Martin Lewis warns two-child benefit cap ‘doesn’t exist’ and explains 3 payouts | Personal Finance | Finance
Money expert Martin Lewis has warned parents that the much vaunted two child benefit cap ‘doesn’t actually exist’ and has instead set out three ways parents can get cash.
This week, there’s been a lot of noise about Labour being encouraged to scrap the two-child benefit cap, with new Chancellor Rachel Reeves assuring that the government won’t make any ‘unfunded decisions’ that weren’t in its manifesto.
A think tank set out that scrapping the cap could lift as many as 700,000 children out of poverty and put up to £228 a week back in parents’ pockets if they have three kids or more.
But money expert Martin Lewis says that the cap is actually not real, and in fact there are three cash elements which make up child benefits.
Taking to Twitter, Martin Lewis said: “It has been much confused and mis-explained in the media during the current political debate to often convolute all three into one thing called the two-child benefit cap. It doesn’t really exist.
“The benefit system is very complicated, there are a lot of ifs and buts.
“The first thing is Child Benefit, a universal payment made for every child you have. You get £25.60 a week for the first child, £16.95 a week for each subsequent child, so to be plain, you’ve got 10 kids, that’s one lot of £25.60 a week, and nine lots of £16.95 a week, though that is subject to the benefit cap.
“Plus, there is another restriction on child benefit that depends on what the highest earning parent earns.
“So, once they earn £60,000 or more then the Child Benefit is clawed back through the tax system via what’s called the high income Child Benefit charge. If their income is over £80,000 then that charge is the same as the Child Benefit so you effectively do not get any child benefit.
“Number two is the 2 child limit. This is the one that is being discussed in the media. It should accurately be called a two child limit for Universal Credit or Tax Credit. It applies to the benefits that people on low incomes, whether they’re working or not, get.
“If you have more than two children, then you won’t get any additional benefit for the costs they are incurring you on Universal Credit or Tax Credits.”
Martin explained that there are exemptions, such as if your child was born before April 6, 2017, as the cap only took effect for children born after that date.
He also said that there’s a Benefits Cap to be aware of. This is an overall cap on benefits per couple or single person, which applies to various benefits such as Universal Credit and included within that are child benefits.
He added: “The cap for families, couples and single parents is £1,835 a month, for single adults £1229.42 a month.
“That is how the system works.”
