Reports suggest that thousands of higher-earning parents are unaware of the link between their pension contributions and their family’s child benefit entitlements. If either parent earns over £50,000 per annum then annual payments per child of £1,076 tax free start to reduce, whilst for those earning more than £60,000, then 100% of the child benefit is lost.
According to research by Royal London, parents should be aware that boosting their pension contributions could also increase the amount of child benefit they’re entitled to, and according to a report in the Financial Times this week, “The income threshold at which child benefit starts to be clawed back is based on “adjusted net income” which is a person’s total taxable income minus their pension contributions and/or charitable giving. This means that it is possible for parents to make higher pensions contributions to reduce their earnings below the threshold, and receive the benefit.”
Child Benefit payments are currently at their lowest level since records began, however, with better planning, there are certainly more options for those in the higher tax brackets to consider when making pension provisions, whilst still being able to access this allowance.
Here at the Financial Planning Group we help individuals, families and businesses to place their financial affairs in context with their future goals and aspirations. We provide a simple, structured, disciplined and reviewable planning service. We will change the fundamental relationship people have with their money to give them confidence and clarity in their own future.
If you would like to arrange an investment consultation, please call Tim Norris or Alan Clifton on 0800 731 7614 and we would be delighted to arrange a meeting at our offices in the heart of Teddington.