Worked examplesChild Benefit
The Child Benefit charge: the hidden tax band between £60k and £80k
With four children, a pay rise at £70,000 is taxed at 63%, more than a millionaire pays. Here's how the charge works, and why it makes a pension payment in that band unusually cheap.
The short answer
£9,663
is what £20,000 in a pension really costs at £80,000 with two children.
The payment gets 40% tax relief and stops the Child Benefit charge, which works out at 52% relief in all.
The working
- Paid into the pension
- £20,000
- Income tax saved (40%)
- −£8,000
- Child Benefit kept
- −£2,337
- Real cost
- £9,663
By salary sacrifice, which saves 2% National Insurance too, it costs £9,263.
Child Benefit looks simple. You claim it for each child and it's paid every four weeks. But once one parent's income passes £60,000, the government starts taking it back through the High Income Child Benefit Charge, and by £80,000 it has all gone.
The way it's taken back creates a tax band that nobody voted for and few people notice until a tax return arrives.
What Child Benefit is worth
For 2026/27, Child Benefit is £27.05 a week for the eldest or only child and £17.90 a week for each other child.
| Children | Child Benefit a year |
|---|---|
| 1 | £1,406.60 |
| 2 | £2,337.40 |
| 3 | £3,268.20 |
| 4 | £4,199.00 |
How the charge works
For every £200 of adjusted net income over £60,000, you repay 1% of the family's Child Benefit. At £80,000 you repay all of it.
Two details decide who pays:
- Only the higher earner's income counts. Two parents on £59,000 each pay nothing. One parent on £80,000, with a partner at home, repays the lot.
- The higher earner pays it, through Self Assessment or their tax code, even if the other parent receives the money.
The hidden 63% rate
Spread £4,199 of Child Benefit over £20,000 of income and every extra £1 earned costs 21p in charge. Add that to income tax and National Insurance:
63%
tax on a pay rise at £70,000, with four children.
More than the 47% paid on income over £125,140.
The working
| A £1 pay rise at £70,000 | |
|---|---|
| Income tax | 40p |
| National Insurance | 2p |
| Child Benefit charge | 21p |
| You keep | 37p |
The rate climbs with every child:
| Children | Tax on a pay rise between £60k and £80k |
|---|---|
| None | 42% |
| 1 | 49% |
| 2 | 54% |
| 3 | 58% |
| 4 | 63% |
A bonus is taxed the same way. On £62,000 with two children, a £10,000 bonus leaves just £4,631 after tax, NI and the charge: 46p in the pound. The bonus worked example runs through it.
Turning it around with a pension
Pension contributions reduce adjusted net income, so they reduce the charge. A pension payment in this band gets the normal 40% tax relief plus the Child Benefit you no longer repay.
Take a family where Parent A earns £80,000, Parent B earns £30,000, and they have two children. The charge currently takes back all £2,337 of their Child Benefit.
If Parent A pays £20,000 into their pension, their adjusted net income falls to £60,000 and the charge disappears.
| Paid into the pension | £20,000 |
| Income tax saved (40%) | −£8,000 |
| Child Benefit kept | −£2,337 |
| Real cost | £9,663 |
£20,000 in the pension for £9,663 of take-home pay: 52% tax relief instead of 40%. By salary sacrifice, which also saves 2% National Insurance, it costs £9,263.
More children, cheaper pension saving
Because the charge is a percentage of the family's Child Benefit, the reward for paying into a pension grows with each child:
| Children | What £1 into a pension costs (£60k to £80k) |
|---|---|
| None | 60p |
| 1 | 53p |
| 2 | 48p |
| 3 | 44p |
| 4 | 39p |
No cliff, so any amount helps
This is the big difference from the £100k childcare cliff edge, where a single pound over the line costs a family its funded hours and Tax-Free Childcare. The Child Benefit charge is a slope, not a cliff: every £200 brings back 1%. A £2,000 top-up works just as hard, per pound, as a £20,000 one, so it's worth doing even if you can only afford part of it.
The same logic is why paying into a pension can beat overpaying the mortgage for many higher-rate taxpayers: the bigger the relief going in, the more ground the pension starts with.
Don't cancel the claim
If you earn over £80,000, it's tempting to stop claiming. Stay registered and opt out of the payments instead. No payments means no charge, but the claim still gives National Insurance credits to a parent at home with a child under 12. Each qualifying year adds about £358 a year to the full new State Pension, for life. The claim also means your child gets their National Insurance number automatically.
The catch
Pension money is locked away until 57 (55 until April 2028), and it's taxed when you draw it, apart from the tax-free quarter. This is a good deal for people who would save anyway. It isn't free money.
General information, not financial advice. Child Benefit and the charge apply across the UK; the tax figures use 2026/27 rates for England, Wales and Northern Ireland, and Scottish income tax differs. Speak to a regulated adviser before acting.