Benefits can understandably be a confusing topic for a lot of parents. Our MPO financial experts have written this article to explain how the current Universal Credit rules affect UK parents and what to do if you are struggling financially.
Will Labour scrap the two-child limit for Universal Credit?
Universal Credit has been the main topic of conversation in the press this week, with a lot of speculation about whether the unfair two-child limit will finally be scrapped.
A lot of parents are understandably confused about all the recent news stories, with many national newspapers wrongly referring to the ‘two-child benefit limit’. Child Benefit is a totally different benefit and doesn’t have the same limits applied to it as Universal Credit.
Currently, you can only claim Universal Credit for your first two children, with no additional support for larger families. These rules mean that millions of lower-income families are sadly struggling due to outdated limits put in place by the Conservatives in 2017.
Labour has been under pressure about this issue since they formed the new UK government, with experts such as Martin Lewis and our own Money Mum and Dad strongly supporting a review of this policy.
Martin Lewis also released this helpful video this week (above), which explains more about the two-child limit and why this is not the same as restrictions for Child Benefit.
60 Second Summary – Will Labour scrap the two-child limit for Universal Credit?
Benefits can be a confusing topic for a lot of parents, and this week’s constant stream of news about the ‘two-child benefit limit’ or ‘child benefit two child limit’ may not be the easiest to understand. This limit applies to Universal Credit and not Child Benefit, though many news sources don’t make this very clear.
To make things simpler, our MPO financial experts have written this article to explain how the current Universal Credit rules affect UK parents and what to do if you are struggling financially.
- High-profile campaigners like Martin Lewis and child poverty charities have been fighting the Universal Credit limit for years, as it unfairly targets larger low-income families.
- You can claim an additional amount of Universal Credit per month for up to 2 children in your household, though there are some exceptions (e.g. if you have triplets).
- If you think you might be entitled to Universal Credit (or other benefits) but aren’t claiming, you can check your eligibility on using a benefits calculator. There are a few available online including this helpful calculator from debt charity Turn2us.
- It doesn’t look like the Universal Credit limit will be lifted yet, but it is possible that this could change in the next government budget announcement.
What are the current Universal Credit rules for parents?
Theresa May’s Conservative government first introduced the cap on Universal Credit in 2017, with no changes made in the 7 years since then. The UK has since experienced a Worldwide pandemic, Brexit, and a cost-of-living crisis, so it’s fair to say that the financial situation has changed drastically for many families.
Universal Credit is one of the main benefits that parents can claim to support them with childcare costs. Below are the main rules for Universal Credit that you should be aware of:
- You don’t have to be unemployed or unable to work to claim Universal Credit, and it can be available for parents who are employed or self-employed too.
- You must live in the UK and be at least 18 years old (though there can be exceptions for some 16 and 17-year-olds.
- You must be under State Pension age and have less than £16,000 in money, savings, or investments.
- You will need to make a joint claim if you live with your partner – even if they aren’t claiming for themselves. This is because your partner’s income will be assessed as part of your household to work out how much your payments should be.
There are various other scenarios which would allow you to claim Universal Credit, and a full list of requirements is available HERE on the Gov.uk website.
How much can I claim per child?
If you are responsible for caring for a child, you can claim an extra amount on top of your usual Universal Credit payment. This only applies to up to 2 children though, even if you have 3 or more children that you take care of.
There are certain exceptions to this rule (e.g. if you were already claiming for 3 or more children before the limit was announced in April 2017). Other exception include if you have twins or triplets for example.
You can claim until your child turns 16 or 19 (if in full time education), and payments will continue until the 31st of August after their birthday.
Usual monthly payments for Universal Credit
| Standard monthly payment (£s) | |
| Single and under 25 years old | £311.68 per month |
| Single and over 25 years old | £393.45 per month |
| Living with a partner and under 25 years old | £489.23 per month (one payment for both of you) |
| Living with a partner and one or both of you are over 25 years old | £617.60 per month (one payment for both of you) |
Additional payments per child
| Standard monthly payment (£s) | |
| For your first child | £333.33 per month (born before 06/04/2017) OR £287.92 per month (born after 06/04/2017) |
| For your second child (and other children if you fall under the exceptions to the 2 child rule). | £287.92 per month |
| If your child is disabled | You can claim an additional £156.11 per month |
| If your child is severely disabled | You can claim an additional £487.58 per month |
Am I entitled to claim Universal Credit?
Many working parents don’t realise that they can claim benefits like Universal Credit and assume that they are only for unemployed people. Not all parents will be eligible for Universal Credit, but if you are unsure you can use an online benefits calculator.
You simply fill in your details and this calculator will tell you if you are entitled to Universal Credit or any other benefits that you weren’t aware of. The Gov.uk website contains links to several calculators that you might find useful.
Gov.uk Benefits Calculator Advice – CLICK HERE
Is Labour going to remove the two-child benefit limit for Universal Credit?
Sadly, Labour hasn’t budgeted for the extra expenses needed to remove the Universal Credit limit yet – and has shockingly suspended MPs that voted to remove the limit early.
According to reports from Sky News, it will cost around £1.5billion to remove the limit. We’re hopeful that the limit could be lifted later this year or next year if this is accounted for in the next government budget announcement.
Until then, our Money Mum and Dad and other campaigners will continue to speak out about this issue in the hope that Sir Keir Starmer will make these necessary changes to support UK families.
What can I do if my family is struggling financially?
There are a wide range of resources and charities that can help if you and your family are struggling to make ends meet. We have listed several of these resources below:
