‘Two-child limit’: the exceptions

 

Following the introduction of the ‘two-child limit’ in April 2017 (as described in Bulletin 257), Mark Willis takes a closer look at the exceptions now that government guidance is available.

For child tax credit (CTC), the two-child limit can only directly affect a child born on or after 6 April 2017. Where the claimant is responsible for two or more other children, a child element is not payable for a child born on or after 6 April 2017, unless an exception applies. In some cases, the arrival into the household of an older child can mean that the two-child limit ‘displaces’ a child born on or after 6 April 2017.

For example, a family has one child born before 6 April 2017 and one born after, and then becomes responsible for another child born before 6 April 2017. For CTC, child elements are always payable for the two children born before 6 April 2017, but the baby is now affected by the two-child limit.

The exceptions cover this situation, butonly where the circumstances described below for adoption or non-parental care would have applied to the child born before 6 April 2017.1 Reg 9(2) Child Tax Credit Regulations 2002 No.2007, as amended by SI 2017 No.387

For universal credit (UC), apart from exceptions, transitional protection may apply to a child born before 6 April 2017. This transitional protection is subject to a condition that the claimant must already be responsible for at least two other children born before 6 April 2017.2 Reg 40(2), Universal Credit Regulations 2013 No.376, as amended by SI 2017 No.376 As in the example above, the arrival into the household of an older child could mean that the two-child limit kicks in if there is another child born on or after 6 April 2017. In this situation for UC, the child born before 6 April 2017 is not automatically transitionally protected and an exception has to apply in order for her/him not to be affected by the two-child limit. From 1 November 2018, however, the only transitional protection in new UC claims for a child born before 6 April 2017 will be if the claimant was entitled to a child element in UC for that child on 31 October 2018, or if CTC or income support (IS)/jobseeker’s allowance (JSA) amounts were payable for that child within six months of the UC claim. It is anticipated that, by that time, all areas of the country will be full service and it will not be possible to make new claims for tax credits.

The upshot of this distinction is that every family with three or more children born before 6 April 2017 should claim tax credits now while they can. Even if their income is too high to receive any tax credits, they can maintain and renew a nil award. If circumstances change and their income goes down in future, CTC child elements will be payable for all children born before 6 April 2017. However, if they have to claim UC after 31 October 2018, a maximum of two child elements will be payable, unless an exception applies.

Where the two-child limit would apply to a third or subsequent child, rules provide a number of exceptions. If one (or more) of the exceptions apply to that child, the limit does not apply to that child and a child element is payable for her/him.

The government has stated that it will not support families who choose to have a child from 6 April 2017 if they already have two or more children. However, people generally do not plan to have a multiple birth, so the child elements are payable for all but one of the babies in a multiple birth, where there are already two or more older children.

The government recognises that by adopting a child from local authority care the parent is saving the state a lot of money. The two-child limit therefore does not apply to a third or subsequent child who is an adopted child. However, it is important to note that an adopted child is not disregarded for the purposes of the two-child limit. Therefore, if a claimant adopts two children and then goes on to have a child of her/his own, the child element will not be payable for the new (ie, non-adopted) child. Note also that adoptions from abroad are not covered by this exception.

This exception covers where the claimant is responsible for the parent of a child born on or after 6 April 2017. For CTC, an exception applies to such a child as long as the parent is a qualifying young person under 20 for whom the claimant is responsible. For UC (and IS/JSA where child allowances are still included), the parent of the child must be a child, aged under 16, for whom the claimant is responsible. Once the young parent is 16, s/he can claim UC or CTC in her/his own right.

This exception covers a third or subsequent child who is the subject of non-parental caring arrangements. It is important to check first that the claimant is responsible for the child for CTC or UC purposes, as, in most situations where the child is looked after by the local authority with accommodation or maintenance paid for out of public funds, a child element is not payable in any case (see CPAG’s Welfare Benefits and Tax Credits Handbook, p186 for CTC and p223 for UC). If CTC or UC is payable, and the claimant is responsible for the child under formal legal provisions (see Handbook, p1681), the exception should apply on the evidence of the arrangements. If these specific provisions do not apply, the child can also be an exception if it is likely that s/he would other- wise be looked after by a local authority. In practice, claimants should fill in an application form, with part to be completed by a registered social worker. The guidance for social workers asks them to ‘exercise your professional judgement in making a decision about whether the child would otherwise be looked after’.3

Where a third or subsequent child is born as the result of ‘non-consensual conception’, this exception can be applied. It applies on provision of ‘any available evidence’ of a criminal conviction for rape or controlling or coercive behaviour, or a similar offence abroad, or of a criminal injuries compensation award for such an offence, where it appears likely that the offence resulted in the conception of the child. It is not clear what sort of evidence the victim of such a crime would be given when the perpetrator is convicted. In the absence of evidence of a conviction or compensation award, claimants must fill in an application form, with a part to be completed by a third party to whom the rape or abuse has been reported. The third-party professional must be a healthcare professional, a registered social worker or a specialist support worker from one of the specified approved organisations, which are members of The Survivors Trust, Refuge, Rape Crisis England and Wales, and 165 listed members of the Women’s Aid Federation of England.

The government has said that it appreciates that many victims need time to come to terms with what has happened to them before they disclose it to anyone, so there is no time limit on when the report needs to be made in order to be eligible for the exception. para 31, Consultation Response – exceptions to the limiting of the individual child element of child tax credit and the child element of universal credit to a maximum of two children, HM Government, January 2017 It follows that the DWP or HM Revenue and Customs (HMRC) should therefore use its powers to revise decisions on official error grounds, to provide maximum backdating to the date of the child’s birth, even if the circumstances are disclosed years later.

Note again that such children are not disregarded when counting the total children. If a claimant has two older children from a previous coercive/controlling relationship, and then goes on to have a new baby after 6 April 2017 with a new partner, the two-child limit means a child element is not payable for the new baby.

The exceptions for multiple births, adoption and parent under 16 or dependant should be applied automatically on evidence of the birth or adoption; there is no application form.

For CTC, applications and evidence for exceptions should be clearly marked and sent to: Exceptions, HM Revenue and Customs, BX9 1HZ.

For UC, claimants are asked to apply by phone or through their online account and send evidence to one of two addresses, depending on whether they are in a gateway area or full service area. However, for the non-consensual conception exception, claimants are asked to hand the form to their work coach, not to post it.4

For housing benefit (HB), the local authority does not have the power to make a decision on exceptions to the two-child limit. It must include all children in the applicable amountwho have been included by HMRC for CTC purposes. In cases where income is too high for tax credits, a claim is still required, resulting in a nil award in order to allow the children to be included in the HB claim.

Challenging decisions on exceptions In all cases, claimants should continue to notify the birth of a child, or becoming responsible for a child, within one month. Even if the two-child limit applies, this would allow a disabled child element or childcare element to be included in respect of that child if applicable. Also, a child element for the child can become payable in future if an older child is no longer included.

If an exception is applied for but not awarded, that is part of a decision about entitlement and is subject to challenge under the usual mandatory reconsideration and appeal rules.

CPAG considers that the two-child limit unlawfully discriminates against a number of different groups including, but not limited to, children with multiple siblings, large families

and those with a religious or moral objection to the use of birth control. CPAG encourages advisers to request mandatory reconsiderations and then lodge appeals against all decisions that impose the two-child limit, whether or not an exception may apply, and raise human rights, discrimination and rights of the child arguments. CPAG is in the process of bringing a judicial review claim challenging the lawfulness of the two-child rule – see our test cases page – for more details and a template.

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