High Income Child Benefit Charge

lucyandthomas

Hi All

Please can you help resolve a discussion:

If a self employed person is likely to earn 55k this year in taxable profits, can they avoid the HICBC by contributing 5K + into a SIPP?

Thanks

lucyandthomas

Should add, this would be for a sole trader

Dazed_and_C0nfused

Depends.  If their only taxable income was £55k yes.

If they had £55k profit and say £200 interest and £200 dividends, which are all taxed at 0% then no.  As their adjusted net income would be £50,400.

I'm assuming the £5k is the gross contribution, not the actual payment by the individual.

lucyandthomas

No dividends, so as long as (taxable profits + savings interest) - gross pension contribution totals less than £50,270, it sounds like there won't be an issue with HICBC. That's great - many thanks

Dazed_and_C0nfused

You have for the basic rate band and HICBC limit mixed up.

Basic rate band ends at £50,270.

HICBC is charged once ANI hits £50,100.

lucyandthomas

Ah - right. Thanks