Martin Lewis ‘clears up’ 3 ‘confusing’ benefit rules after Budget | Personal Finance | Finance

Martin Lewis has explained three benefit rules that he says have caused “confusion” following the Government’s Autumn Budget. Rachel Reeves announced sweeping changes to pensions, wages, benefits, rail fares and tax, but one update in particular has left people unsure what it actually means.

The Government confirmed that the two-child limit on the child element of Universal Credit will be scrapped from April 2026. The change is expected to lift 450,000 children out of poverty, but many people have been mixing it up with other benefit rules. Martin said the announcement “caused confusion”, so he set out the difference between three separate systems: Child Benefit, the two-child limit for Universal Credit, and the overall benefits cap.

He told MoneySavingExpert readers: “The Government has announced it’s ending the two-child benefit limit, but there’s a lot of confusion about what it is. So here is a bit of a primer.”

Martin explained that Child Benefit is unaffected. He said: “It is nowt to do with Child Benefit, a universal payment for every child you have (clawed back from higher earners).”

He then clarified how the current limit works for families claiming Universal Credit. He said: “The two-child benefit limit, often wrongly called a cap, means those who get Universal Credit won’t get any additional benefit if they incur extra costs because they’ve more than two children. This is what is being scrapped in April, so they will get more benefits if [they have] extra costs from more children.”

Finally, he pointed out that the benefits cap still remains in place. He said: “Separately there is also a Benefits Cap, which, in simple terms, is a max amount you can get on benefits (including Universal Credit and Child Benefit). The cap for families, couples and single parents is £1,835 a month. It’s more in Greater London.”

He added that he hoped his explanation had “helped clear it up a bit”.

Alongside the Universal Credit changes, the Budget also confirmed a number of other benefit updates.

From April 2026, the standard allowance for Universal Credit will rise by 6.2% for most claimants, while those under 25 will see a 6.8% rise.

Most other working-age benefits across England, Scotland and Wales will increase by 3.8%.

However, the amount paid to people who cannot work due to sickness or disability, known as the health element, will be frozen until 2029/30 for existing claimants. New claimants from April 2026 will receive £50 a week instead.

Local Housing Allowance rates and the overall benefits cap will not rise next year.

The Budget also confirmed changes affecting pensioners. The State Pension is on track to rise by 4.8% next April under the triple lock.

This will take the full New State Pension from £230.25 to £241.30, and the full basic State Pension from £176.45 to £184.90.

There was also an update for workers. From April 2026, the national minimum wage for those aged 21 and over will increase by 4.1%, rising to £12.71 an hour.

Younger workers will see increases of between 6% and 8.5%, depending on age.

Other major announcements included a freeze on prescription charges in England, changes to ISAs, a freeze on regulated rail fares until 2027, and a new mileage-based charge for electric vehicles starting in April 2028.

Income Tax and National Insurance thresholds will also remain frozen until 2031, prompting Martin to warn this is a “stealth tax”.

He said: “Freezing thresholds while average earnings rise means people pay a bigger proportion of their income in tax.”