How much pension should I contribute to avoid high income child benefit tax charge

MortagageWannabe

Hi all,
I'm looking for advice on how much pension I should contribute in order to avoid the high income child benefit tax charge. I would also like some guidance on how to claim back tax relief on pension contributions as I am a higher rate tax payer.
My gross salary is £65,000 per annum
Car allowance £5,520 per annum
No other income
The workplace pension is a defined contribution pension arrangement.
My employer matches and doubles employee pension contributions to a maximum of 10%. If the employee contributes 5%, the employer will contribute maximum 10%. Any employee contributions above 5% will not attract additional employer contribution.
My employer passes on 5% of their NIC savings by reducing the employee contribution rate by 5%. An employee contribution of 5% will become 4.75% via salary exchange.
Employee pension contributions is via salary sacrifice.
How much should I contribute in employee pension contributions in order to collect the full child benefit payment of £20 per week for my child (I only have one).
Also, please advise on how I would go about claiming tax relief from HMRC for my pension contributions. (assuming I am entitled to claim it).
Thank you

atush

you need to get your income down to 50K or less this includes the car benefit).

As for the tax, you can just call HMRC and inform them.

Dazed_and_confused

Employee pension contributions is via salary sacrifice

Also, please advise on how I would go about claiming tax relief from HMRC for my pension contributions. (assuming I am entitled to claim it).

You cannot claim any tax relief. The basic reason is that you aren't contributing to a pension. You are agreeing to a reduced salary in return for your employer contribution to a pension and there is no tax relief due on employer contributions.

The tax benefit for you comes comes from having less taxable income.

For example if your "salary" is £65k and you sacrifice 20% then your taxable salary, the bit which goes on your P60 and is part of the adjusted net income calculation which determines the High Income Child Benefit Charge, is £52k.

If you look at your payslips you should that your taxable pay is much less than your "salary".

Triumph13

MortagageWannabe wrote: »

snip
No other income
snip

Don't forget bank interest and any dividends. Even if these are below the relevant tax free allowances they still count towards the £50k limit.

Dazed_and_confused

There are no "allowances" for savings or dividend income.

There are three 0% rates for savings and dividend income.

Even if savings or dividend income is taxed at 0% then the overall tax liability can still increase.

MortagageWannabe

Thank you for your replies Atush and Dazed.
Is there a calculator that you can recommend assist in the above? I understand that I need to reduce my net adjusted income to £50k per however it's not clear to me what percentage of my gross income of £75,520 I should add to my pension salary sacrifice to achieve this.
Thank you.

Dazed_and_confused

Where is the additional £5k income coming from?

onomatopoeia99

atush wrote: »

As for the tax, you can just call HMRC and inform them.

I used to do that. A couple of years ago they said I needed to post them a document from my SIPP provider showing my contributions for the tax year, so I started doing that instead.

Dazed_and_confused

Which is fine for relief at source pension contributions but as the op isn't actually contributing to a pension there is no tax relief they can claim.

MortagageWannabe

Dazed, I can infer from your question that the pension contribution is only applicable to the base salary and not the car allowance element?

Dazed_and_confused

Not at all. That is probably down to your employer.

In your original post you said

My gross salary is £65,000 per annum
Car allowance £5,520 per annum

In a later post you said

my gross income of £75,520