Rachel Reeves announced in her Autumn Budget the elimination of the controversial two-child benefit cap. This cap prevents low-income families from accessing additional means-tested benefits for a third or subsequent child born after April 6, 2017, impacting those on Universal Credit and Tax Credits.
Originally implemented by the Conservatives in April 2017, the policy has faced criticism for exacerbating child poverty. The cap is set to be removed starting April 2026, with Reeves emphasizing the government’s stance against punishing vulnerable children within the welfare system.
The Office for Budget Responsibility estimates that abolishing 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 the two-child benefit cap in April 2025. This cap differs from the benefit cap, which limits the total amount of benefit one can receive.
Chris Sherwood, CEO of the NSPCC, praised the decision to scrap the two-child limit, highlighting its potential to uplift hundreds of thousands of children out of poverty. He stressed the importance of implementing a comprehensive child poverty strategy to address the underlying causes.
The Institute of Fiscal Studies (IFS) suggests that families affected by the cap could have received an average of £4,400 annually in benefits if the cap had never been introduced. Removing the cap could potentially cost £3.6 billion yearly, with Universal Credit claimants receiving additional payments based on the child’s birthdate.
Payments continue until the child turns 16, with extended support for those in full-time education or approved training up to age 19.