Salary sacrifice: pension and car
Pension contributions and the High Income Child Benefit Charge
Between £60,000 and £80,000 of adjusted net income, the High Income Child Benefit Charge takes back Child Benefit at a steady rate. A pension contribution lowers that income, so it cuts the charge and the tax together.
Independent site, not a government service. Relief is claimed through your pension provider, your payroll or HMRC (Self Assessment or the GOV.UK claim service).
Child Benefit is £27.05 a week for the eldest child and £17.90 for each other child in 2026/27 (GOV.UK, Child Benefit rates), £2,337 a year for two children. If either parent has adjusted net income above £60,000, the higher earner pays a charge of 1% of the benefit for every £200 above that figure, so it is all taken back at £80,000 (GOV.UK, High Income Child Benefit Charge). A gross pension contribution lowers adjusted net income pound for pound. A parent on £72,000 with two children who contributes £8,000 gross cuts the charge from £1,402 to £467 and saves £3,200 of Income Tax as well: £4,135 of help on £8,000, about 51.69%. By salary sacrifice it also saves 2% NI. HM Treasury has confirmed that sacrificing salary to keep Child Benefit stays possible after the April 2029 NI cap.
Pension contributions and the Child Benefit charge
Example, not your result yet· change a figure to see yours
Child Benefit charge saved
£935
| Child Benefit a year | £2,337 |
| Charge before | £1,402 |
| Charge after | £467 |
| Income Tax relief as well | £3,200 |
| Help on the contribution | 52% |
Figures checked by Radif Partners · Editorial policy · How the sums are done
The charge at each income
| Adjusted net income | One child | Two children | Three children |
|---|---|---|---|
| £60,000 | £0 | £0 | £0 |
| £65,000 | £351 | £584 | £817 |
| £70,000 | £703 | £1,168 | £1,634 |
| £75,000 | £1,054 | £1,753 | £2,451 |
| £80,000 | £1,406 | £2,337 | £3,268 |
| £85,000 | £1,406 | £2,337 | £3,268 |
The charge rises in steps of £200, one per cent at a time, until it equals the whole benefit at £80,000. These thresholds apply from the 2024/25 tax year; up to 2023/24 the charge started at £50,000, as GOV.UK still notes for earlier years.
What a contribution saves
| Children | Income | Gross contribution | Charge saved | Income Tax saved | Total help |
|---|---|---|---|---|---|
| 1 | £72,000 | £8,000 | £562 | £3,200 | 47.03% |
| 2 | £72,000 | £8,000 | £935 | £3,200 | 51.69% |
| 3 | £72,000 | £8,000 | £1,307 | £3,200 | 56.34% |
| 2 | £80,000 | £20,000 | £2,337 | £8,000 | 51.69% |
The more children, the bigger the help, because each step of £200 takes back more money. With three children, a contribution in the £60,000 to £80,000 zone can earn relief well above 60%. The last row shows a parent on £80,000 who brings income down to £60,000: the whole charge goes, plus 40% tax relief on the part above £50,270.
Sacrifice, net pay or relief at source
All three methods lower adjusted net income by the gross contribution. Sacrifice and net pay do it in payroll; relief at source needs the gross figure on your Self Assessment return or a claim, without which HMRC will work out the charge on the higher income. On £72,000, sacrificing £8,000 also saves £160 of NI. The policy paper on the April 2029 cap says that employees who sacrifice salary to keep Child Benefit can continue, but NI will be due above £2,000 a year. The Income Tax and charge savings, which are most of the gain, stay.
Adjusted net income in practice
It is your total taxable income, including salary, bonus, benefits in kind, self-employed profit, rental profit, savings interest and dividends, less gross relief at source pension contributions and gross Gift Aid. GOV.UK's pension tax relief page explains the gross figure: what you paid plus the basic rate the provider added. Interest and dividends count, so a parent with savings outside an ISA can be pushed over £60,000 by them.
Checklist for a parent near £60,000
- Work out adjusted net income for the year, including any bonus.
- Find which partner has the higher figure: only that person pays the charge.
- Choose a gross contribution that brings income down to the level you want, £60,000 for no charge at all.
- Use sacrifice or net pay if your employer offers them; otherwise pay into a SIPP and report the gross amount.
- Keep claiming Child Benefit even if the charge takes it all, for the NI credits.
The calculator above takes your figures. For the same effect at the £100,000 line, see the guide to contributions over £100,000; for a salary of £60,000 with a pay rise, the £60,000 page. The salary sacrifice calculator and the guide to the 2029 cap cover the NI side.
Three families
A single mother of one on £66,000 pays a charge of £421. A gross contribution of £6,000, £4,800 paid into a SIPP, removes it and saves £2,400 of Income Tax: help of about 47.02% on the gross amount. A couple where one partner earns £75,000 and the other £20,000, with two children, pays a charge of £1,753 on the higher earner's income; only that partner's contributions help. A father of three on £80,000 loses all £3,268 of Child Benefit to the charge; £20,000 gross into a pension brings it all back and saves £8,000 of tax too.
Couples: whose income counts
The charge is on the partner with the higher adjusted net income, whether or not that partner receives the benefit. Partners means married couples, civil partners and people living together as a couple. If the lower earner's income rises above the higher earner's during the year, the charge moves to them for that year. Couples near the threshold sometimes compare incomes each year before deciding whose pension to pay into.
Self-employed parents
A self-employed parent with profits in the £60,000 to £80,000 range contributes by relief at source, normally into a SIPP or personal pension. The contribution reduces adjusted net income once it is on the Self Assessment return, so it can be made right up to 5 April, once profits for the year are clear. The charge and the relief are worked out in the same calculation, and the payment on account for the next year follows.
Savings and dividends
Interest and dividends count in adjusted net income even when they are covered by the Personal Savings Allowance or the dividend allowance. A parent with £58,000 of salary and £3,000 of interest from savings outside an ISA is over £60,000. Moving the savings into an ISA removes that income from the test, and a pension contribution covers whatever is left.
How the charge has changed
For 2024/25 onwards the charge starts at £60,000 and is complete at £80,000, a band of £20,000 with 1% per £200. The test remains individual: two parents each on £59,000 pay nothing, while a single earner on £80,000 loses everything. Any pension planning works on the higher earner's own income. GOV.UK publishes a calculator of its own for the charge itself; the calculator here adds the pension contribution and the Income Tax relief to it.
Timing within the tax year
The charge is based on adjusted net income for the whole tax year, so a contribution made in March counts as much as one made in April. A parent who learns of a pay rise or a bonus late in the year can still act before 5 April. Salary sacrifice has to be agreed before the pay is earned, so a sacrifice for a March bonus needs to be in place before the bonus is awarded. A SIPP payment by relief at source can be made at any time up to the last day of the tax year, then reported on the return.
What the figures leave out
The tables use Child Benefit for a full tax year at the weekly rates times 52. A child born during the year, or one who turns 16 and leaves education, changes the benefit and the charge for that year. The calculations also ignore NI and student loans, which salary sacrifice reduces as well, and Scottish rates, under which the Income Tax relief is higher. For a precise figure, put the year's actual Child Benefit into GOV.UK's calculator and the pension contribution into the one on this page.
Two last cautions. A large sacrifice lowers the salary that lenders see, which can matter before a mortgage application. And the cash salary after sacrifice must stay at or above the National Minimum Wage for your hours, which rarely bites at these incomes but can for part-time work.