The High Income Child Benefit Charge (HICBC) that came into force on 7 January 2013 applies to a parent where they or their partner have an annual income in excess of £50,000.
Once you or your partner’s annual income hits £60,000, the full amount of Child Benefit will be clawed back via the HICBC.
There is still time to reduce this for the current tax year, even though there is only a couple of weeks left, but there are steps you can take to reduce the HICBC. For most, this would be down to making Gift Aid payments to a charity or by paying contributions into a pension, but you may be better waiting until after 5 April.
If you think you will be liable to the HICBC for both 2012/13 tax year and 2013/14 you can save by making Gift Aid payments or contribute towards your pension, but this could be difficult to achieve for this current tax year.
A pension payment is more tax efficient in 2013/14 and 2012/13 is because the HICBC only applies for one quarter of 2012/13 but for the whole of 2013/14. Reducing your taxable income for later of these years can reduce your HICBC by four times the rate if applied the year earlier.
Although pension contributions and Gift Aid payments made before 5 April 2013 will reduce the Child Benefit tax it may be worth waiting until after, as this can reduce the tax by up to four times during 2013/14 tax year.
HMRC has an online check which works out how much HICBC is payable and this would be a great tool to use to see how effective a Gift Aid payment or pension contribution can be for both this current year and next.