THOUSANDS of parents could face shock tax bills out of the blue due to "pointlessly" complicated child benefit rules.
The taxman has written to nearly 100,000 people who should probably be paying the high income child benefit charge (HICBC).
And HMRC is also doing checks on 125,000 parents who may owe the cash from previous years, new figures reveal.
Families where a parent earns over £50,000 must tell the taxman and pay the tax charge on child benefit.
Child benefit is worth £84.60 a month for the first child – or just over £1,000 a year – and £56 a month for an extra child.
The HICBC is paid at a rate of 1% of the benefit for every £100 earned over this amount.
If either parent earns £60,000 or more the full amount must be repaid.
So for example, someone earning £55,000 and claiming for one child got £1,115.65 in the previous tax year.
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But under the rules they have to pay £557 to cover the tax charge, according to HMRC's child benefit calculator.
But many parents are not aware of the charge which came in from 2013.
The Sun has previously spoken to parents who were hit with surprise bills of thousands of pounds.
Some parents continue to claim child benefit and to pay the charge because it helps them to build up national insurance credits, which you need to qualify for the state pension.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown said: “The High Income Child Benefit Tax Charge is pointlessly complicated and widely misunderstood, so it’s no wonder that tens of thousands of people get things wrong, and risk shock tax bills.
"Even the mountains of paperwork involved are horribly confusing.
"The Office of Tax Simplification has pointed out that HMRC had to write to almost 100,000 people who aren’t paying the charge, but probably should be.
"It has also opened more than 125,000 checks on people who possibly should have paid in previous years.
"It means vast swathes of people could face massive tax bills out of the blue."
How to avoid a surprise tax bill
If you or your partner earns over £50,000 and you get child benefit you need to tell HMRC each year by filing a tax return.
You'll have to pay the tax charge which means paying back some of the money you get from the benefit, and if you earn £60,000 or more you'll have to pay it all back.
Around half a million people have to file a tax return just to report child benefit.
The rule applies when just one parent earning over this amount and if for example both earn £49,900 each, they won't be affected.
Although the rules have been in place since 2013, many parents are not aware of the change if it didn't affect them at the time but does now or more recently.
You should check for previous years if you earned over this amount as you could owe the tax for previous years.
You should contact HMRC if that's the case.
Charity Turn2Us recommends using the government's child benefit tax calculator to see how you might be affected by the high income tax charge.
You can decide to opt out of getting the benefit altogether to avoid having to pay money back. But you risk missing out on National Insurance credits.
These fill gaps in NI contributions when not working, and count towards how much state pension you get in retirement.
One grandmother has lost out on £800 a year in state pension payments after missing out on the credits.
The credits can be passed on to family who are looking after kids – but only if the parent is claiming the credits through child benefit in the first place.
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