Universal credit u-turn

Plans to cap child-related benefits for families with more than two children born before 6 April 2017 scrapped

We discussed the delays and impact that Universal Credit was having on divorced or divorcing couples in November but there is good news for some families, as it is reported today by the BBC that the work and pensions secretary, Amber Rudd, is scrapping plans to cap child-related benefits for families with more than two children born before 6 April 2017. She has commented: “I don’t think it’s right that you have this existing two-child policy that was introduced recently acting retrospectively for people who might have three, four, or five children”.

For families where the third child is born after April 2017 the changes have no effect. The Child Poverty Action Group is said to be thrilled with the news but is calling for the two-child cap to be scrapped for all families and are currently challenging the legality of the policy via the courts. Ms Rudd has defended the policy by saying “It’s right that we have a two-child policy when people are thinking about having a third child. People on low income and benefits need to consider what sort of funds they’ve got”.

The government are once again delaying a nationwide roll out of Universal Credit, instead opting for a pilot scheme of 10,000 claimants before eventually transferring an anticipated three million people across from the old benefits system.  

The delay will be welcome news for divorcing or already divorced spouses, as unlike the previous tax credit regime, under the Universal Credit system spousal maintenance, along with other unearned income, will be deducted from any benefits entitlement on a pound for pound basis.

Given this, and the uncertainty over the timing of the implementation of the new scheme, many clients are disregarding benefits entirely when negotiating settlements.

If you have any questions or would like to know more about our update, please contact Linzi Perriman (Solicitor) in the Weightmans family team.

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