The two-child benefit cap limits families from claiming further Universal Credit or Tax Credits for their third or subsequent child
The two-child benefit cap is being axed – with the scrapping of the controversial scheme to take place in April 2026.
Chancellor Rachel Reeves confirmed the end of the cap, which limits families from claiming further Universal Credit or Tax Credits for their third or subsequent child, as part of her Budget.
The Office for Budget Responsibility (OBR) estimates removing the cap will increase the benefits for 560,000 families by an average of £5,310, and will lift 450,000 children out of poverty by 2029/30.
The cost of getting rid of the cap will reach £3billion by 2029/30, the OBR says. The policy was introduced by the Conservatives in April 2017 but has long come under fire from campaigners.
The Chancellor told the Commons: “We on this side of the House do not believe that the solution to a broken welfare system is to punish the most vulnerable children.”
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The two-child benefit cap is separate to the benefit cap, which is a limit on the total amount of benefit you can get. Universal Credit claimants currently receive an extra £339 a month if their first child was born before April 6, 2017.
If your first child was born on or after April 6, 2017, or you have a second child, the extra amount is £292.81. These extra payments are paid until August 31 after the child turns 16.
Parents can continue to get payments up until their child is aged 19 if they are continuing in full-time education or approved training.
Chris Sherwood, CEO at the NSPCC, said: “The Chancellor finally scrapping the two‑child limit is a welcome move that will lift hundreds of thousands of children out of poverty.
“Through Childline, we hear about children and young people not being able to afford food or school essentials, worrying about judgement from others and agonising over the wider impact on their family, all of which can have a devastating effect on their physical and mental wellbeing.
“If the Government wants to continue to be bold and make poverty‑free childhoods a reality for all, it must build on today’s Budget with a comprehensive child poverty strategy that tackles the root causes head‑on. Only then will every child have the chance to thrive.”
Professor Ashwin Kumar, director of research and policy at IPPR, and former advisor to Gordon Brown, said: “Abolishing the two-child limit is targeted, sensible and fair. It supports families who need it most, reduces child poverty, and saves the public money in the long run.
“For too long, children have been punished for the so-called sins of their parents. The policy was both ineffective and unjust. Ending the two-child limit is a serious step towards restoring fairness, opportunity and dignity for families across the country.”
