Tax Credits: 2 child limit policy

This page explains the 2 child limit policy that came into force for child tax credit from 6 April 2017.

On this page where we talk about a child it includes any child under 16 or qualifying young person aged 16 or over and under age 20 who the claimant is responsible for.

NOTE: Where the examples show a new claim for tax credits, it is assumed that the individuals meet the exception criteria and are able to make a new tax credit claim.

What is the 2 child limit policy?

In the 2015 Summer Budget, the Government announced that the child element of child tax credit (CTC) would be limited to two children for those born after 6 April 2017 unless certain exceptions apply. Similar changes were announced to universal credit.

Prior to 6 April 2017, the child element of CTC was paid for each child or qualifying young person that the claimant (or their partner) was responsible for.

The change means that anyone who is responsible for a child born on or after 6 April 2017 will not receive the child element for that child unless:

The child element of child tax credit will continue to be paid for all children born before 6 April 2017.

Even if the child element is not payable for a child, it is important that the claimant still reports the birth of a child or a child joining the household to HMRC as soon as possible. This is because there may still be entitlement to the child disability element of CTC or the childcare element of working tax credit. These amounts are not affected by the 2 child limit policy. It will also mean that if one of the other children move off the claim, the child not receiving a child element may then qualify for a child element. If they are already on the system, this should happen automatically.

Existing tax credit claimants

Those already claiming child tax credit on 6 April 2017 will continue to receive a child element for each of the children on the claim at that time (born before 6 April 2017).

If the claimant (or their partner) becomes responsible for a third or subsequent child born after 6 April 2017, they will not receive a child element for them unless one of the exceptions explained below applies.

Example 1

Dominic and Josie have four children (born in 2005, 2008, 2011 and 2016). In 2016/17 their tax credit claim included four child elements – one for each child.

Their 2019/20 tax credit claim will also include four child elements – because all of the children were born before 6 April 2017 the family are not affected by the 2 child limit policy.

Example 2

Daisy and Mike have two children born in 2012 and 2015. In 2016/17 their tax credit claim included two child elements.

In May 2019, their third child is born. They will not receive a child element for their new child because the baby was born after 6 April 2017 and they are already receiving child elements for two other children.

Example 3

Molly has two children born in 2012 and 2015. In 2016/17 her tax credit claim included two child elements.

In May 2020, Molly gives birth to her third child. Under the normal rules, Molly would not receive a child element for her third child because the baby was born after 6 April 2017 and she is already receiving child elements for two other children. However, Molly meets the conditions for a non-consensual conception exception (see below) and so a third child element is included in Molly’s tax credit award.

Example 4

Pete and Millie have one child born before 6 April 2017. In May 2020, their second child Freddy is born. They will receive the child element for Freddy because they are not already claiming for two or more children.

However, if Pete and Millie go on to have a third child in say September 2021, they will not receive the child element for that child unless an exception applies because they will already be claiming for 2 children.

Some tax credit claimants may find themselves responsible for a child through adoption or other friend and family care arrangements. If they are already claiming a child element for two children, they may not receive a child element for them. However, if the child is born after 6 April 2017, they are the third child on the claim and they are younger than other children on the claim then one of the exceptions below may apply so that the child element will be paid for them.

Example 5

May is a single parent. She claims CTC for her two children who were born in 2010 and 2012 respectively. In May 2020, she adopts a baby. Under the normal rules, she would not receive a child element in respect of her new baby because she is already claiming for two other children. However, she can claim an adoption exception meaning she will receive the child element for all three children.

If May was to give birth to a fourth child in July 2020, she would not receive the child element for that child unless one of the other exceptions applied.

The rules become more complicated if the claimant becomes responsible for a child born before 6 April 2017 when they are already claiming for two children and one or both of them were born after 6 April 2017.

Example 6

Sven and Celine have two children – Anna (born in 2010) and Elsa (born on 1 May 2018). They claim CTC for both children. In August 2020, they adopt a third child – James who was born in 2013. They want to claim CTC for James.  

As James was born before 6 April 2017 he is entitled to the child element of CTC – no adoption exception is required. However, by adding James to the claim, the child element will be removed from for Elsa. This is because the couple are already claiming the child element for 2 or more children (Anna and James).

However, the rules allow for an exception in this situation – Elsa will receive an exception because she is the third child in the ordering of the children under the rules and all but one of the other children (Anna) is adopted. (See another child/children are covered by an exception below.)

New tax credit claimants

Those making new tax credit claims after 6 April 2017 may be affected by the 2 child limit policy if the claim includes more than 2 children.

A child element will be included for all children born before 6 April 2017.

Example 7

Iris and Daniel make a new claim for tax credits in July 2018. They have four children, all born before 6 April 2017. They will be entitled to a child element for each of the four children because they were all born before 6 April 2017.

