The chartered financial planner explained that for some, there are ways to legally avoid the charge, with one option in particular enabling the person to still benefit from their income during their lifetime. This is by making pension contributions.
“Parents with income substantially above £60,000 may choose to waive payment of the child benefit to avoid having to report and pay the tax,” commented Ms Ingram.
“Those whose incomes are above £50,099, but below £60,000, can still receive a proportion of the benefit tax free and can even increase their entitlement to tax free Child Benefit by making pension savings or donating to charity.
“Each £1 saved in a pension plan or gifted using gift aid reduces the income that counts towards the threshold in addition to providing tax relief at 40 percent.
“For example, Georgia has two children and would normally be entitled to tax free Child Benefit of £1,855 per year. Her income is £52,000 so she owes tax of £371 on the Child Benefit.