Avoiding High Earner child benefit

Bandy2023

Hi, all
Maybe not the best title, but here's my quandary.
I want to take some money out of my pension at some point next year.
I earn around £56k, so it won't take much of a withdrawal to put me over the £60K limit and trigger the high earner child benefit thing.
Our youngest is due to leave school in May next year though, meaning we'll be stopping claiming anyway.
So when would be 'safe' for me to withdraw the money??

Isthisforreal99

Bandy2023 said:

Hi, all
Maybe not the best title, but here's my quandary.
I want to take some money out of my pension at some point next year.
I earn around £56k, so it won't take much of a withdrawal to put me over the £60K limit and trigger the high earner child benefit thing.
Our youngest is due to leave school in May next year though, meaning we'll be stopping claiming anyway.
So when would be 'safe' for me to withdraw the money??

'Safe' as in not having to repay any child benefit? Anytime on or after 6 April 2027.

As an aside, it's not seen as wise to take a 40% hit on your pension if you can avoid it. You may also trigger MPAA meaning any future pension payments are restricted to £10,000 per annum.

Veteransaver

Are you taking some of the tax free lump sum from your pension?

sheramber

Isthisforreal99 said:

Bandy2023 said:

Hi, all
Maybe not the best title, but here's my quandary.
I want to take some money out of my pension at some point next year.
I earn around £56k, so it won't take much of a withdrawal to put me over the £60K limit and trigger the high earner child benefit thing.
Our youngest is due to leave school in May next year though, meaning we'll be stopping claiming anyway.
So when would be 'safe' for me to withdraw the money??

'Safe' as in not having to repay any child benefit? Anytime on or after 6 April 2027.

As an aside, it's not seen as wise to take a 40% hit on your pension if you can avoid it. You may also trigger MPAA meaning any future pension payments are restricted to £10,000 per annum.

The higher benefit charge is based  on your   annual net adjusted income.

If that is over £60k then you will be liable to repay  any child benefit overpaid up until your claim stops.

Albermarle

Veteransaver said:

Are you taking some of the tax free lump sum from your pension?

As above, if you take some ( or all) of the tax free part, then no problem with child benefit or the MPAA limit.

Bandy2023

Isthisforreal99 said:

Bandy2023 said:

Hi, all
Maybe not the best title, but here's my quandary.
I want to take some money out of my pension at some point next year.
I earn around £56k, so it won't take much of a withdrawal to put me over the £60K limit and trigger the high earner child benefit thing.
Our youngest is due to leave school in May next year though, meaning we'll be stopping claiming anyway.
So when would be 'safe' for me to withdraw the money??

'Safe' as in not having to repay any child benefit? Anytime on or after 6 April 2027.

As an aside, it's not seen as wise to take a 40% hit on your pension if you can avoid it. You may also trigger MPAA meaning any future pension payments are restricted to £10,000 per annum.

Let's say I withdraw after 6 April 2026, would I then only be liable to repay any child benefit between then and our child leaving in May 2026?
A month or two of repaying I can handle, it's just a whole year's worth I don't want to pay back.
Noted on the 40% thing, can't be helped.

Isthisforreal99

Bandy2023 said:

Isthisforreal99 said:

Bandy2023 said:

Hi, all
Maybe not the best title, but here's my quandary.
I want to take some money out of my pension at some point next year.
I earn around £56k, so it won't take much of a withdrawal to put me over the £60K limit and trigger the high earner child benefit thing.
Our youngest is due to leave school in May next year though, meaning we'll be stopping claiming anyway.
So when would be 'safe' for me to withdraw the money??

'Safe' as in not having to repay any child benefit? Anytime on or after 6 April 2027.

As an aside, it's not seen as wise to take a 40% hit on your pension if you can avoid it. You may also trigger MPAA meaning any future pension payments are restricted to £10,000 per annum.

Let's say I withdraw after 6 April 2026, would I then only be liable to repay any child benefit between then and our child leaving in May 2026?
A month or two of repaying I can handle, it's just a whole year's worth I don't want to pay back.
Noted on the 40% thing, can't be helped.

Yes, only the child benefit received in that tax year (after 6 April 2026) would be taken into account. Note that it's a taper between £60k and £80k before the full amount needs to be repaid.

sheramber

You cannot pay back more than you have received.

You could put it away in a savings account until you need to repay it. 

Bandy2023

Isthisforreal99 said:

Bandy2023 said:

Isthisforreal99 said:

Bandy2023 said:

Hi, all
Maybe not the best title, but here's my quandary.
I want to take some money out of my pension at some point next year.
I earn around £56k, so it won't take much of a withdrawal to put me over the £60K limit and trigger the high earner child benefit thing.
Our youngest is due to leave school in May next year though, meaning we'll be stopping claiming anyway.
So when would be 'safe' for me to withdraw the money??

'Safe' as in not having to repay any child benefit? Anytime on or after 6 April 2027.

As an aside, it's not seen as wise to take a 40% hit on your pension if you can avoid it. You may also trigger MPAA meaning any future pension payments are restricted to £10,000 per annum.

Let's say I withdraw after 6 April 2026, would I then only be liable to repay any child benefit between then and our child leaving in May 2026?
A month or two of repaying I can handle, it's just a whole year's worth I don't want to pay back.
Noted on the 40% thing, can't be helped.

Yes, only the child benefit received in that tax year (after 6 April 2026) would be taken into account. Note that it's a taper between £60k and £80k before the full amount needs to be repaid.

Good point
So repaying a couple of months of the 'tapered' amount won't be much.
Sounds good to me, I'll wait until 7th April before withdrawing.
Thanks for confirming pretty much what I thought ( apart from the taper )

kimwp

I would have thought (though do not know for sure), that it's the overall sum of child benefit for that tax year and overall net adjusted income for that tax year that would count. So if your income meant that you had to pay back a third of the max (ie paid all year) child benefit for the year, then if you only claimed it for 2/3 of the year, you wouldn't need to pay anything back.

Isthisforreal99

kimwp said:

I would have thought (though do not know for sure), that it's the overall sum of child benefit for that tax year and overall net adjusted income for that tax year that would count. So if your income meant that you had to pay back a third of the max (ie paid all year) child benefit for the year, then if you only claimed it for 2/3 of the year, you wouldn't need to pay anything back.

Wrong.....