Higher rate taxpayers can boost pensions to avoid child benefit cut
29 August 2012
Higher rate taxpayers can expect to have their child benefit payments cut due to new tax rules next year. However it may be beneficial for a parent whose income is between £50,000 and £60,000 to make additional pension contributions to avoid the new tax, and at the same time boost their retirement income.From 7 January 2013, if one parent in a household earns more than £50,000 he/she will have to pay the new child benefit tax, regardless of which parent is claiming the child benefit and irrespective of the income earned by the second parent. It will be a particular blow to those families where salaries are unevenly distributed and one parent is the main or sole breadwinner.
Currently in the UK, families receive a child benefit payment of £1,055.60 a year for the eldest child and a further £696.80 a year for each additional child. Therefore a high-earning family with three children under 16 could find themselves up to £2,449.20 a year worse off under the new rules.
If you require further pensions advice or details about the child benefit tax, you should contact Sam Park at our Lurgan office on: 028 3832 4924 or by email at firstname.lastname@example.org .