Personal finance expert Martin Lewis has issued guidance to parents claiming Child Benefit who are at risk of exceeding the earnings threshold and potentially having to repay it. During his BBC Radio 5 Live podcast, he answered a listener's question about facing a tax charge after a pay rise pushed their salary above £60,000.
Child Benefit rates for 2026/27
For the 2026/27 tax year, parents receive £27.05 a week — approximately £117.22 per month — for their eldest or only child, and £17.90 a week for each additional child, around £77.57 per month. Child Benefit is tax-free, but if a parent or their partner has an individual adjusted net income exceeding £60,000, they may be liable for a tax charge.
The listener explained: "I recently gained a significant promotion in April taking my annual salary up by £16,000. Prior to me gaining that promotion I'd started the process of getting an EV car through work on a salary sacrifice scheme that subsequently arrived in June. I'm the primary earner and my wife works part time in a minimum wage job. She claims Child Benefit for our two children but I'm now concerned about hitting the higher earner Child Benefit threshold."
Salary sacrifice and adjusted net income
The listener asked whether the salary sacrifice EV scheme reduces his income for Child Benefit calculations, and whether, if his EV payments commenced later in the tax year, this could cause him to exceed the threshold — and if so, whether he should boost his pension contributions to keep his taxable income beneath £60,000.
Martin explained: "A salary sacrifice scheme is effectively you pay for something through work and they reduce your salary to do it - so you get the car, but you have a lower salary and effectively as you've got a lower salary you're not paying tax and national insurance on your income and you're just getting the benefit that you would get."
How the threshold works
Mr Lewis said Child Benefit reduces once the highest earner in a couple earns £60,000. He added: "It's totally gone by the time the highest earner earns £80,000." He explained that the money is recouped via the high-income child benefit tax charge.
He said: "If you do salary sacrifice on a new electric vehicle that does reduce what is called your 'adjusted net income'." He clarified that this relates to the £60,000 - £80,000 threshold, explaining that the EV scheme would lower the adjusted net income — though not by the full amount, as a separate calculation must be carried out regarding 'benefits in kind'.
Regarding pensions, he explained that any contributions made to pension schemes in this manner could potentially bring a person's earnings below the threshold. He continued: "What I would say is make the right decisions for yourself. Remember it isn't a cliff edge on child benefit - it starts at £60,000 and reduces over £30,000 of earnings, so if you were to see £60,500 you would see a very small reduction, it wouldn't be that big an impact". "As you're close to the edge do what's right for you whilst trying to keep hold of the child benefit, but don't be too extreme to keep hold of the benefit would be my overall guidance."
