In her Autumn Budget announcement, Rachel Reeves has confirmed the elimination of the controversial two-child benefit cap. This policy prevented low-income families from receiving additional means-tested benefits for a third or subsequent child born after April 6, 2017, impacting those on Universal Credit and Tax Credits.
Originally introduced by the Conservatives in April 2017, the two-child benefit cap has faced criticism for exacerbating child poverty. Reeves revealed that the cap will be removed starting April 2026, emphasizing the government’s stance against penalizing vulnerable children within the welfare system.
The Office for Budget Responsibility (OBR) projects that the removal of the two-child benefit cap will incur a cost of £3 billion by 2029/30. According to the Department for Work and Pensions (DWP), approximately 1,665,540 children were affected by this cap in April 2025.
Chris Sherwood, the CEO of NSPCC, praised the decision to scrap the limit, noting the positive impact it will have on lifting hundreds of thousands of children out of poverty. He emphasized the importance of tackling the underlying causes of child poverty with a comprehensive strategy to ensure every child has the opportunity to thrive.
The Institute of Fiscal Studies (IFS) estimates that affected families could have received an average of £4,400 more in benefits annually if the two-child cap had never been implemented. While lifting the cap may cost around £3.6 billion per year, Universal Credit claimants stand to benefit from increased monthly payments based on the timing of their children’s births.
Payments for additional children continue until the child reaches the age of 16 or 19 if they are in full-time education or approved training. The move to eliminate the two-child benefit cap marks a significant shift in welfare policy, aiming to alleviate financial strain on families and improve outcomes for children in need.