Hundreds of thousands could benefit from the rule change
Some benefit rule changes set out in the Universal Credit Bill will be officially implemented from April 6, 2026 as part of the Government’s plan to tackle child poverty. This single change could see more than 400,000 families increase their entitlement by thousands of pounds each year.
The two-child limit is being removed at the start of the new tax year from that April date. This will allow families on Universal Credit to receive the child element of the benefit for every child in the household and not just the first two.
Additionally, the benefit will also be receiving a 3.8% increase as part of the annual benefit uprating in April. This will make the child element worth around £3,650 per year from the time the two-child limit is scrapped.
It’s estimated that 450,000 fewer children will be living in relative poverty by 2030/2031 as a result of this rule change. The Government also estimates that 150,000 fewer working age adults will be in relative poverty.
The child element of Universal Credit adds an additional amount to a family’s claim to help cover the costs of raising a child and reduce child poverty. These amounts are usually paid per child but households with a third or more children born after April 2017 did not receive any extra earnings for these children.
There were some exceptions for families that had a third or more children without choosing to, such as having a multiple birth or non-consensual conception.
The two-child limit was originally introduced after the 2015 general election to make savings in the welfare system. The Conservative policy, which was criticised by many campaigners, aimed to ensure households on benefits would face the same “financial choices” around having more children that working households had.
It’s estimated that in April last year, around 483,000 families were being affected by the two-child limit. Government figures also estimate that 300,000 children are living in relative poverty as a result of the policy.
It’s worth noting that the two-child limit is not the same policy as the benefit cap, which will not be removed this April. The benefit cap limits the maximum amount a working-age household can receive in benefits and differs depending on where and who you live with.
Around 50,000 families may not be able to gain anything from the two-child limit being removed due to the benefit cap and a further 10,000 may not be able to get their full new entitlement as this would put them over their allocated cap.
A number of other changes to the Universal Credit system will also be implemented from April. This includes a cut to the Limited Capability for Work-related Activites group, also known as the health element of Universal Credit.
Currently, eligible claimants get £94 per week from this element but going forward, applicants who make their first successful claim after April will only get £50 per week.
Additionally, while most benefits, including Universal Credit add-ons, will be increasing by 3.8%, the benefits’ standard rate will be getting an extra increase of 2.3%. This will make for a total of 6.2% increase just for the standard rate.
