On the Verge of Losing Child Benefit ? – try Salary Sacrifice (a.k.a. Salary Exchange)

Child Benefit, which has for years been non-means-tested, is worth £20.30  a week (£1055.60 p.a.) for a first child and £13.40 (£696.80 p.a.) for each additional child. From January 2013, those who earn over £60,000 will see their child benefit payments removed, and those who earn between £50,000 and £60,000 will see the benefit reduced on a sliding scale.

Now, the test is based on taxable rather than gross income, so that would mean a person earning £60,000 could opt to “sacrifice” £10,000 per annum and receive that as a pension contribution instead. A big ask for the majority, but for some it is do-able and will stop them losing this cash benefit.

Within the amount sacrificed (I prefer the term “exchanged” as it embodies the fact you’re getting something else instead) you can also include certain other benefits, such as child care vouchers ( a tax free benefit, with monthly tax free maximum benefit £243) or even gifts to charity via GiftAid.

Salary Exchange should in any event be the contribution method of choice for the vast majority of people paying into company plans. If you have a company plan at work, but salary exchange isn’t offered, please get in touch and I’ll be happy to explain how it works and how it should be set up.

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