How to get the most out of pension tax advantages
By Cristian Angeloni, 3 Feb 22
Personal finance experts share 10 tips savers should be aware of
“If you or your partner has registered for, and claims, child benefit, and one of you earns more than £50,000 a year, you’ll be liable for the high-income child benefit tax charge,” Lowery warned.
“This can be a major irritation for some couples as it needs to be paid through self-assessment.
“The charge increases gradually depending on how much you earn. For those earning £60,000 or more, it equals the total amount of the child benefit.
“This means lots of people choose not to claim child benefit – but by not claiming, you or your partner might miss out on National Insurance credits that count towards state pension entitlement.
Higham added: “Therefore, if you are affected, the sensible option is to register for child benefit but opt to not receive it. So you don’t have to pay the tax charge but still accumulate NI credits.
“This tax charge could also be avoided – while still legitimately claiming child benefit – if, by using salary sacrifice for your pension contributions, you take your gross earnings below the £50,000 threshold.”
Tags: Pension
