From April, the Government is removing the two-child limit on certain benefits. This change means that many families can now receive child-related benefits for more than two children, rather than being restricted to only the first two.
For many families, this is a positive change, because it increases the amount of benefits they receive, particularly through Universal Credit or Child Tax Credit. However, in some cases, the increase in benefit income might cause families to be affected by a different rule known as the ‘benefits cap’.
Below, we explain what’s changing, who might be affected, and what it could mean for your household.
What is the ‘benefits cap’?
The benefits cap sets a maximum amount of benefits a household can receive each week. It mainly affects working-age households who aren’t working enough hours to qualify for an exemption.
If the removal of the two-child limit increases your family’s benefit income above the benefits cap limit, the Department of Work and Pensions (DWP) might lower your Universal Credit to bring your total income down to the capped amount.
In other words, even if your family is now entitled to more financial support on paper, you may not receive all of it if it takes your household benefits income above the cap.
Who’s exempt from the Benefits Cap?
Some households are not affected by the benefits cap. If you qualify for an exemption, your benefits won’t be reduced, even if your total household income is above the cap level.
You may be exempt if anyone in your household receives:
- Disability Living Allowance (DLA)
- Personal Independence Payment (PIP)
- Attendance Allowance
- Carer’s Allowance
- Armed Forces Independence Payment
You’re also exempt if:
- You're a single parent and work enough hours to qualify for the earnings exemption
- You’re a couple and one or both adults work enough hours to qualify for the earnings exemption.
If any of these apply, the benefits cap will not reduce your payments.
A simple example
To understand how these changes might work in practice, here’s a straightforward example:
Before April 2026:
A family with four children only receives benefit payments for two of the children because of the two-child limit
After April 2026:
After the limit is removed, the family is now entitled to support for all four children and their Universal Credit increases.
However:
This increase pushes their total income from benefits to above the benefits cap
The DWP lowers their Universal Credit to bring them back within the capped amount.
Later, if one of their children receives Disability Living Allowance (DLA):
- The family becomes exempt from the benefits cap
- Their Universal Credit is no longer reduced
They begin to receive the full amount they’re entitled to, including the support for all four children, even though the total is higher than the benefits cap.
We're here to help
Every family’s situation is different, and we know that changes to benefits can sometimes feel overwhelming.
If you need help understanding how these updates might affect you and your family, our team is here to talk things through and make sure you have the information you need.
