Child Benefit Higher Rate Tax Payer

RajaStyle

HI All

I was wondering am I better off opting out of child benefit as a higher rate tax payer on £65k ?

I have 3 kids, I get child benefit but have to pay it all back and sometimes I get the feeling they take more back than they give me, call me paranoid.

Just wanted to hear the view of those in the know.

Saw a chart which showed I kind of get taxed worse because of it.

Thanks in Advance

Strummer22

The marginal tax when you're in the HICBC taper (£60-80k) is pretty eye watering, although not as bad as when this was £50-60k. 

If you're on £65k they'll not take back more than they pay you (so yes, you are paranoid!). You'd pay back about a quarter of what you receive, assuming your partner isn't earning more than you.

So, if you opt out of child benefit, you'll lose money. By far the most tax efficient thing you can do is: pay into a pension until your adjusted net income is below £60,200 (which is the threshold for repaying child benefit). You get to keep full child benefit and will receive higher rate tax relief on the pension contribution (if it's a relief at source pension you need to tell HMRC; salary sacrifice and net pay pensions automatically provide tax relief).

If your partner doesn't earn enough to pay national insurance, make sure the child benefit claim is in their name. You'll get national insurance credits automatically if you claim child benefit and your child is under 12 - so those years would count as qualifying years for state pension. 

RajaStyle

Amazing thanks Strummer very helpful