Summer Budget 2015: Tax credits to be limited to two children
State support provided to families through tax credits will now be limited to two children, which means that any further children born after April 2017 won’t be eligible for support.
The only exception is if further children are the result of twins, triplets or other multiple births.
Those who already have large families and receive tax credits won’t be affected by the new rules.
In addition, those starting a family after April 2017 will no longer be eligible for the Family Element in tax credits. The equivalent in Universal Credit (the successor to tax credits), known as the first child premium, will also not be available for new claimants after April 2017.
The Chancellor pointed out that on top of Child Benefit for every child (which will continue to be paid at the same level for all children), an out-of-work family with five children can currently claim more than £14,000 a year in tax credits alone.
Osborne said: "It’s important to support families, but it’s also important to be fair to the many working families who don’t see their budgets rise by anything like that when they have more children."
Those in receipt of tax credits should therefore face the same financial choices about having children as those supporting themselves solely through work, he explained.
He added that the aim is to protect existing families on the lowest incomes while favouring support to working families through the tax system and earnings growth, rather than the benefit system. To that end, the chancellor also annnounced a new National Living Wage to help boost the finances of low-income families.