Rachel Reeves announced in her Autumn Budget that she will eliminate the contentious two-child benefit cap. This cap restricts 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 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 importance of not penalizing the most vulnerable children within the welfare system.
According to the Office for Budget Responsibility (OBR), the removal of the two-child benefit cap is projected to cost £3 billion by 2029/30. The Department for Work and Pensions (DWP) reported that in April 2025, 1,665,540 children were affected by this cap.
Separate from the benefit cap, which imposes a limit on total benefit amounts, the two-child benefit cap has been a subject of debate. The NSPCC’s CEO, Chris Sherwood, lauded the decision to scrap the cap, highlighting its potential to lift hundreds of thousands of children out of poverty.
The Institute of Fiscal Studies (IFS) estimates that families impacted by the cap could have received an average of £4,400 more annually if the cap had never been in place. However, lifting the cap could incur an estimated cost of £3.6 billion per year, with Universal Credit claimants currently receiving extra monthly payments depending on the child’s birth date.
Parents may continue to receive payments until their child turns 19 if the child remains in full-time education or approved training. This move aims to alleviate financial burdens on families and improve the well-being of children across the UK.