Thousands of families could benefit from the change

Some benefit rule changes outlined in the Universal Credit Bill will officially come into effect from 6 April 2026, as part of the Government’s strategy to combat child poverty. This change could result in more than 400,000 families increasing their entitlement by thousands of pounds annually.

The two-child limit will be abolished at the start of the new tax year from that April date. This will enable families on Universal Credit to receive the child element of the benefit for every child in the household, not just the first two.

In addition, the benefit will also see a 3.8% increase as part of the annual benefit uprating in April. This will make the child element worth approximately £3,650 per year from the time the two-child limit is removed.

It’s projected that 450,000 fewer children will be living in relative poverty by 2030/2031 due to 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 provides an additional amount to a family’s claim to help cover the costs of raising a child and reduce child poverty. These amounts are typically paid per child, but households with a third or more children born after April 2017 did not receive any extra earnings for these children, reports the Mirror.

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 initially implemented following the 2015 general election as a means to make savings in the welfare system. The Conservative policy, which faced criticism from numerous campaigners, was designed to ensure that households on benefits would have to make the same “financial choices” about having more children as working households do.

It’s estimated that in April of the previous year, approximately 483,000 families were impacted by the two-child limit. Government statistics also suggest that 300,000 children are living in relative poverty due to this policy.

It’s important to distinguish that the two-child limit is not the same as the benefit cap, which will not be lifted this coming April. The benefit cap restricts the maximum amount a working-age household can receive in benefits and varies depending on your location and who you live with.

Roughly 50,000 families may not benefit from the removal of the two-child limit due to the benefit cap, and an additional 10,000 may not receive their full new entitlement as this would exceed their assigned cap.

Several other modifications to the Universal Credit system will also come into effect from April. This includes a reduction to the Limited Capability for Work-related Activities group, also known as the health element of Universal Credit.

At present, eligible claimants receive £94 per week from this component, but moving forward, applicants who make their first successful claim after April will only receive £50 per week. While the majority of benefits, including Universal Credit additions, will rise by 3.8%, the standard rate of benefits will receive an additional 2.3% uplift. This means the standard rate will see a total increase of 6.2%.