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Two Child Limit for Child Tax Credit, Housing Benefit and Universal Credit

Having your third (or fourth, fifth plus) child?

The government has introduced a two child limit into Child Tax Credit, Housing Benefit and Universal Credit. This means that if you already have two or more children and become responsible for another child on or after 6 April 2017, you may not see an increase in these benefits – although there are exceptions.

This does not affect entitlement to Child Benefit. 

Generally, if you already have 2 or more dependent children in your family and, you have a new baby who was born on or after 6 April 2017, or you become responsible for a child on or after 6 April 2017, your Child Tax Credit or Universal Credit will only increase if that child is disabled and you get Disability Living Allowance for them and/or you have to pay for registered childcare for them, or if an ‘exception’ applies.

If you take on responsibility for a 3rd, 4th, 5th etc child who was born before 6 April 2017, contact us for further advice.

The Housing Benefit rules are changing in the same way. But note that if you get Income Support, Income-Based Jobseeker’s Allowance or Income-Related Employment and Support Allowance (or Universal Credit and you are claiming Housing Benefit because you are living in specified accommodation) you will already be getting your maximum Housing Benefit entitlement – so this change will not affect your current Housing Benefit award. 

Example:
Gerry and Sonia claim Working Tax Credit, Child Tax Credit and Housing Benefit to top up Gerry’s wages. They have 4 children aged between 10 and 3. They have a new baby, born in May 2017. The baby has no health conditions or disabilities and Sonia does not work, so they do not pay for any childcare. They will not get any extra Child Tax Credit for the new baby nor any extra Housing Benefit. But they can get extra Child Benefit.

There are some exceptions to the rules. In certain circumstances relating to multiple births, adoption, non-parental caring arrangements eg kinship care and where a child was conceived as a result of non-consensual sex, extra money for a 3rd, 4th, 5th etc child could be included.  

So, for example, if you have no dependent children but then give birth to triplets on or after 6 April 2017, or if you already have one dependent child, then you give birth to twins on or after 6 April 2017, you will receive extra Child Tax Credit, Housing Benefit for all those children. If you are an existing Universal Credit claimant, you will receive extra Universal Credit.

If you think an exception should apply, it will be up to the Tax Credit Office or Universal Credit Department to decide whether extra benefit can be paid for a 3rd, 4th, 5th etc child. 

The Housing Benefit Office must follow the decision of the Tax Credit Office and, until the Housing Benefit Office have seen the Tax Credit award letter, they cannot include any extra child allowance for a 3rd, 4th, 5th etc child. This is because the information they receive by computer from the Tax Credit Office shows the total amount of Tax Credits being paid, but not which children are included in the award. 

If you were already getting Housing Benefit on 5 April 2017 and you have 3 or more children included in your Housing Benefit assessment, the Housing Benefit Office will continue to include these children in your award. However, if you need to make a new claim for Housing Benefit (eg. if you move to a different local authority area) or you become responsible for another child, your Housing Benefit award can only include a maximum of 2 children (even if more than 2 of your children were born before 6 April 2017) until the Housing Benefit Office have seen your Child Tax Credit award.

So, unless you are getting Income Support, Income-Based Jobseeker’s Allowance or Income-Related Employment and Support Allowance (or Universal Credit and you are claiming Housing Benefit because you are living in specified accommodation), it is very important that you show the Housing Benefit Office your Tax Credit letter as soon as you receive it. If you delay, you could miss out on benefit. 

This is because the Housing Benefit Office will know when your Child Tax Credit increases and will know how much you are getting; they will adjust your Housing Benefit award accordingly. But they cannot add the extra child allowance to your Housing Benefit award until you have provided your new Tax Credit award showing all the children included in the award. If you do not provide the letter within the required time limits, your Housing Benefit could be less than it should be. 

If you want to make a new claim for benefits before November 2018 and you have 3 or more children, you will not be able to make a claim for Universal Credit. Instead you will be able to claim Child Tax Credit, Housing Benefit and either Working Tax Credit if you are working sufficient hours, or Jobseeker’s Allowance, Income Support or Employment or Support Allowance.  

From 1 November 2018, anyone who makes a new claim for Universal Credit, will only get a maximum of 2 child elements, unless any of the exceptions apply. There is, however, transitional protection for claimants who were already receiving child elements with an existing award for Universal Credit on 31 October 2018, or in a Child Tax Credit award in the previous 6 months. They will continue to receive child elements for the children who they were previously receiving elements or allowances for, until there is a break in the Universal Credit award or they are no longer responsible for the child.

If you are concerned about these changes, please contact us