The charge at £65,000, by number of children
The charge is 25% of the Child Benefit claimed, because adjusted net income is £5,000 above the £60,000 threshold and the charge rises 1% for every £200 above it. It reaches 100% at £80,000.
| Children | Child Benefit a year | Charge (25%) | Kept after the charge |
|---|---|---|---|
| 1 | £1,407 | £352 | £1,055 |
| 2 | £2,337 | £584 | £1,753 |
| 3 | £3,268 | £817 | £2,451 |
The pension contribution that keeps your Child Benefit
Adjusted net income falls pound for pound with a gross pension contribution. Bringing it to £60,000 removes the charge in full, so a contribution of about £5,000 at £65,000 keeps all of your Child Benefit and cuts your income tax at the same time.
| Two children | |
|---|---|
| Gross pension contribution | £5,000 |
| Child Benefit charge removed | £584 |
| Income tax relief on the contribution | £2,000 |
| Total gain | £2,584 |
| Real cost of the £5,000 in your pension | £2,416 |
In other words, £5,000 goes into your pension but the charge removed and the tax relief mean it costs about £2,416 of take-home pay. The Child Benefit charge calculator runs your own figures, including a bonus or company car.
Take-home pay at £65,000
On the standard tax code with no pension, £65,000 takes home about £48,257 a year, or £4,021 a month, before any Child Benefit charge. If the £5,000 is given up by salary sacrifice to escape the charge, taxable pay falls to £60,000 and take-home is about £45,357 a year, with the Child Benefit kept in full and the pension built up on top. The take-home pay calculator shows the detail.
What counts towards the £60,000 threshold
The charge is based on adjusted net income, not salary alone. It is total taxable income, including a bonus, a company car and other benefits in kind, savings interest and dividends, minus gross pension contributions and Gift Aid donations. Someone on a £65,000 salary with a company car can therefore face a larger charge than the salary suggests, and a pension contribution is the main way to bring the figure back down. The adjusted net income calculator works it out.