In a significant shift in social policy, Chancellor Rachel Reeves has used her Autumn Budget to announce the abolition of the controversial two-child benefit cap.
What Was the Two-Child Benefit Cap?
The two-child limit was a policy introduced by the Conservative government in April 2017. It restricted low-income families from receiving additional means-tested benefits for a third or subsequent child born after April 6, 2017.
This rule affected claimants of Universal Credit and Tax Credits, and had long been criticised by campaigners who argued it was a key driver of child poverty across the UK.
The Impact of Scrapping the Cap
According to documents released by the Office for Budget Responsibility, the cap will be officially scrapped from April next year.
Official statistics from the Department for Work and Pensions (DWP) reveal the scale of this change: a total of 1,665,540 children were impacted by the policy as of April 2025.
The Institute for Fiscal Studies (IFS) estimates that affected families lost out on an average of £4,400 in benefits per year because of the cap. However, removing it comes at a substantial cost, with previous IFS analysis suggesting a potential price tag of £3.6 billion annually.
What This Means for Family Finances
The removal of the cap will have a direct impact on household budgets for larger families. Currently, under the existing rules:
- Universal Credit claimants receive an extra £339 per month for a first child born before April 6, 2017.
- For a first child born on or after that date, or for a second child, the payment is £292.81 per month.
These additional payments are made until August 31 after the child's 16th birthday, and can continue until they are 19 if they remain in full-time education or approved training.
With the cap lifted, families will now be able to claim these standard amounts for every child in their household, regardless of their birth order, providing a significant financial boost to those struggling with the cost of living.
