earn less than £3,418 per month will have a smaller deduction from their earnings¹. The increase was calculated by reference to the change in earnings and inflation rate since the figures were last updated; an increase based on consumer price inflation alone would have raised the protected minimum amount for monthly earnings to £729.28¹.

The figures in the tables were last updated in April 2023, earlier than the usual three yearly uprate, to reflect the cost crisis and the high inflation rates at the time¹. The Scottish Government has reviewed and updated the statutory tables every three years since 2006¹. During parliamentary scrutiny of the Bankruptcy and Diligence (Scotland) Act 2024, the Scottish Government committed to update the tables again in April 2025 to help those struggling due to the continued cost crisis¹.

The impact assessment sets out three options: a standard uprating of the tables, uprating with minor amendments to the bandings, and doing nothing¹. It reports that 56,700 earnings arrestments were executed from 1 April 2023 to 31 March 2024, of which 51,210 were by local authorities for council tax arrears, 500 by HMRC and 4,990 by other creditors, and that over 90% were by local authorities to recover council tax debt¹.

IRRV advised that in 2023/24 around £30 million was collected from 34,000 successful earnings arrestments, and the assessment states that if each of those affected an individual earning at least £1,000 a month, the loss to local authorities would be up to £26.5 million a year, described as an upper estimate¹. COSLA wrote to the Economy and Fair Work Committee endorsing IRRV's position¹. During the passage of the Bill, the Economy and Fair Work Committee, stakeholders and MSPs sought to increase the protected minimum amount to £1,000 a month, to align it with the protected minimum balance for bank arrestments¹.

Why it matters for households

People in Scotland who have debts enforced through an earnings arrestment, and their employers, are affected. From 6 April 2025, if the Regulations are approved, a higher protected minimum amount of £750 a month applies before any deduction is taken, and the rate paid above that amount falls to 15% for those earning up to £1,500 a month¹. The Scottish Government states the outcome is that those subject to an earnings arrestment on a low income will retain more of their earnings¹. It also notes that because average earnings have increased since the previous uprating, some people would pay higher deductions, or pay a deduction when they previously were exempt¹. Employers must comply with the terms of an earnings arrestment, and section 57 of the 1987 Act sets out the action to be taken where an employer fails to comply¹. The changes sit within the tax system as a form of debt enforcement.

What happens next

The Regulations require approval by Parliament and would come into force on 6 April 2025¹. If passed, they will be published on the Accountant in Bankruptcy website and payroll providers will be informed¹. The Scottish Government has committed to consult on a different approach to the bandings used for calculating earnings arrestments to reduce their impact on those who earn least, with wider consultation to follow shortly after the Regulations are laid¹. It has committed to review the tables every three years, so the next review would be expected in 2027¹.