What is the two-child benefit cap and how could it change?

The two-child limit means many low-income families are unable to receive additional help when they have a third or subsequent child.

The issue has been the subject of intense political debate and speculation, with Chancellor Rachel Reeves hinting at changes to the Budget.

So how does the system work and what can happen?

The policy, introduced by Conservative Chancellor George Osborne, means parents can only claim universal credit or tax credit for their first two children.

Applies to third or subsequent children born after April 6, 2017.

A total of 1.6 million children live in larger families and as a result are not eligible for these benefits.

According to the Institute for Fiscal Studies (IFS), if the cap had not been introduced, affected families would have been entitled to benefits of an average of £4,400 a year, or a tenth of their total disposable income.

The think tank estimates the policy will ultimately save the Treasury around £3.6bn a year.

TRUE. There is often a misconception that the two-child limit affects the payment of child benefit, as it is called the two-child benefit cap.

So take a breath between “two kids” and “benefits.”

This policy specifically targets universal credit and tax credits, not child benefit.

If you receive universal credit or tax credit, you will usually not be paid any additional benefit if you have a third or subsequent child born after 6 April 2017.

For example, if you have four children born before this date, you will still receive additional payments. This relates to children under 16 or young people under 20 in full-time education or training.

There are other exceptions.

If a parent or parents have one child and the next child is a twin or triplet, then a claim can be made for all those children.

Claims can also be made if children are born after rape or from a coercive relationship. Payments can also be made to children who are adopted or are your child’s children in your care rather than the local authority’s care.

More than 100 charities have written to the chancellor calling for the two-child limit to be scrapped.

A group of Labor MPs want the chancellor to repeal the law, arguing it would lift hundreds of thousands of children out of poverty.

However, this will create a savings deficit for the Treasury. Money will likely have to be found through cuts elsewhere, tax increases or increased government borrowing.

Conservatives support the cap, saying the cap makes the system fairer and means parents on welfare would face the same financial choices as parents who fund themselves solely by working.

Chancellor signals changes he told the BBC It was not right for children in large families to be “punished” through “no fault of their own.”

They have options beyond scrapping the policy altogether.

Aid is available to all families, regardless of the number of children, but at a lower level.

The chancellor could also offer potentially smaller partial payments for each additional child, reflecting whether those children could use the same car or second-hand clothes as their siblings.

It could also limit benefit payments to a larger number of children.