Money FAQ

A charging order is an order that gives you a legal charge over the debtor's title to a property or shares in a company. This means that the debtor cannot sell the property without you being paid. Whilst it will not provide you with actual payment, it does provide good security and is probably the most effective method of enforcing a judgment.

Obviously, you first have to know whether the debtor owns any property or shares. If you know where he or she lives, you can search the Land Registry to see if he or she owns the property. The Land Registers are open to the public and a search costs £2 if you carry it out online. You should contact any Land Registry (Head Office tel: 020 7917 8888 or visit

There is no way of doing a central search for ownership of shares in limited companies. You can, however, search at Companies House to see if the debtor is a director of a company. If the debtor is, he or she may own shares in it and this can be checked at Companies House (tel: 0870 333 3636 or

A third party debt order is an order directed to a third party who holds money on behalf of, or owes money to, the debtor. It orders the third party to hold any such money until there is a hearing at the court to establish if the money should be paid to you.

You can obtain a third party debt order against:

  • Banks and building societies: only where an account is in the sole name of the debtor.
  • Solicitors: they often hold money on behalf of their clients.
  • Tenants who pay rent to the debtor.
  • Employers: only where money is actually due, not where it is merely accruing. It would be more appropriate to use a third party debt order where you expect a single week's or month's pay to cover the debt.

Each third party debt order only works once. It operates at the precise moment it's served on the third party; so that if at that moment the third party doesn't owe the debtor money, you will be unsuccessful. Also, the third party debt order can pay out any money which has a prior call, i.e. if you third party a bank and the debtor has written out a cheque to someone the day before you serve your third party and it's in the clearing system, it will be paid despite your order.

Using an attachment of earnings you can have the court order the debtor's employer to make deductions from his or her earnings and send these payments directly to you. You can attach wages, commissions, and bonuses. You cannot attach Social Security, old age pensions or disability pensions. Servicemen's pay can only be attached through the Defence Council. You can attach wages of an owner of a limited company, but not that of a self-employed debtor, such as a proprietor or partner in a firm.

This method of enforcing will usually only result in payment if the debtor is in secure employment. If he or she moves job, then you have to make a fresh application in respect of any new employment the debtor goes on to.

A warrant of execution is a request that the County court bailiffs seize any personal belongings of the debtor. Any such belongings are sold and the proceeds of sale after costs will be paid to you up to the value of your judgment.

This method is not usually very effective unless you know that the debtor has assets of value and can direct the bailiffs to them by providing addresses. Bailiffs are only able to act on information you supply to them and they don't carry out any investigations themselves. Personal items, such as clothes and tools of the debtor's trade, cannot be seized.

If there are insufficient assets, the bailiff will notify the court and you will be advised.

Frequently, the debtor facing a warrant will apply to the court to suspend the warrant and allow him or her further time to pay the judgment. If the District Judge should suspend the warrant, you may ask to have it reinstated if the debtor doesn't pay.

A warrant remains in force for one year, but you may renew it continuously upon application to the court.

Obtaining a judgment may be considerably easier than getting paid. In some cases a debtor will have few, if any, assets from which to satisfy a judgment. In others, the debtor will simply refuse to pay leaving it to you to enforce judgment. It's important to remember that attempts to enforce judgment are impractical unless you are confident the debtor can pay the debt.

It's wise to check whether there are other outstanding judgments against the debtor. All unpaid judgments are automatically registered at the Registry of County Court Judgments (tel: 020 7380 0133). For a nominal fee (currently £4.50 per name and address), they will tell you whether the debtor has other unsatisfied judgments. Obviously, if there are many outstanding judgments against the debtor, your chances of getting paid are slight.

It's always best to encourage voluntary payment from the debtor. You may do this directly with the debtor or ask the court to make an instalment order. The debtor may also ask for an instalment order, and you may inquire about the debtor's assets to determine ability to pay.

Your tactics on enforcement depend on your debtor's situation. Is he employed? Does he have a building society or bank account? Above all, is it likely that he will be able to pay? There are four ways of enforcing payment on a judgment and these are as follows:

  1. Warrant of execution
  2. Attachment of earnings
  3. Third party debt order (formerly called a 'garnishee order')
  4. Charging order
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If the defendant admits to only part of your claim, he will fill in Form N9B (defence). If he has already paid the amount admitted, he need not fill in Form N9B but otherwise must do so.

