THOUSANDS of families could be stung by huge bills after mistakenly claiming child benefit.
At least 170,000 households could be penalised after the government changed the law.
It could see them hit with bills totalling thousands of pounds.
Rules updated by the government state that if someone in the household earns more than £50,000, the High Income Child Benefit Charge kicks in.
It means you start to be taxed on the money you claim.
Parents have been caught out by the complicated rules and extra charge and have been landed with bills for thousands of pounds.
It is up to parents to notify HMRC if they are liable for the charge and they must file a self-assessment tax return to pay it.
Jason and Samantha Wilkes, from Somerset, were slapped with a bill to repay more than £4,200 in child benefit plus fines.
Dad Jason received a pay rise in 2014 that pushed him over £50,000 – but they were unaware the rules had changed in 2013 which means people on more than £50,000 pay tax on the benefit.
They continued to claim it for their two kids between 2014 and 2017 until they got a bill from HMRC, reports the Telegraph.
Jason, 52, told the outlet: “Nobody told me that when I went over the threshold.”
The couple won a case against HMRC but the department appealed and in January HMRC was granted permission to use investigative powers to reclaim child benefit.
But even if the family win the appeal, the judgment will not apply to some 170,000 other families also affected, it was revealed in court last week.
A HMRC spokesman said: “Individuals who do not report liability to these charges cannot gain an unfair advantage over the majority following the rules.”
Last year, 7.74 million families were claiming child benefit, a fall of roughly 95,000 when compared to the year before.
Most parents in the UK can claim child benefit but there are still certain eligibility rules.
You can claim if you’re responsible for a child who is under 16 or under 20 and in approved education or training.
Only one person in the household can get child benefit, but there is no limit to how many children you can claim for.
You can claim if your salary is about £50,000, but the High Income Child Benefit Charge kicks in at that point, meaning you’ll start to be taxed on the money you claim.
From your self-assessment tax return, HMRC calculates how much you owe them in over-payments which must either be paid in full or negotiated to be paid in installments.
But once you start earning £60,000 of more, you’ll lose all of your benefit through tax.
Even if you start having to pay tax, you can financially profit from claiming.
You could put the Child Benefit into a high-interest savings account to earn money before having to pay the tax back.