Insolvency Act 1986, section 310

Income payments orders

Part IX Bankruptcy

(1) F811 The court may . . . make an order (“an income payments order”) claiming for the bankrupt’s estate so much of the income of the bankrupt during the period for which the order is in force as may be specified in the order.

[F812 (1A)An income payments order may be made only on an application instituted—

(a)by the trustee, and

(b)before the discharge of the bankrupt.F812]

(2)The court shall not make an income payments order the effect of which would be to reduce the income of the bankrupt [F813when taken together with any payments to which subsection (8) appliesF813] below what appears to the court to be necessary for meeting the reasonable domestic needs of the bankrupt and his family.

(3)An income payments order shall, in respect of any payment of income to which it is to apply, either—

(a)require the bankrupt to pay the trustee an amount equal to so much of that payment as is claimed by the order, or

(b)require the person making the payment to pay so much of it as is so claimed to the trustee, instead of to the bankrupt.

(4)Where the court makes an income payments order it may, if it thinks fit, discharge or vary any attachment of earnings order that is for the time being in force to secure payments by the bankrupt.

(5)Sums received by the trustee under an income payments order form part of the bankrupt’s estate.

[F814 (6)An income payments order must specify the period during which it is to have effect; and that period—

(a)may end after the discharge of the bankrupt, but

(b)may not end after the period of three years beginning with the date on which the order is made.

(6A)An income payments order may (subject to subsection (6)(b)) be varied on the application of the trustee or the bankrupt (whether before or after discharge).F814]

(7)For the purposes of this section the income of the bankrupt comprises every payment in the nature of income which is from time to time made to him or to which he from time to time becomes entitled, including any payment in respect of the carrying on of any business or in respect of any office or employment [F815and [F816 (despite anything in section 11 or 12 of the Welfare Reform and Pensions Act 1999)F816] any payment under a pension scheme but excluding any payment to which subsection (8) applies..

(8)This subsection applies to—

(a)payments by way of guaranteed minimum pension; F817...

F817(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) In this section, “guaranteed minimum pension” [F818 has F818] the same meaning as in the Pension Schemes Act 1993 . F815]

Definitions used in section 310 1

attachment

(3) In subsection (1) “attachment” includes a hold notice or a deduction notice under Part 1 of Schedule 8 to the Finance ( No. 2) Act 2015 (enforcement by deduction from accounts) and, if subsection (1) has effect in relation to a deduction notice, it also has effect in relation to the hold notice to which the deduction notice relates (whenever the hold notice was given).

Defined in s.128(3) · see it in the full Act

Cases considering section 310 29

Azuonye v Kent

[2019] EWCA Civ 1289 · 19 July 2019Limits

Section 310 supplies the statutory framework for income payments orders. The judgment uses it to identify the nature, duration and enforceability of the order after discharge. (see paras [15]-[16]) Section 310(1) defines an income payments order as claiming specified income for the bankrupt’s estate during the period of the order. (see para [15]) Section 310(3) permits an income payments order to require payment by the bankrupt or by another person, such as an employer, to the trustee. (see para [15]) The judgment refers to section 310(5) in describing the statutory consequences for sums received under an income payments order and the trustee’s position in a later bankruptcy. (see para [18]) Section 310(6) permits an income payments order to continue after discharge, but limits its period and requires the order to be made before discharge. (see para [15]) Section 310(6A) permits variation of an income payments order on application by the trustee or bankrupt, including after discharge. The court considered this review power when rejecting the proposed non-provability rule. (see paras [15], [31])

Horton v Henry (Rev 1)

[2016] EWCA Civ 989 · 7 October 2016Limits

The court held that the income payments order regime captures income but confers no power to require a bankrupt to exercise protected pension rights so as to generate income. (see paras [42]-[45]; [56]) The reasonable-domestic-needs safeguard did not supply criteria for deciding whether, how and to what extent a bankrupt should be compelled to draw pension benefits. That absence supported rejection of the trustee's construction. (see paras [45]; [47]) The maximum three-year duration of an income payments order illustrated the uncertainty and absence of criteria that would arise if the court had to direct a pension election with potentially lifelong consequences. (see para [47]) A payment in the nature of income means an actual pension payment or an actual entitlement to that payment. It does not include the contractual right to elect to crystallise a pension or choose the form of benefits. (see paras [42]-[44]; [48]; [54]-[56])

