The two-child limit on Universal Credit and Child Tax Credit has been scrapped, the government confirmed on 9 July 2026, as part of a Child Poverty Strategy baseline report. The policy had left 453,600 Universal Credit households, and 1.6 million children, without the child element for a third or subsequent child born after 6 April 2017. The change is one of several expected to lift around 550,000 children out of poverty by the end of this Parliament.
TL;DR · LAST REVIEWED 10 July 2026
- The two-child limit on Universal Credit and Child Tax Credit, which capped support for a third or subsequent child born after 6 April 2017, has been scrapped, the government confirmed 9 July 2026.
- The policy affected 453,600 Universal Credit households and 1.6 million children as of April 2025, before being removed.
- Free school meals are being expanded from September 2026, alongside a £1 billion Crisis and Resilience Fund, as part of the same Child Poverty Strategy.
- Together, these measures are expected to lift around 550,000 children out of poverty by the end of this Parliament, according to a baseline report published 9 July 2026.
KEY FACTS
- Two-child limit on UC/Child Tax Credit: scrapped, confirmed 9 July 2026
- Previously affected 453,600 UC households and 1.6 million children (April 2025 figures, before removal)
- Benefit Cap (separate policy, still in force): 124,000 households capped, 103,000 with children (May 2025)
- Free school meals expansion begins September 2026
- £1 billion Crisis and Resilience Fund launched
- Target: around 550,000 children lifted out of poverty by the end of this Parliament
- 4.5 million children were in relative low income in 2023/24, 900,000 more than in 2010/11; 2.0 million in deep material poverty
What's changed: the two-child limit is scrapped
The two-child limit restricted the child element of Universal Credit and Child Tax Credit to the first two children in a family, for a third or subsequent child born on or after 6 April 2017. The Department for Work and Pensions and Department for Education confirmed on 9 July 2026 that the policy has been scrapped, describing it as one of the "early actions" already taken under the Child Poverty Strategy, alongside expanding free school meals and launching a £1 billion Crisis and Resilience Fund.
Work and Pensions Secretary Pat McFadden said scrapping the limit and launching the Crisis and Resilience Fund were already making a difference, and framed the baseline report as evidence of a serious, evidence-led approach to reducing child poverty. Education Secretary Bridget Phillipson described the combined package, including the two-child limit removal, expanded free school meals and free breakfast clubs, as the largest reduction in child poverty in a single Parliament since records began.
Who was affected, and what this means for existing claimants
According to the government's own evidence pack, 453,600 Universal Credit households were not receiving some child element because of the two-child limit as of April 2025, with 1.6 million children living in those households. Independent experts, including the Institute for Fiscal Studies and the Resolution Foundation, had identified removing the two-child limit as one of the most cost-effective policy levers available to reduce child poverty, ahead of this change being confirmed.
| Two-child limit: UC households affected | 453,600 | |||
| Two-child limit: children affected | 1,600,000 | |||
| Benefit Cap: households affected | 124,000 | |||
| Benefit Cap: households with children | 103,000 |
The publication of the baseline report came a day after the government published what it describes as the last ever official statistics on the number of people affected by the two-child limit, reflecting the fact that the policy no longer applies going forward.
The Benefit Cap: a separate policy that still applies
The two-child limit should not be confused with the Benefit Cap, a different policy that limits total benefit income regardless of family size and remains in force. As of May 2025, 124,000 households were capped, 103,000 of them with children, with almost all of those capped on Universal Credit rather than Housing Benefit. Households can be exempt from the Benefit Cap where an adult has limited capability to work, is caring for someone with a disability, receives a disability-related benefit, or where the household has combined earnings of £846 or more per month.
Free school meals expansion and the Crisis and Resilience Fund
Free school meals are being expanded from September 2026, building on the government's stated ambition around free breakfast clubs and affordable childcare. The £1 billion Crisis and Resilience Fund, also referenced as an early action already under way, sits alongside these changes as part of the same strategy. Together with the two-child limit removal, the government expects these measures to lift around 550,000 children out of poverty by the end of this Parliament.
