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Higher Rate Tax & Child Benefit?

philng
philng Posts: 833 Forumite
Part of the Furniture 500 Posts Name Dropper Combo Breaker
in Cutting tax
Currently my PAYE will look like I am a Higher Rate Taxpayer but I then pay a lump sum in to my pension in March which brings my annual earnings back under the HRT threshold.

How will this work with the changes to Child Benefit as I want to make sure I dont lose this for my 16 yr old son?

Comments

  • ceeforcat
    ceeforcat Posts: 1,131 Forumite
    How much do you earn? The limit is £50000 now, not the higher rate threshold.
  • philng
    philng Posts: 833 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Maybe just over £50000 with bonus?
  • ceeforcat
    ceeforcat Posts: 1,131 Forumite
    OK. If you are in a company pension scheme it is your earnings after your contributions which count.

    If this still exceeds £50000 or you are not in a company scheme you need to contribute a gross amount equivalent to the excess.

    e.g. you earn £52000 - you need to contribute £1600 which will be increased to £2000 by HMRC
  • pjclar02
    pjclar02 Posts: 437 Forumite
    ceeforcat wrote: »
    e.g. you earn £52000 - you need to contribute £1600 which will be increased to £2000 by HMRC

    Why does the OP have to contribute £1,600?
  • jem16
    jem16 Posts: 19,751 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    pjclar02 wrote: »
    Why does the OP have to contribute £1,600?

    So that he doesn't exceed the £50k taxable earnings limit where you lose the Child benefit.
  • ceeforcat
    ceeforcat Posts: 1,131 Forumite
    jem16 wrote: »
    So that he doesn't exceed the £50k taxable earnings limit where you lose the Child benefit.


    Plus he would be entitled to a further £400 tax relief as a result of being a higher rate taxpayer.
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