Maunders v Evans

[2001] EWCA Civ 1808 · 15 November 2001

Applies the statutory treatment of post-bankruptcy income to the alleged arrangement. Income may be used for the bankrupt's reasonable domestic needs, but surplus income should be applied for creditors rather than used to acquire a post-bankruptcy asset. The alleged incremental acquisition of a beneficial interest was therefore highly improbable in the circumstances (see judgment discussion of section 310). Confirms that an allowance must be made for income needed to meet the bankrupt's reasonable domestic needs before any order directing payment of post-bankruptcy income to the trustee. The distinction between living expenses and acquisition of an asset informed the court's assessment of the alleged agreement (see judgment discussion of section 310(2)).

9 more judgments, and what each says about section 310, are in the case-law panel in the full Act.

Amendments and notes

12 notes from legislation.gov.uk

Amendments

  1. F811Words in s. 310(1) repealed (1.4.2004) by 2002 c. 40, ss. 259(2), 278, 279, Sch. 26 (with s. 249(6)); S.I. 2003/2093, art. 2(2), Sch. 2 (subject to arts. 3-8 (as amended by S.I. 2003/2332, art. 2))
  2. F812S. 310(1A) inserted (1.4.2004) by 2002 c. 40, ss. 259(3), 279 (with s. 249(6)); S.I. 2003/2093, art. 2(2), Sch. 2 (subject to arts. 3-8 (as amended by S.I. 2003/2332, art. 2))
  3. F813Words in s. 310(2) inserted (6.4.1997) by 1995 c. 26, s. 122, Sch. 3 para. 15(a) (with s. 121(5)); S.I. 1997/664, art. 2(3), Sch. Pt. II (with transitional adaptations, modifications and savings in arts. 3-14)
  4. F814S. 310(6)(6A) substituted (1.4.2004) for s. 310(6) by 2002 c. 40, ss. 259(4), 279, (with s. 249(6)); S.I. 2003/2093, art. 2(2), Sch. 2 (subject to arts. 3-8 (as amended by S.I. 2003/2332, art. 2))
  5. F815S. 310(8)(9) and words preceding them added (6.4.1997) by 1995 c. 26, s. 122, Sch. 3 para. 15(b) (with s. 121(5)); S.I. 1997/664, art. 2(3), Sch. Pt. II (with transitional adaptations, modifications and savings in arts. 3-14)
  6. F816Words in s. 310(7) inserted (11.11.1999 for the purpose only of any exercise of power to make regulations, otherwise 29.5.2000) by 1999 c. 30, ss. 18, 89(5), Sch. 2 para. 2; S.I. 2000/1382, art. 2(e)
  7. F817S. 310(8)(b) and word omitted (6.4.2012) by S.I. 2011/1730, art. 3(2) (as substituted) by virtue of The Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No.2) (Amendment) Order 2012 (S.I. 2012/709), arts. 1(2), 2(2)
  8. F818Word in s. 310(9) substituted (6.4.2012) by S.I. 2011/1730, art. 3(3) (as substituted) by The Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No.2) (Amendment) Order 2012 (S.I. 2012/709), arts. 1(2), 2(2)

Modifications

  1. C1027S. 310 applied (with modifications) by S.I. 1986/1999, art. 3, Sch. 1 Pt. II
  2. C1028S. 310 amended by Education (Student Loans) Act 1990 (c. 6, SIF 41:1, 2), s. 1(5), Sch. 2 para. 5(1)
  3. C1029S. 310 restricted (12.8.1998) by S.I. 1998/2003, reg. 13(1)
  4. C1030S. 310 excluded (16.6.2016) by The Education (Postgraduate Masters Degree Loans) Regulations 2016 (S.I. 2016/606), regs. 1(1), 97(1)(a)