{"id":12297,"date":"2026-03-06T16:53:12","date_gmt":"2026-03-06T16:53:12","guid":{"rendered":"https:\/\/www.wealthtime.com\/advisers\/?post_type=blog&p=12297"},"modified":"2026-03-20T15:47:29","modified_gmt":"2026-03-20T15:47:29","slug":"the-child-benefit-trap","status":"publish","type":"blog","link":"https:\/\/www.wealthtime.com\/advisers\/blog\/the-child-benefit-trap\/","title":{"rendered":"The child benefit trap: the high income child benefit charge"},"content":{"rendered":"\n

Claire Trott, Technical Connection<\/p>\n\n\n\n

Pension contributions can play a powerful role in reducing an individual\u2019s adjusted net income, which is important when determining eligibility for certain benefits – including the high\u2011income child benefit charge.<\/p>\n\n\n\n

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 \u00a360,000. This is a \u2018tapered\u2019 charge, with an extra 1% deducted for every \u00a3200 of income over \u00a360,000. Once the higher income earner hits \u00a380,000 take-home, the benefit is withdrawn.<\/p>\n\n\n\n

So, if one partner has adjusted net income of \u00a370,000 then a pension contribution of \u00a310,000 gross, \u00a38,000 net would reduce their adjusted net income to \u00a360,000 restoring their child benefit payment but also giving \u00a32,000 extra into their pension and an a reclaim of a further \u00a32,000 via their self-assessment.<\/p>\n\n\n\n

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\u2019t incurred. For those who can\u2019t 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.<\/p>\n\n\n\n

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\"Claire<\/figure>\n<\/figure>\n<\/div>\n\n\n\n
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A benefit of pension contributions is that it reduces the adjusted net income of an individual.<\/p>Claire Trott, Technical Connection<\/cite><\/blockquote><\/figure>\n<\/div>\n<\/div>\n\n\n\n

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