Example 8

Jonathan and Anne make a new claim for tax credits in July 2018. They have four children. Matilda and Jake were born in 2010 and 2012 respectively. Kristen was born in May 2017 and Milo in June 2018.

Starting with the earliest born child:

  • The child element will be included for Matilda because she was born before 6 April 2017
  • The child element will be included for Jake because he was born before 6 April 2017
  • The child element will not be included for Kristen because she was born after 6 April 2017 and the child element has already been allocated to 2 or more children (Matilda and Jake)
  • The child element will not be paid for Milo because he was born after 6 April 2017 and the child element has already been allocated to 2 or more children (Matilda and Jake)

A child element could only be included for Kristen or Milo if one of the exceptions below applies.

Moving in with a new partner

The usual process applies in that the claimant must notify HMRC of their change in circumstances. Any single claim will be terminated and a new joint claim will be required. The child elements that are payable on the new joint claim will depend on the details of the claim.

Example 9

William is a single parent with two children – Ross (born 2010) and Jennifer (Born 2012). He claimed tax credits in 2016/17 and his claim included a child element for each child. In July 2020, William moves in with Victoria who also has two children – Rachel (born 2012) and Devin (born 2014). Victoria’s tax credit claim also included two child elements.

In July 2020, both single claims are ended and the couple make a new joint claim. As all of the children were born before 6 April 2017, the couple will have four child elements included in their new claim.

However, a newly formed couple could receive less child elements that they were previously receiving as single claimants if any of the children are born after 6 April 2017.

Example 10

John is a single parent with two children – Jason (born 2010) and Janna (born 2012). He claimed tax credits in 2016/17 and his claim included a child element for each child. In September 2020, John moves in with Christine who also has two children – Connie (born 2014) and Christopher (born May 2017). Christine’s tax credit claim also included two child elements.

In September 2020, both single claims are ended and the couple make a new joint claim. However, they will only receive 3 child elements – for Jason, Janna and Connie. They will not receive a child element for Christopher as the 2 child limit policy applies and none of the exceptions (see below) apply.

What are the exceptions to the 2 child limit?

Children born after 6 April 2017 and who are classed as the third (or subsequent) child on the claim may qualify for an exception so that a child element can be included for them. 

When working out if a child is the third child on the claim in order to claim an exception, an ordering process is used starting with the earliest date first. The date used will either be the date of birth of the child (if the claimant is a parent or step-parent of the child) or the date the claimant became responsible for that child) in any other case.

There are six exceptions:

  1. Multiple birth
  2. Adoption
  3. Non-parental care arrangements
  4. Where a child of the claimant has a child of their own
  5. Non-consensual conception
  6. Another child/children are covered by an exception

Multiple birth

The purpose of the multiple birth exception is to recognise that families do not normally plan for a multiple birth.

In some cases, a multiple birth will not need an exception. For example, if a claimant has twins and claims CTC for the first time – the twins will each receive a child element because they are not already receiving a child element for any other child.

The multiple birth exception will be needed where:

The first child in a multiple birth will only get the child element if they are the first or second child on that claim. If they are not, then the claimant will not receive the child element. For all other children in the multiple birth (other than the first born) the claimant will receive a child element for each of them due to the multiple birth exception as long as they remain responsible for at least two children born as part of the multiple birth.

Example 11

Chester and Roseanne are claiming working tax credit. They have no children. In May 2020, Roseanne gives birth to twins. As the couple are not claiming for any other children, no exception is required and the child element will be paid for each child.

Example 12

Assume that Chester and Roseanne from Example 1 had Triplets in May 2020 (rather than twins). The first child would attract the child element of CTC because there are no other children on the claim. The second child would also attract the child element of CTC. However, under the normal rules no child element would be payable for child 3 because Chester and Roseanne are already claiming for at least two children (child 1 and child 2).

The multiple birth exception means that in this case – a child element would be payable for Child 3.

Example 13

Elliott and Justine have two children who were born before 6 April 2017. In May 2019, Justine gives birth to twins – Dexter and Diane. Under the normal rules, no child elements would be paid for either Dexter or Diane, because the couple are already receiving child elements for two other children (born before 6 April 2017).

As Dexter is the first child in the multiple birth and isn’t the first or second child on the claim – no child element will be paid for him as no exception applies.

However, a child element will be paid for Diane because she is the second child in the multiple birth and the multiple birth exception applies.

Adoption

The adoption exception will apply to a child if they have been:

The exception will not apply if:

Example 14

May is a single parent. She claims CTC for her two children who were born in 2010 and 2012 respectively. In May 2020, she adopts a baby. Under the normal rules, she would not receive a child element in respect of her new baby because she is already claiming for two other children. However, she can claim an adoption exception meaning she will receive the child element for all three children.

Under the current rules, if May was to give birth to a fourth child in July 2020, she would not receive the child element for that child unless one of the other exceptions applied.

