Child benefit tax charge threshold

[jtr63]

I am trying to do some planning before the end of the tax year. Is the threshold for Child Benefit claw back £50k of absolute income, £50k of income after the personal allowance of £11k is taken off. I am thinking that I can reduce the figure used for this by making an additional payment in to my SIPP. Any thought gratefully received.

John

[PinkDalek]

I am trying to do some planning before the end of the tax year. Is the threshold for Child Benefit claw back £50k of absolute income, £50k of income after the personal allowance of £11k is taken off. I am thinking that I can reduce the figure used for this by making an additional payment in to my SIPP. Any thought gratefully received.

John

https://www.gov.uk/child-benefit-tax-charge

What counts as income

To work out if your income is over the threshold, you’ll need to work out your ‘adjusted net income’.
Your adjusted net income is your total taxable income before any personal allowances and less things like Gift Aid.
Use the Child Benefit tax calculator to get help with your adjusted net income.


https://www.gov.uk/child-benefit-tax-calculator

Pension contributions would therefore not appear to make an impact, as confirmed here:

https://www.gov.uk/guidance/adjusted-net-income

What adjusted net income is

Adjusted net income is total taxable income before any Personal Allowances and less certain tax reliefs, for example:
trading losses
donations made to charities through Gift Aid
pension contributions paid gross (before tax relief)
pension contributions where your pension provider has already given you tax relief at the basic rate

[DrBunsenHoneydew]

Not quite sure what PinkDalek means, but Pension and Gift Aid are given as allowances in the usual way for this calculation of Taxable Income (which has its usual HMRC meaning). Your earnings may get pension relief in salary directly by employer (taxable income as stated on P60 is stated after this direct relief) or you may claim relief in tax return, as you would need to do for Gift Aid. The £50k included the personal allowance, not over and above, so you don't get another £11500 headroom on top of the £50k.

On a technicality, you'll find that you don't pay back any Child Benefit unless your taxable income exceeds £50099 rather than £50k.

[PinkDalek]

Not quite sure what PinkDalek means, but Pension and Gift Aid are given as allowances in the usual way for this calculation of Taxable Income (which has its usual HMRC meaning). ...

Yes, thanks, you spotted my erroneous "not" when talking about adjusted net income. The sentence should have stated:

"Pension contributions would therefore appear to make an impact, as confirmed here:".

On a technicality, you'll find that you don't pay back any Child Benefit unless your taxable income exceeds £50099 rather than £50k.

When you plug in a few figures in the calculator https://www.gov.uk/child-benefit-tax-calculator/main and go to calculate you'll find:

There is no tax charge if your income is below £50,099.