Bankruptcy - Individuals employed on a PAYE basis

For those individuals working for a third party on a PAYE basis, in most circumstances, your employer will not be contacted unless of course you work in a financially sensitive job and there are rules in your contract of employment or rules of professional association. For example, you can not be an MP, JP or hold certain public offices if you are subject to a bankruptcy order.

There will be no attachment of earnings order made on your employer. Any surplus income will be collected by your Trustee as part of an income payments order. (See also income/expenditure)

The only reason for any contact with your employer is the tax coding rule which is explained below. The Inland Revenue may therefore contact your employer for the purpose of notifying them of your new tax code.

If you are a PAYE employee then from the date of bankruptcy to the following 5th April you will have no monthly deduction for PAYE.

You take home pay may, therefore, increase dramatically.

This will have an impact on the calculation of the income payments order.

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