Government announces removal of the two-child benefit cap in Budget

The Chancellor of the Exchequer announced in her Autumn Statement on 26 November 2025 that the two-child limit in Universal Credit is being abolished from April 2026¹. The limit restricts Universal Credit support to two children in a family². The Children's Commissioner for England, Dame Rachel de Souza, responded to the announcement the same day³.

The Universal Credit (Removal of Two Child Limit) Bill was introduced in the House of Commons on 8 January 2026¹. For Great Britain it amends provisions in the Welfare Reform Act 2012, the Welfare Reform and Work Act 2016 and the Universal Credit Regulations 2013¹. Clause 3(4) sets the coming into operation date for clause 2 as 6 April 2026, and additional child elements can be included in the calculation of entitlement for assessment periods starting on or after 6 April 2026¹.

In Northern Ireland, the Minister for Communities laid a Legislative Consent Memorandum before the Assembly on 19 January 2026, seeking agreement to extend the Bill's provisions on the removal of the two-child limit to Northern Ireland¹. The memorandum states that social security is devolved but that there is, in effect, a single system of social security in Northern Ireland and Great Britain, and that parity of timing and substance is an integral part of maintaining it¹. It adds that if extension is not agreed, a separate Assembly Bill would be needed, meaning people in Northern Ireland would not benefit at the same time as those in Great Britain, which could have an adverse financial impact on claimants there¹. Sir Stephen Timms MP, Minister for Social Security and Disability, has confirmed that formal consent will be required before the Bill reaches Royal Assent, which is likely to be mid-late March 2026¹.

At August 2025, 13,780 households in Northern Ireland were impacted by the two-child policy, containing 48,080 children, of whom 17,600 were not eligible for the child element in Universal Credit¹. Of those 13,780 households, 650 were affected by the Benefit Cap; following removal of the two-child policy an additional 1,010 households are estimated to be impacted, bringing the total estimated impacted households to 1,660¹. The memorandum sets out projected additional costs:

Source: Department for Communities Legislative Consent Memorandum, 19 January 2026¹

Gingerbread said the child element of Universal Credit will also be increased, and that by the government's own estimates 560,000 families will see an increase in Universal Credit benefits in 2029-30, reducing rates of child poverty by 450,000 by 2029-30². It said over half of all households affected by the two-child limit are single-parent families, and that 43% of children in single-parent families live in poverty². The Institute and Faculty of Actuaries' ILC said the measure "will lift 400,000 children out of poverty"⁴. The two estimates of children lifted out of poverty differ: 450,000 by 2029-30² and 400,000⁴.

Gingerbread said it was disappointed that the Benefit Cap was not abolished, noting that almost 70% of households affected by the cap are single parents and over half of these have a youngest child under five years old². It also said the National Minimum Wage and National Living Wage are set to increase by 8.5% and 4.1% respectively from April 2026².

Why it matters for households

Families on Universal Credit with three or more children have had the child element paid for a maximum of two children, subject to a limited number of exceptions¹. From assessment periods starting on or after 6 April 2026, an amount will be included in the Universal Credit calculation for all children or qualifying young people in the household¹. The change applies in Great Britain through the Bill, and in Northern Ireland only if the Assembly agrees the extension; the memorandum states that without it, people in Northern Ireland would not benefit at the same time as those in Great Britain¹. The removal also means more families are expected to be affected by the Benefit Cap in Northern Ireland, where Welfare Supplementary Payments offset benefit lost to the cap and are funded through the Executive's Departmental Expenditure Limit Budget¹. The additional funding for that mitigation scheme will require Executive consideration as part of the 2026-29/30 multi-year Budget Exercise¹. The memorandum states that the UK Government is not consulting on measures in the Bill, and that in view of the severely restricted timeline it will not be possible for the Department for Communities to conduct any specific consultation in Northern Ireland¹.

What happens next

The Bill was introduced in the House of Commons on 8 January 2026¹. Formal consent will be required before Royal Assent, which is likely to be mid-late March 2026¹. The UK Government is working to progress the legislation as quickly as Parliamentary time allows to enable the changes to take effect from 6 April 2026¹. The Northern Ireland Assembly is asked to agree the principle of extending clauses 2 and 3 to Northern Ireland¹. Gingerbread said the government is expected to publish its Child Poverty Strategy in the coming weeks².