Non-parental care arrangements

This exception will apply where the claimant or their partner are a friend or family carer of the child. A ‘friend or family carer’ means a person who is responsible for the child and any of the following apply:

It can also apply in an informal situation where:

The exception will also apply where the claimant or their partner are responsible for the child and any of the first 6 bullets above applied immediately prior to the child’s 16th birthday and since that date they have continued to be responsible for the child.

The exception will NOT apply if the claimant or their partner are the parent of the child or step-parent of the child.

Where a child of the claimant has a child of their own

This exception is intended to cover situations where a child or qualifying young person that the claimant or their partner is responsible for (and receive a child element of CTC for) has a child of their own. The CTC rules allow the claimant (and their partner) to claim CTC for both children. This situation is common where the claimant is the parent of one child who has a child of their own (i.e. the claimant’s grandchild)

If this exception is claimed (because the child of the claimant's child is the third or subsequent child) and the claimant goes on to have another child of their own, they will receive a child element for their own child unless one of the other exceptions apply.

Non-consensual conception

This exception applies in relation to a child where:

The rules go on to explain what  ‘did not have the freedom or capacity to agree by choice’ means. It includes (but is not limited to) circumstances which at the time the child was conceived:

Personally connected in this context means that B is in an intimate personal relationship with the claimant or they live together and are members of the same family or have previously been in an intimate personal relationship with each other.

The claimant and B are members of the same family if, at or around the time the child in question is conceived:

The behaviour has a serious effect on a claimant if it causes the claimant to fear, on at least two occasions, that violence will be used against them or it causes the claimant serious alarm or distress which has a substantial adverse effect on their day to day activities.

Another child/children are covered by an exception

Following legal action in 2017, the Government announced an additional exception. Under the previous rules, if a family adopted a child or became responsible for a child under a non-parental care arrangement (including looking after a child of their own child) they could not go on to have a further child of their own and claim the child element. The Government announced that it would change the rules to ensure that a family that already cares for children who are adopted or cared for under a non-parental caring arrangement can receive CTC for up to two further children (to whom no exception applies).

As a result, where a child is the third or subsequent child on the claim, a child element will be paid for them if all, or all but one, of the other children or qualifying young people are adopted or covered under a non-parental care arrangement (including a child of a child of the claimant). The criteria for these are set out above.

Example 15

Harry and Julie had a child, Brooklyn, in 2010. In May 2017, Harry's nephew Colby came to live with them (under a non-parental care arrangement). Colby is aged 13 (born before May 2017). A child element is payable for Colby as he is the second child on the claim. In November 2019, Julie gave birth to Ella. As all but one (the "but one" in this case is Brooklyn) are cared for under a non-parental caring arrangement, the couple receive a child element for Ella.

Prior to November 2019, they would not have received an element for Ella because no exception would apply. 

What happens if exception is given?

If an exception is claimed for a third or subsequent child, then the claimant will receive a child element for them.

Unfortunately, the complicated rules mean that in some cases, getting an exception for one child could cause another child already on the claim to lose a child element. A special exception has been created to ensure that this does not happen.

Example 16

Nancy is a single parent who is claiming CTC for two children:

  • Joanna – born in October 2013
  • Keaton – born in May 2017

In July 2020, Nancy has a third child – Callum. Under the normal rules, Nancy would not receive a child element for Callum because she is already claiming for two other children. However, the circumstances surrounding Callum’s conception are such that the non-consensual conception exception applies. This means that Nancy is entitled to the child element for Callum.

However by adding a child element for Callum, Keaton loses his child element. This is because Keaton was also born after 6 April 2017 and a child born after that date can only qualify for a child element if:

  • There is no more than one other child on the claim; or
  • An exception applies

Now that Callum is on the claim, Keaton fails to qualify because there are two other children on the claim.

This was obviously not the intention when the 2 child policy was introduced and so the special exception ensures the child element will be paid for the ‘displaced child’ (i.e. the child who has lost the child element). This will happen where:

Claiming an exception?

Claimants should ask HMRC for any exception that applies at the time the child is added to the claim. Our understanding is that if a claimant later claims an exception for a child (whether HMRC were informed about the existence of the child or not), HMRC will backdate to the previous 6 April but will only backdate further if Section 21 official error provisions apply.

HMRC will require evidence that the child meets the exception conditions in most cases except for multiple births (which can be established from information already given).

How does the 2 child limit affect universal credit?

The 2 child limit policy will apply to universal credit, however the rules are different to tax credits. We have a separate section about universal credit.

How does the 2 child limit affect other benefits?

The 2 child limit policy also affects income support, jobseeker’s allowance and housing benefit claimants whose applicable amount includes an amount for a child or qualifying young person. Similar rules apply in respect of exceptions for the third child. For housing benefit claimants, the exception will be based on any exception given by HMRC for child tax credit. It is not clear what the position is for housing benefit claimants who do not qualify for tax credits.

Last reviewed/updated 1 July 2022