This form is sent to the court by the defendant. The court will send you a copy along with a Notice of Part Admission Form N225A.

Form N9A gives you financial information about the defendant's ability to pay that portion of the debt admitted as owing. Form N9B states the defence to that portion of the claim the defendant denies owing.

At this point you have two options. Either you can:

  1. accept the defendant's admission of partial liability; or
  2. contest the defendant's admission of partial liability and continue to sue for your full claim.
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The defendant may disagree with all of your claim, or you may not be willing to accept the defendant’s admission to partial liability. The defendant will state on Form N9B (defence) why your claim is denied. If the defendant only denies part of your claim (partial admission), the defendant must complete and return to the court both Form N9A (admission) and Form N9B (defence). You will be sent both forms by the court together with Form N225A.

The defendant’s defence may be that your claim has already been fully paid and that you are therefore owed nothing. If this defence stated as: ‘the amount claimed has been paid’ is raised, you will receive from the court a copy of the defendant’s Form N9B and Form N236. You must fill in Form N236 and say whether your claim has been fully paid or whether you deny payment and want the case to proceed. Then return the completed Form N236 to the court.

Once a defence is received by the court an Allocation Questionnaire Form N149 is sent to you and the defendant, which must be completed and returned by both parties within 14 days. As the claimant, you must pay a fee when returning the questionnaire, currently £100. If your claim is a money-only claim below £1,500, the fee isn't payable.

  • Find out more about making a money claim online.

The defendant must return the Acknowledgement of Service Form to the court stating his intentions within 14 days of the effective date of service.

It's not uncommon for the defendant to fail to reply to the Claim Form within the 14 days. The defendant may feel he is without a defence, or has no assets to lose, or both.

If there is no reply within the time limit, then you should ask the court to enter judgment by default.

  • Find out more about making a money claim online.

Either the court can be asked to serve the Claim Form on the defendant, which they will do by first-class post, or you can arrange to serve the defendant personally either yourself, by using a firm of process servers or any other person.

There are four principal options available to you for service.

  1. Personally serve the defendant by handing the Claim Form and the reply forms to him.
  2. By first-class post to the defendant.
  3. By leaving it at the last known address of the defendant.
  4. Send the reply forms and Claim Form to the defendant's solicitor if the defendant has already instructed one and if the solicitor has agreed to accept service of the Claim Form.

If you serve the defendant yourself, you must send a Certificate of Service Form N215 to the court within seven days of service on the defendant.

It's best to leave service to the court, unless there is some degree of urgency or you believe that the defendant will try to avoid being served with the Claim Form. The court sometimes takes a couple of weeks to serve the Claim Form, but by leaving it to the court you have less risk of making a mistake in the service which may ultimately result in delays. The court rules relating to service can be complex and their interpretation strict.

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The defendant must be served with a copy of the Claim Form (Form N1) you have issued, along with the Response Pack Form N9 which the court sends. The Response Pack includes forms N9A, N9B, N9C and N9D (forms N9C and N9D are used where the claim is for an unspecified amount or it is not a claim for money). Forms N9A and N9B are for the defendant to admit the amount claimed in full or part and, if necessary, put a proposal for how their is to pay any money that is admitted, and state their defence.

  • Find out more about making a money claim online.

You must complete Form N1 and then give it to the court staff together with a fee (which varies in relation to the amount of your claim). You can either attend in person to start ('issue') proceedings or send it by post.

You will be sent in return a receipt for your fee called a Notice of Issue Form N205A. This also gives you your small claim case number so you must keep this document carefully.

You have now started ('issued') the small claim proceedings and the next step is to 'serve' the summons on the defendant. 'Serve' is a legal term that means the defendant is notified of the claim

  • Find out more about making a money claim online.

Solicitors are now allowed to act for clients on a conditional or 'no win, no fee' basis in personal injury cases. This means that if you win the case, you pay them their normal costs plus a 'success fee'; if you lose the case, you pay nothing. The success fee varies; at most it can be double the amount of normal costs, but cannot be based upon the solicitor taking a percentage of the compensation. Remember that if you lose, you may still have to pay the other side's fees if you are not within the small claims limit.

