Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group said: “The child benefit is worth a little over £2,600 a year to a family with three children, however it’s been means tested since 2013 and families with one parent earning £50,000 or over have been hit by the High-Income Child Benefit Charge. At the Spring Budget the Chancellor announced plans to take account of joint household income to ensure those households with two incomes of up to £100,000 aren’t given preferential treatment over those with one earner whose income is just over £50,000. In the meantime, the Government are raising the threshold for the High Income Charge to £60,000.
“If you’re still eligible for the charge, it’s possible to reduce the impact, and end up net better off, by increasing the amount you pay into your pension via salary sacrifice. Paying into your pension reduces what counts as your income, and it could allow you to keep your child benefit and boost your pension savings at the same time. When the change to basing the charge on household income kicks in some people will find salary sacrifice a more viable option than before as it will be possible for both earners to sacrifice more of their salary, retain child benefit and still have two good incomes - previously it could have made manging the monthly budget harder in the short term.”
“You can choose not to take child benefit payments if your earnings are over £60,000, but you should still consider filling in the child benefit claim form. This helps you get National Insurance credits, which go towards your State Pension later in life.”
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