The scale of child poverty the strategy is responding to
| Children in relative low income (2023/24) | 4.5m | |||
| Children in deep material poverty | 2.0m | |||
| Children in families with a "negative budget" | 1.5m |
The Child Poverty Strategy's own evidence pack sets out the scale of the problem it is responding to. In 2023/24, there were 4.5 million children in relative low income after housing costs, an historic high and 900,000 more than in 2010/11. Of these, 2.0 million children were in deep material poverty, defined as lacking at least 4 of 13 essential material items. A further 1.5 million children live in families with a "negative budget", where income is not enough to cover essential costs, forcing families into debt just to get by. Families with children also have far lower savings buffers than those without: a median of £1,000 compared with £4,100, and 80% of families with children in relative low income, rising to 95% in deep material poverty, have no or low savings at all.
What else the evidence shows: childcare and essential costs
The evidence pack also sets out childcare as a specific barrier: 44% of working Universal Credit households not currently using childcare cited cost as the reason, and nursery costs for part-time care for 0 and 1-year-olds in England grew 23% in real terms between 2010 and 2024, faster than income growth for the lowest-earning households. In 2023, 52% of families earning £10,000 to £19,999 a year found childcare costs difficult or very difficult to meet, compared with 18% of families earning £45,000 or more. Working households can currently get help with up to 85% of childcare costs through Universal Credit. Beyond childcare, the pack notes that school-related costs, including uniform and trips, can add over £1,000 a year for a child in primary school and £2,000 a year for a child in secondary school.
How progress will be tracked over the next decade
The baseline report sets the starting position for the Child Poverty Strategy's full ten-year course, with annual reporting against two headline metrics: relative low income after housing costs, and deep material poverty. The government has committed to a four-year study of parents and carers in or near poverty, alongside lived-experience research, cross-government policy evaluation and a new Interministerial Group on child poverty working with devolved governments, local partners and civil society.
RELATED GUIDES
DISCLAIMER
This article is for general information only and does not constitute financial or benefits advice. Kael Tripton Ltd is an independent editorial publisher and is not authorised or regulated by the Financial Conduct Authority (FCA). Figures are drawn from the Department for Work and Pensions' Child Poverty Strategy Evidence Pack and the 9 July 2026 baseline report. Anyone affected by these changes should check their Universal Credit journal or contact DWP directly for advice on their specific claim. ICO registration ZC135439.
Frequently asked questions
Has the two-child limit definitely been scrapped, or is this still a proposal?
It has been scrapped. The government describes it as an early action already taken under the Child Poverty Strategy, and says the statistics published the day before the baseline report are the last ever figures on how many people were affected by the policy, since it no longer applies.
Will I automatically get more Universal Credit now the two-child limit is scrapped?
The government has confirmed the policy is scrapped, but has not published detailed guidance in these releases on exactly how and when individual awards will be adjusted. Anyone with a third or subsequent child affected by the previous limit should check their Universal Credit journal or contact DWP directly for confirmation on their own claim.
What is the Benefit Cap, and is that also being scrapped?
No. The Benefit Cap is a separate policy that limits total household benefit income regardless of family size, and it remains in force. As of May 2025, 124,000 households were capped, 103,000 of them with children.
What is the Crisis and Resilience Fund?
A £1 billion fund described by the government as an early action under the Child Poverty Strategy, launched alongside the two-child limit removal and the expansion of free school meals from September 2026.
How is the government measuring progress on child poverty?
Progress is tracked against two headline metrics: relative low income after housing costs, and deep material poverty, defined as a family lacking at least 4 of 13 essential material items. A baseline report published 9 July 2026 sets the starting position, with annual reporting over the Strategy's ten-year course.
SOURCES
- Department for Work and Pensions and Department for Education, Plan to track progress on lifting 550,000 children out of poverty published – accessed 9 July 2026
- Department for Work and Pensions, Child Poverty Strategy: Evidence Pack – accessed 9 July 2026
- GOV.UK, Child Poverty Strategy collection – accessed 10 July 2026