  • Find out more about making a money claim online.

There's a fee required to start a small claims case so it's important to have confidence of recovery before you issue proceedings. For non-monetary claims the fee is £150, but for money claims the exact amount you will be required to pay will depend upon the amount of your claim. At present (September 2010), the fees for a claim are as follows:

Amount ClaimedCounty Court FeeMoney Claim Online Fee
Up to £300    £30£25
£300.01 - £500   £45£35
£500.01 - £1,000£65£60
£1,000.01 - £1,500 £75£70
£1,500.01 - £3,000£85£80
£3,000.01 - £5,000£108£100
£5,000.01 - £15,000£225£210

Since the fees do change, it's best to have the court staff advise you what your fee will be when you issue. The defendant will be ordered to pay this fee if you win, but remember that you still have to recover the money from the defendant.

  • Find out more about making a money claim online.

Small claims cases are always dealt with in a County court. You can start your claim in any County court, but the case will be transferred to the defendant's local court if:

  • The defendant is an individual; and
  • You are claiming a fixed sum of money, such as a debt; and
  • The defendant replies to the court stating that he will defend the claim.
  • You began the claim using Money Claim Online and the defendant has decided to oppose your claim.

In these cases the transfer is automatic and you will be notified by the new court once your claim is transferred to them. If your claim is for compensation 'damages', i.e. where you cannot immediately say how much is claimed, as in a personal injury case, then the claim will not be transferred.

It's best to keep proceedings in your own court, particularly if the defendant lives some way away. County courts are located throughout the country, and you can find one near you, or the defendant, by referring to the telephone directory under 'Courts' or visiting where there's a list of court addresses.

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If you are making a small claim, you are the claimant. The party you are suing is the defendant. There can be multiple claimants and multiple defendants.

Any individual over the age of 18 can make a small claim. A young person ('minor') under the age of 18 can only claim on his or her own behalf for unpaid wages. A minor can file a claim through a guardian or a parent. Always state your full name and don't use initials.

You may, as a business owner or operator, also make a small claim.

If you are a firm, then make a small claim as a firm using its name, followed by the words 'a firm'. You would then list the address of the firm. Example: Lawpack Publishing, a firm, 76-89 Alscot Road, London, SE1.

If you are a limited company, use its name designation 'limited company' and either its trading address or the address of its registered office. Example: Lawpack Publishing Limited, a limited company, 76-89 Alscot Road, London, SE1.

If you are a person doing business under another name, use your own name followed by the words 'trading as', and the address of the business. Example: John Smith trading as Lawpack Publishing, 76-89 Alscot Road, London, SE1.

  • Find out more about making a money claim online.

You cannot sue for an amount larger than £5,000 using the Small Claims Track in the County court. If you believe you are entitled to more than £5,000, you can voluntarily lower your claim to £5,000 so you can use the Small Claims Track. This may be advisable, for instance, if you think you have a claim for £5,200. Here it may be wiser to sacrifice the additional £200 for recovery without legal fees.

Virtually any type of claim (under £5,000 if seeking money damages) can be brought as a small claim. The following are some typical small claims matters:

  • Debt collection
  • Landlord/tenant actions
  • Personal injury cases
  • Disputes over services rendered
  • Contract disputes

You cannot use the Small Claims Track in the County court for possession proceedings. Any claim can be taken out of the Small Claims Track if the court decides that the issues involved are too complex.

  • Find out more about making a money claim online.

  1. You can prepare and present your case without having to pay a lawyer. A lawyer's fee will most likely be more than your claim. Under the Small Claims Track you have a chance of recovering the full amount of your loss with little or no costs. You can use a solicitor to represent you, but in most cases a solicitor isn't necessary.
  2. Making a small claim is a simple process. Because the Small Claims Track is so simple you shouldn't need a solicitor. Lawpack's Small Claims Kit provides all the necessary forms but if you have any doubt, a Consumer Advice Centre (e.g. Community Legal Advice) or a Citizens' Advice Bureau can be of great help.
  3. A small claim is a speedy process. Most small claims cases are heard within a few months of sending a claim form to the court.
  • Find out more about making a money claim online.

