How to boost pension savings and reduce tax

Parents earning more than £50,000

For taxpayers subject to the high-income child benefit charge because they or their partner get child benefit, and either have an individual income more than £50,000, making a pension contribution could reduce or eliminate the charge.

The charge is equal to 1 per cent of a family’s child benefit for every £100 of income that is more than £50,000 each year. If an individual’s income is more than £60,000, the charge will equal the total amount of the child benefit.

“Individuals will also receive tax relief at their highest marginal rates on the pension contribution,” notes Tully. “This can mean tax relief of close to 60 per cent. In other words, for each £1,000 in the pension, the government has effectively paid around £600. That’s a fantastic outcome, if people are able to afford the payments.”

Chloe Cheung is a senior features writer at FTAdviser