1 minute read
Child Benefit –avoid high income tax charges and fund your retirement
If you or your partner receive Child Benefit and either of you earn over £50,000 in a tax year, an income tax charge will apply to the highest earner. This charge is designed to claw back the Child Benefit received.
If your income is over £60,000, the tax charge reclaims all the Child Benefit received.
Advertisement
With earnings between £50,000 to £60,000 the charge is a proportion of the Child Benefit received.
The tax charge is collected through submission of a tax return for the higher earner and it is calculated as 1% of the amount of Child Benefit received for every £100 of adjusted net income over £50,000.
Adjusted net income is reduced by the pension contributions you have made within the tax year. Whether they are made via your employer through a salary sacrifice arrangement or to a personal pension.
Within the same tax year as the Child Benefit charge, should you decide to make a pension contribution, reducing your adjusted net income below £50,000, you will find that the Child Benefit charge no longer arises.
– call Tristan Wilcox-Jones, Samantha Taylor or Lucas Knight on 01225 445507