If your claim exceeds £5,000, you must either reduce your claim so it can be dealt with in the Small Claims Track or else you must bring your action in another track. You are not allowed just to divide a claim that is over the £5,000 limit into two or more claims so that each is within the small claims limit. For example, X lent Y £6,000. Y was to repay X in two instalments, each for £3,000. X cannot argue that there were two separate contracts. The loan was one transaction; X may not have two claims heard in the court using the Small Claims Track.

The other tracks are as follows:

  1. Fast Track - Claims for £5,000-£15,000 with the trial to be no more than one day. (There are limited costs recovery rules and the trial will generally take place within 30 weeksof the case directions which are the orders the court makes for the administration of the case.
  2. Multi Track - Complex cases and claims over £15,000.
  • Find out more about making a money claim online.

The Small Claims Track is a simplified procedure within the County Court for dealing with claims for amounts of money under £5,000. It's not a separate court but is often called 'the Small Claims Court'. The Small Claims Track covers the following types of case:

  • Any claim which has a financial value of not more than £5,000.
  • Any claim for personal injuries which has a financial value of not more than £5,000 where the claim for general damages for personal injuries isn't more than £1,000.
  • Any claim which includes a claim by a tenant of residential premises against his landlord for repairs or other work to the premises where the estimated cost of the repairs or other work isn't more than £1,000 and the financial value of any claim for damages in respect of those repairs or other work isn't more than £1,000.
  • Find out more about making a money claim online.

There is a legal requirement to keep accounting records for six years.

If you are self-employed, while you will be paying into your state pension by means of your National Insurance contributions (assuming you are paying them) you won't have any other pension scheme available unless you are paying into one. You are strongly advised to consult an independent financial adviser to set you up with a scheme most suitable for you.

Annuities are sources of income usually enjoyed by the elderly. The individual makes an investment in the annuity and over the remaining period of their life receives payments in connection with this annuity, some of which is capital and some of which is taxable income. When the annuity is paid it will be clearly shown how much is capital (and this is not taxable), how much is income and how much tax has been deducted.

Self Invested Personal Pensions (SIPPs) allow you direct control over the investments in your pension scheme. They provide maximum flexibility in the timing of contributions into, and benefit payments from, the scheme.

An example of such flexibility is that a SIPP allows you to withdraw up to 25 per cent of the fund tax free between the ages of 55 and 75. You can then use the balance to provide income for the rest of your life.

Self Invested Personal Pensions also provide an attraction for Inheritance Tax purposes because if you die before retirement, the whole of the value of the SIPP is excluded from your estate.

There are many assets that can be included in a SIPP, but some are specifically excluded (e.g. residential property, works of art, fine wines and vintage cars).

One advantage of a Self Invested Personal Pension is the opportunity it provides for investing in smaller companies. Another is that a SIPP can borrow up to 50 per cent of its value.

Stakeholder Pensions were introduced in April 2001 as the new low-cost private pension initiative. The government has insisted that those employers with five or more employees must offer their staff access to a Stakeholder Pension scheme where there is no other form of company pension already in place that they would otherwise be eligible to join.

Unlike the traditional form of occupational pension, there is no legal requirement for the employer to contribute and benefits at retirement will depend on how much has been paid in, the performance of the funds while invested and the rates of interest available at retirement.

Stakeholder Pensions must meet certain standards designed to ensure they offer value for money. These standards are known as CAT (Charges, Access, Terms) standards and are summarised below:

  • There is a maximum management charge of one per cent of the value of the pension fund per annum.
  • The minimum contribution to the plan must be no less than £20 and the member can choose when and how often to pay.
  • The plan holder must be able to switch to another scheme or pension company whenever he likes and without penalty.
  • Any extra benefits such as life assurance or premium protection must be optional and arranged separately from the pension plan.

Contributions are made net of basic rate Income Tax by the employee and gross where the employer decides to contribute.

ISA stands for Individual Savings Account. They are free from Income and Capital Gains Tax. The maximum annual investment for 2012/13 is £11,280 of which £5,640 may be in cash.

If you're being pursued by a creditor for an old debt, you may be able to ignore it on the ground that it has time-lapsed. This is six years, except in Scotland where it's five, but this only applies if no legal action has been taken against you on the debt, and you have not acknowledged it during the time. If you do now acknowledge it as a result of the creditor contacting you, you will reactivate the debt, so take advice before doing anything.

