How to Protect Your Child Benefit

By Nick Braun PhD

Child benefit is an extremely valuable tax-free gift from the Government to parents. The payments continue for up to 20 years, which means you could receive around £35,000 tax free if you have two children.

Unfortunately, child benefit is withdrawn if either parent has income over £50,000. The parent with the highest income is forced to pay a new tax called the High Income Child Benefit Charge.

This guide explains how the tax works and how you can protect your child benefit by:

• Making pension contributions
• Transferring income to your spouse/partner
• Claiming more tax reliefs
• Shifting income and expenses into another tax year
• Reshaping income so it falls outside the net

How to Protect Your Child Benefit contains tax planning ideas for:

• Salary earners
• Landlords and property investors
• Company owners
• Sole traders and partnerships

What Information is Contained in the Guide?

Subjects covered include:

• How property investors can protect their child benefit by:
• Shifting income to their partners (even if their partner is a higher-rate taxpayer)
• Claiming more tax deductible expenses
• Using a company
• Converting taxable income into capital gains
• How those affected by the child benefit charge can enjoy exceptionally high tax relief by making pension contributions.
• How one taxpayer is able to make a pension contribution of £11,380 at a personal cost of just £3,325, with the remaining £8,055 coming from the taxman.

• How to use gifts from grandparents to avoid the child benefit charge and increase family retirement savings by 47%.
• Tax saving strategies for salary earners, including:
• Salary sacrifice arrangements
• Deferring bonuses
• Reducing working hours
• How one mother is able to spend two extra weeks with her children and is still better off financially.

• How company owners can avoid the child benefit charge with “rollercoaster income”: taking bigger dividends in some tax years and smaller dividends in other tax years.
• How company owners can avoid the child benefit charge by gifting shares to their spouse/partner (even if their spouse/partner is a higher-rate taxpayer).
• How the self-employed can avoid the child benefit charge by:
• Postponing or accelerating tax deductible expenses
• Employing children and paying them tax free salaries
• Starting a company

 

What Will I Receive?