What is changing?
The government has introduced a two child limit in Child Tax Credit, Housing Benefit and Universal Credit. This applies where you already have responsibility for two or more children and become responsible for another child on or after 6th April 2017. This applies both for new babies and when another child joins your family after this date. Child Benefit will still be paid and is not affected by this change. The change to Housing Benefit only applies to those who do not get passported on to full Housing Benefit as a result of result of receiving a means-tested benefit such as Income Support, Income Based Job Seeker’s Allowance, Income Related Employment and Support Allowance or Universal Credit if they live in supported accommodation. The Housing Benefit change will mainly affect those in low paid employment.
There are some exceptions to the new rules. The exception rules are quite complex but they cover:
- multiple births
- claims made by another adult where the parent is themselves a child or young person someone else is claiming for
- kinship care arrangements
- situations where Guardians Allowance is paid
- children who are conceived as a result of non-consensual sex.
If you feel any of these exceptions should apply and you are having difficulty in getting this accepted then you should seek further advice.
New Universal Credit and Tax Credit claims made by families
The two child limit will be applied by Universal Credit to families who are already in receipt of Universal Credit but families who have two or more children born before 6th April 2017 who are not already in receipt of Universal Credit will not be able to make new claims to Universal Credit until 31st October 2018 unless they have claimed Universal Credit within the last 6 months. This rule applies even if they live in a full roll out area. The 31st October 2018 date may be extended.
They will instead be expected to claim Tax Credits and, if needed, one of the previous benefits ie Job Seekers Allowance, Employment and Support Allowance or Income Support plus Housing Benefit. if they then have a child born after 6th April 2017 the 2 child restriction will be applied by Tax Credits.
Interaction with Benefit cap rules
The two child limit rules and the benefit cap rules both operate independently of each other. The exemptions for each set of rules are different so a family may gain an exemption from one of these policies but not from the other. In many cases both will apply. You should be aware however that if you have a new baby this could create a new possibility of an exemption to the Benefit cap rules.
Where someone is already subject to the benefit cap and then has a new baby the basic rule under the Benefit Cap is that they will not gain any additional benefit for the new child. They can claim Child Benefit but the Child Benefit counts as income for the Benefit Cap and so will be deducted from the Universal Credit or Housing Benefit (unless the maximum Housing Benefit cap has been reached).
However if the new baby is disabled then this will give rise to a potential Disability Living Allowance claim which could gain the whole family a benefit cap exemption