Case Studies

Client who will receive a reduction in Child Benefit

If a client will see a reduction in their Child Benefit, they may want to consider paying a pension contribution

  • For 2022/23, the Child Benefit is £21.805 per week for the oldest child and £14.45 per week for each other child
  • However there is a Child Benefit High Income Charge which offsets the Child Benefit for those with ‘adjusted net income’ in excess of £50,000
  • For every £100 of income above threshold, the tax charge will equal 1% of the total rate of Child Benefit
  • Therefore once the client’s income reaches £60,000 the value of Child Benefit will be matched by the tax charge

A pension contribution will reduce the ‘adjusted net income’

So what will be the effective rate of tax relief if the client pays a pension contribution? 

Solution = Income Tax calculator 

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