UK caps tax credit for families with 2 kids

London, April 6: The UK government on Thursday capped its practice of providing tax credits to British families at two children, a move affecting hundreds of thousands of parents.

The so-called “two-child benefits” are aimed at saving money for the state and intended to influence the behaviour of less well-off families by making them think twice about having a third child.

“These changes only affect children born on or after 6 April 2017. If all of your children are born before this date, your Child Tax Credit won’t change,” said a notification from Her Majesty’s revenue and customs (HMRC).

Child Tax Credit is paid by the UK government to low income families to help parents with the costs of bringing up a child.

The amount of money parents are entitled to depends on factors including income and other circumstances.

The credit is worth up to £ 2,780 per child per year. Analysis by Policy in Practice consultancy found that a low-income family in the UK whose third or additional child is born before midnight on Wednesday would qualify for up to £50,000 in tax credit support over 18 years whereas a similar family whose third child was born on Thursday will miss out.

The credit can be claimed by any British national based on the earnings criteria set out by HMRC.

Historically, there has not been a limit on how many children a parent can claim for but from today families can claim credits only for their first two children. The changes will hit lowest-income families the hardest. It is estimated the cuts will affect 515,000 families by 2020. The change had been announced by former UK chancellor George Osborne.