Hundreds of thousands of families across the UK are set to receive a significant boost to their household income following a major welfare change announced in the government's Autumn Budget.
What is changing with Universal Credit?
Chancellor Rachel Reeves has confirmed the abolition of the controversial two-child benefit cap for households claiming Universal Credit. This policy, originally introduced by the Conservative government in 2017, had restricted parents to claiming means-tested support only for their first two children.
Under the previous rules, families with a third or subsequent child born after April 6, 2017, were unable to claim the additional £292.81 per month that would normally be available for each child. The cap included some exceptions for circumstances such as multiple births or non-consensual conceptions.
When will the changes take effect and who benefits?
The significant policy shift is scheduled to come into force from April 2026. From this date, families will be able to claim support for all children in their household.
The financial impact will be substantial for affected families. For example, a single parent with three children will see their annual benefit entitlement rise from £20,978 to £24,491 – an increase of over £3,500 per year.
According to government estimates, approximately 560,000 families will benefit from the change by the 2029/30 financial year, with an average increase of £5,310 across these households.
Broader impact and reaction
The policy change is projected to have a dramatic effect on child poverty rates in the UK. The government estimates that 450,000 fewer children will be living in poverty by the end of the decade as a direct result of scrapping the cap.
However, the move has attracted some criticism. Opponents argue that the changes could reduce the incentive for parents to work, particularly for those earning around £22,000 on minimum wage.
The announcement forms part of the broader annual benefits uprating process, which typically uses inflation figures from September to determine increases that take effect each April.
