Claire Trott, Technical Connection

Pension contributions can play a powerful role in reducing an individual’s adjusted net income, which is important when determining eligibility for certain benefits – including the high‑income child benefit charge.

A benefit of pension contributions is that it reduces the adjusted net income of an individual. This is often used as a test for various benefits, one of which is child benefit. The high-income child benefit charge is a tax charge on families where one partner has an adjusted net income of more than £60,000. This is a ‘tapered’ charge, with an extra 1% deducted for every £200 of income over £60,000. Once the higher income earner hits £80,000 take-home, the benefit is withdrawn.

So, if one partner has adjusted net income of £70,000 then a pension contribution of £10,000 gross, £8,000 net would reduce their adjusted net income to £60,000 restoring their child benefit payment but also giving £2,000 extra into their pension and an a reclaim of a further £2,000 via their self-assessment.

Should earnings at the end of the year be higher than expected this is a great way to ensure that the high-income child benefit charge isn’t incurred. For those who can’t reduce their adjusted net income to below this level then consideration should be given to not taking the child benefit payment in the first place. However, it is still possible to claim, should a parent require the national insurance credit, or want to pass them on to a family member caring for the child, using specified adult childcare credits..

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This article is intended for regulated financial advisers and investment professionals only.

The statements and opinions expressed in this article are those of the author and don’t necessarily reflect those of Wealthtime or any of its employees. The company does not take any responsibility for the views of the author.

The above is based on understanding of current law and HMRC practice, and Government proposals regarding future law and HMRC practice, as at 23 February 2026, and are presented for general consideration only and no action must be taken or refrained from based on the content of this article alone. Each case depends on its own facts and advice is essential. Accordingly, neither Wealthtime nor Technical Connection, nor any of their officers or employees can accept any responsibility for any loss occasioned as a result of any such action or inaction.

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