Financial guru Martin Lewis has stepped in to clear up widespread confusion following the government's announcement that it will scrap the controversial two-child benefit limit.
What exactly is being scrapped?
The clarification came after Chancellor Rachel Reeves delivered the Labour government's first Autumn Budget on Wednesday, November 26. While the announcement marked a significant policy shift, it created uncertainty among parents about what specifically would change.
The two-child benefit limit is completely separate from Child Benefit, which remains a universal payment available to all families. Child Benefit is currently set at approximately £26 per week for the first child and £17 per week for each additional child, though higher earners see this amount clawed back through the tax system.
Martin Lewis's clear breakdown
Taking to social media platform X, Martin Lewis provided what he called "a bit of a primer" to help households understand the changes. He explained that the two-child limit, often mistakenly called a cap, specifically affects those claiming Universal Credit or Tax Credits.
"The two-child benefit limit means those who get Universal Credit won't get any additional benefit if they incur extra costs because they've more than two children," Lewis stated. "This is what is being scrapped in April, so they will get more benefits if there are extra costs from more children."
Understanding the different benefit rules
Lewis was careful to distinguish between three separate elements that often get confused. He noted that households need to understand the differences between Child Benefit rules, the two-child limit for Universal Credit and Tax Credits, and the separate Benefits Cap.
The Benefits Cap, which remains in place, sets a maximum amount households can receive in benefits. For families, couples and single parents outside Greater London, this cap stands at £1,835 per month, with higher amounts applying within the capital.
The money expert concluded his explanation by acknowledging the complexity of the system, saying: "There are lots of ifs and buts. I hope that helped clear it up a bit." His intervention comes as many families prepare for the changes set to take effect from April next year.
