Can salary sacrifice reduce the High Income Child Benefit Charge in 2026/27?

Full answer

The High Income Child Benefit Charge (HICBC) applies where either partner in a household has ANI above GBP 60,000 and Child Benefit is being paid. The charge tapers from 0% at GBP 60,000 to 100% at GBP 80,000 (clawing back the entire Child Benefit amount at GBP 80,000 ANI). How the taper works (2026/27) -- ANI below GBP 60,000: no HICBC -- GBP 60,000-80,000: 1% of Child Benefit for every GBP 200 of ANI above GBP 60,000 -- GBP 80,000+: full Child Benefit clawed back Example with 2 children: -- Child Benefit: GBP 25.60/week for first child + GBP 16.95/week for second = GBP 42.55/week = GBP 2,212.60/year -- ANI = GBP 68,000: excess over GBP 60,000 = GBP 8,000 / GBP 200 = 40 units; HICBC = 40% x GBP 2,212.60 = GBP 885.04 How salary sacrifice helps Salary sacrifice to an employer pension scheme (under a registered pension) reduces gross salary and therefore reduces ANI. The reduction in ANI is pound-for-pound. Example: salary GBP 68,000, sacrifice GBP 8,000 to pension. New ANI = GBP 60,000. HICBC = GBP 0. Child Benefit retained. Tax saving: GBP 885 HICBC + income tax and NI savings on GBP 8,000 sacrifice (40% income tax + 2% NI = GBP 3,360). Other salary sacrifice benefits that reduce ANI -- Cycle to Work scheme -- Childcare vouchers (legacy scheme) -- Electric vehicle (EV) company car via salary sacrifice (the benefit in kind is very low for EVs) Non-salary-sacrifice options Personal pension contributions (outside salary sacrifice) also reduce ANI -- the contribution grossed up for basic rate tax relief is deducted from ANI. GBP 8,000 personal contribution = GBP 10,000 gross pension contribution reduces ANI by GBP 10,000. Whose ANI matters? The HICBC is triggered by the partner with the higher ANI, regardless of who receives the Child Benefit. Both partners should check their individual ANI. If one earns GBP 70,000 and the other GBP 50,000, the HICBC is based on the GBP 70,000 income.

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