• The high income child benefit tax charge affects (HICBC) people who may not have the disposable income to do anything about it but who may have parents who could help
• Contributions paid into someone else's pension are treated as either exempt or potentially exempt transfers for IHT purposes.
• A contribution paid by a grandparent for an adult child caught in the high income child benefit tax charge trap can combine tax planning on a family basis and retirement planning.

There is a 1% tax charge on the child benefit received for each £100 of Adjusted Net Income over £50,000. At £60,000 plus, the tax charge is 100%, in effect removing all child benefit, It’s also worth noting that the  HICBC starts before the adjusted net income of the highest earner moves into higher rate tax

The gross value of contributions by the member or a third party on their behalf to personal pension schemes are deducted when calculating Adjusted Net Income.

Contributions paid into someone else's pension are treated as either exempt or potentially exempt transfers for IHT purposes. For income tax purposes they are treated as if they were made by the member of the pension scheme not the payer.

Identify someone in the child benefit tax trap:

1. There is a member of household receiving child benefit and
2. One member of the household has Adjusted Net Income in excess of £50,000 (even if they are not the recipient of the child benefit)

Identify the amount of Adjusted Net Income in excess of £50,000.

Make a net relief at source contribution pension contribution of 80% of the excess either as a single or regular contribution in the tax years the tax trap applies.