A draft of the UK’s upcoming budget — mistakenly published early online — revealed two major changes: the government plans to remove the two-child limit on welfare benefits and raise taxes in multiple areas.

The welfare cap, enforced under previous administrations, restricted benefit payments to only the first two children in a family. Its removal signals a major policy shift, expected to benefit larger families nationwide.

At the same time, the budget outlines tax increases across various segments, including higher levies on high-value homes, potential changes to dividend taxation, and new charges on electric vehicles as part of a broader effort to raise roughly £26 billion annually.

👶 Impact on Families and Welfare

If implemented, lifting the cap could significantly ease financial burden for families with more than two children. Advocates say this move will help reduce child poverty and support larger households that were previously penalised by benefit limits.

However, critics argue that with concurrent tax increases, many households may see little net benefit — especially those with lower incomes but not large families. The expanded welfare cost is estimated to be around £3 billion annually.

The timing of the leak — before official budget presentation — stirred political controversy, with opposition figures calling it “unacceptable” and demanding transparency about how these changes will balance fiscal pressures and social support.

💷 What It Means for Public Finances

Scrapping the two-child cap will increase welfare expenditure significantly. To offset this long-term cost, the government plans to widen its tax base: higher-value homes will face new surcharges, dividend earnings may be taxed more heavily, and electric vehicle owners may face mileage-based charges. The package aims to raise about £26 billion annually.

Still, these moves come at a time when borrowing and debt remain high. The premature leak has unsettled markets, briefly pushing up UK government bond prices and the pound — but also raising concerns about fiscal credibility and planning integrity.

🔎 What to Watch Next

• Official Budget Speech: All measures remain draft until the government formally presents the budget in Parliament. That will confirm if the two-child cap removal and tax hikes stay as proposed.
• Public Response & Protests: Families may welcome benefit reforms, but taxpayers and middle-income earners might push back against increased taxes.
• Economic Impact: Rising welfare costs and taxes could affect inflation, public spending, and the broader economy over the coming years.
• Policy Transparency: The early leak has triggered calls for stronger safeguards to prevent similar breaches — and for clearer disclosures about long-term financial implications.