Offsetting income to pension to avoid child benefit tax/higher tax rate?

kezzygirl

I read online that I could avoid the need for child benefit tax and higher tax bracket by doing a salary sacrifice/paying more into a pension. Is this correct? How would I go about it? 

Dazed_and_C0nfused

kezzygirl said:

I read online that I could avoid the need for child benefit tax and higher tax bracket by doing a salary sacrifice/paying more into a pension. Is this correct? How would I go about it? 

The principle is correct yes.

You need to know which method will be used to get money into your pension to fully understand the numbers.

Most pension contributions are made using either,

Net pay (you pay, contribution reduces income for tax purposes)
Relief at source (you pay, contribution doesn't reduce taxable income but gets basic rate tax added by the pension company)
Salary sacrifice (your employer pays and means you have less taxable pay in the first place)

Salary sacrifice are best for most people as they avoid NI as well as tax.

NB.  HICBC is based on adjusted net income, not taxable income.

Marcon

Does your employer offer salary sacrifice?

Lots of recent threads on this forum. If you use the search box above and search on 'child benefit pension' that'll narrow things down eg https://forums.moneysavingexpert.com/discussion/6451551/increasing-pension-payments-vs-higher-tax-losing-child-benefit

Nurse2047

Can I ask as I will possibly be in higher tax bracket in 1-2 years. 

If I contribute more into my AVC I can avoid the higher tax ? 

https://www.mandg.com/pru/workplace-pensions/employees/public-sector-avc-schemes/nhs-avc-scheme/tax-savings

kezzygirl

Dazed_and_C0nfused said:

kezzygirl said:

I read online that I could avoid the need for child benefit tax and higher tax bracket by doing a salary sacrifice/paying more into a pension. Is this correct? How would I go about it? 

The principle is correct yes.

You need to know which method will be used to get money into your pension to fully understand the numbers.

Most pension contributions are made using either,

Net pay (you pay, contribution reduces income for tax purposes)
Relief at source (you pay, contribution doesn't reduce taxable income but gets basic rate tax added by the pension company)
Salary sacrifice (your employer pays and means you have less taxable pay in the first place)

Salary sacrifice are best for most people as they avoid NI as well as tax.

NB.  HICBC is based on adjusted net income, not taxable income.

I believe mine is taken from net pay. Unsure if they would be willing to salary sacrifice but il check!

Nurse2047

Thankyou Thankyou