On 7 January 2013, child benefit became means tested in an effort to save the Treasury an estimated £1.5 billion in the next year. More than a million people are set to be affected by the cut, with the Institute of Fiscal Studies estimating that many would lose an average of £1,300 a year. Here is our guide on how to stay ahead of the changes.

Will you be affected by the cuts?

The first thing you need to do is to work out whether these changes will affect you. Families in which parents each earn less than £50,000 will continue to receive child benefit without having to pay the money back. Families with one parent with a taxable income of more than £50,000 will lose some of the benefit, and it will be withdrawn entirely if one parent earns above £60,000.

You need to remember that your eligibility for child benefit depends not just on earnings but on what is known as "adjusted net income". This includes all taxable net income, including rental income and investments as well as bonuses and benefits in kind.

The new tax is calculated on the income of the highest earner, so combined household income is irrelevant. If just one parent earns more than £50,000 a year, the family will have to pay back some of their child benefit.

Earn over £50,000? What are your options to keep receiving the benefit?

  1. Salary sacrifice

If your employer runs a salary sacrifice scheme, you can use it to replace taxable earnings with non-taxable benefits, such as childcare vouchers. Alternatively, you could ask your employer to reduce your salary but make up the difference in your workplace pension scheme, reducing your salary to less than £50,000.

  1. Pension contributions

If you earn £55,000 and make £5,000 of pension contributions, you will decrease your taxable income to £50,000, making you eligible for the full child benefit and have more money saved for when you retire. Paying money into a pension means you also benefit from a reduced income tax bill. However, you cannot normally access the funds before you reach 55.

  1. Transfer assets

Transfer savings and investments to your spouse if they earn less than you in order to reduce your taxable income.

  1. Review your spending

If you can’t bring your income below the £50,000 threshold, think about what you can do to offset the impact of losing the child benefit. For example, maximise the usage of your ISA allowance, and check for savings on your household bills.

  1. Use the child benefit as a loan

There are a number of ways your could use your child benefit to your advantage as long as you don’t spend it. You could put it in a regular savings account, for example, until you have to pay it back, so at least you are earning interest.

  1. Become a company

If you are a consultant or self-employed, this could be a viable option for you. Starting your own company would enable you to pay yourself a lower wage below the tax threshold and then declare and keep dividends from your company shares. This option isn’t possible for most employees, as an anti-avoidance rule exists to prevent "disguised employment", where someone is employed but in tax terms is self-employed.

What happens with child benefit if a couple has split up?

Both parents might try to claim, even if they live apart, but only one of them will get it. If somebody is responsible for a child, they normally get the benefit for it. So, usually, the parent with whom the child lives receives the benefit.

However, the other parent can get child benefit even if their child does not live with them.

This only happens when: they pay towards their upkeep; what they pay is at least the same as the amount of child benefit - so they do not profit; and the person the child lives with is not already receiving child benefit.

Earn over £50k? Have you registered for self assessment?

Any child benefit paid to high-earners who have failed to opt out will be clawed back through the High Income Child Benefit Charge, administered by HM Revenue and Customs.

If somebody earning more than £50,000 or their partner keeps claiming child benefit, then the higher earner will have to admit this in a self-assessment tax form. The IFS estimates that 500,000 extra people might have to fill in these forms as a result of the change.

They will need to register for self-assessment, if they have not already, by 5 October 2013 or face a fine.

The deadline has now expired for higher earners to opt out of receiving child benefit. They will still be able to do so, but may still face a tax charge for the time still in the system since 7 January.