BUDGET 2025: Two child benefit cap lifted for Universal Credit

In a huge move, the government has announced that it will lift the two-child benefit cap for Universal Credit from April 2026. The cap means that low-income families do not receive further means-tested benefits when they have a third child, or any more children after that.

The Office for Budget Responsibility documents said: “The removal of the two-child limit within Universal Credit increases benefits for 560,000 families by an average of £5,310.”

It added that this will cost the government around £3 billion by 2029-30.

Think tanks have been calling for governments to lift the cap for years to help take hundreds of thousands of children out of poverty immediately, but the move has been resisted up to now.

Our view

Lifting the two-child limit for Universal Credit is a hugely important step toward reducing child poverty in the UK that should have been taken a long time ago, and the government should be praised for finally making it happen.

It has the potential to lift hundreds of thousands of children out of hardship and ease pressure on families who are already struggling amid the rising cost of living.

The cap disproportionately affects larger households, but no child should suffer because of the circumstances they are born into.

This change takes a meaningful stride toward helping families across the country and hopefully begins a path towards ensuring all children have the best start in life.