Child Benefit Higher Earner Pension Strategy

Your adjusted net income determines whether you're liable for the High Income Child Benefit Charge. If the highest earner in your household has an adjusted net income between £60,000 and £80,000, it's worth considering whether extra pension contributions make sense as they'll reduce the charge you pay, and while you will feel slightly cash-poorer month to month, the money isn't lost; it's sitting in your pension pot at a rate that most people find surprisingly compelling once they see the numbers.

For a family with two children, the effective marginal tax rate in this band is around 50%, meaning for every £1,000 added to a pension, take-home pay only falls by roughly £500. The more children you have, the more pronounced this effect becomes and the more efficient those contributions are.

Written by Catherine, founder of Milk & Money, who swapped PhD research for childcare analytics.