High Income Child Benefit Charge

Your adjusted net income is used to calculate whether you are liable for the high income child benefit charge. From April the 6th, if the highest earner in your household is earning between £60,000 and £80,000 a year after pension contributions, you may want to consider putting extra money in your pension to reduce the benefit charge that you will have to pay. Over the course of the year, you will still end up slightly worse off in terms of money in your pocket, but depending on your income and the number of children you have, it is a very tax efficient method of adding to your pension.

For those with two children, your marginal tax rate is about 50%, meaning for every £1000 you add to your pension, you will only feel about £500 worse off. The more children you have, the more effective this is.