All chartered accountants are members of the Institute of Chartered Accountants, who will assess your complaint to decide whether conciliation is appropriate or alternatively, carry out an investigation.

Other accountants may be members of the Association of Chartered Certified Accountants, the Chartered Institute of Management Accountants, or the Chartered Institute of Public Finance Accountants. Book-keepers may belong to the Institute of Chartered Secretaries. All of these bodies will investigate and may take disciplinary action against the accountant if your complaint is upheld.

There are various methods of funding a legal case used by solicitors:

  • Charging by the hour: This is the most common method of charging. Hourly rates vary from high street firms where you can expect to pay somewhere between £80 to £120 an hour for advice on private and commercial work, all the way through to £350 an hour for a senior partner in a City firm for extremely expert advice on complex points of commercial law.

  • Fixed fees: This form of payment has the obvious appeal of limiting your liability for legal costs and, after the hourly rate, it's the next most common way of charging. The obvious downside is that if your case concludes quickly, then you will end up paying more than you may have on the hourly rate basis.

  • No win, no fee: 'No win, no fee' is a deceptively simple expression. On one level - and as the name implies - solicitors are paid nothing for their work if they lose, but it also covers agreements whereby solicitors can charge more if they are successful.

  • Legal Aid/the Community Legal Service: To be eligible for Legal Aid, you have to show that you cannot pay for your case (i.e. that you are financially eligible) and that you have a sufficiently strong case that you are likely to win. Even if you're working, own your home and have savings, you may still qualify. However, you may well have to pay a contribution towards the cost of taking your case to court.

In principle, it’s illegal for a director to borrow money from their own company. Small expense sums are allowed to be borrowed in advance. If the loan hasn't been repaid nine months after the end of the company’s financial year, tax at the rate of 25 per cent has to be paid on the sum borrowed (this sum is repaid by HMRC when the loan is repaid). If no interest or a beneficial rate of interest is paid on the loan (unless the loan is for £5,000 or less), a benefit in kind arises on which the director must pay Income Tax and the company Class 1A National Insurance Contributions. The short answer to this question is ‘no’.

To work out what percentage you can offset against tax you need to work out the area of your home that is taken up by your business. Apply this as a percentage. And there is your tax offset!

  • Get more expert advice on setting up working from home.

If you are an employee, so long as your employer agrees that you can work from home (and whether or not your employer provides you with equipment to carry out such work), you may be entitled to seek a reduction in council tax on the ground that the room you use as an office can no longer be used, for example as a bedroom.

It would be advisable for you not to hold business meetings at your home, because too many of those might constitute a change of use and cause other problems with your local council.

  • Find out more about working from home.

Your business rates depend on the space occupied by your business - contact your local authority for advice.

  • Get more expert advice on setting up working from home.

If they are employed by you, then yes, you will need to use the PAYE system. If they remain self-employed, no.

  • Find out more about self-employment.
  • Get more expert advice on setting up working from home.

In principle, you can either pay yourself from your own company by a salary (which could be in the form of a bonus or other remuneration) or, so long as you hold shares in the company and there are profits out of which to pay it, you could pay yourself a dividend.

If you are paid a salary from your own company, normal PAYE rules apply.

If you are paid a dividend, your company doesn't have to pay any tax over at the time of making the distribution. This is because dividends can only be paid out of profits which have already been taxed. In principle, dividends are now a more tax-efficient way of withdrawing profits from a company than salary.

If you have lent money to your company and that company wishes you to be able to withdraw some of that loan (to have it paid back), there would be no tax involved with any such repayment.

Yes, National Insurance is still payable if you are self-employed unless your profits are below a certain level. You need to register either way.

To register for self-employed National Insurance contributions you should contact your local National Insurance office, listed in the phone book under ‘HM Revenue & Customs’.

No, but you should still have a business plan stating what you are planning to do and what you want to achieve. 

Prepare a table or spreadsheet including your planned figures, for example, the prospective number of customers, the average value of each sale, your sales income, materials bought, overheads, profit, etc.

For most new businesses, you must start adding VAT onto your business invoices when your turnover exceeds £70,000 a year (2010/11 figure).

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