Budget 2025: What the Child Benefit Changes Mean For Separating Families

The Government’s decision in Budget 2025 to lift the two-child cap on child benefit for families receiving Universal Credit is one of the most significant changes to children’s support in recent years. It means families will now receive child benefits for every child instead of only the first two.

For separating parents — especially those with larger families — this change may offer some much-needed breathing room. However, it does not address the most significant issue facing couples today: most people still can’t afford to run two homes.

Below, we explain what the Budget change means in practice and why affordability remains the biggest obstacle for separating couples.

What does lifting the child benefit cap mean?

Removing the cap gives larger families a clear financial uplift. For many households, this could amount to hundreds of pounds more each month. This additional support helps parents cover essential costs such as:

• rent and housing
• food and school expenses
• transport and childcare
• everyday household bills

For single parents, this extra income can be particularly important when trying to set up a new home after a separation.

Will this make separation more affordable?

The short answer: It helps — but not enough.

While the uplift makes day-to-day living slightly easier, it does not address the financial barriers that stop many couples from being able to live separately after the relationship ends.

1. The cost of running two homes is still too high

This is the biggest reason couples cannot separate.

Budget 2025 did not introduce any measure that helps families with:

• private rent deposits

• upfront letting fees

• higher monthly rents

• furnishing a second home

• Council tax on two properties

Many people we assist tell us that even after they have agreed to separate, they remain living under the same roof simply because moving out is financially impossible.

2. No help with legal costs or financial settlements

Even if a couple divides everything amicably, they still need a legally binding financial order to protect both parties.

The Budget did not introduce:

• legal aid for divorce finances

• tax relief for legal fees

• help with obtaining a financial consent order

This leaves families vulnerable. Without a court-approved order, financial claims remain open indefinitely — even years after divorce.

If you need a consent order drafted by a solicitor, our Online Consent Order Service, priced at £399, remains the most affordable route to a legally binding settlement in the UK.

3. Frozen tax thresholds reduce disposable income

Tax bands will remain frozen, meaning many working parents will continue to see their take-home pay squeezed.

This fiscal drag effect may cancel out part of the child benefit uplift, especially for parents trying to cover the cost of one or two separate households.

Expert comment from Divorce-Online

“Restoring child benefit for larger families is a welcome step. But it doesn’t change the fact that most couples still can’t afford to run two homes.”
— Mark Keenan, Founder & CEO of Divorce-Online

What should separating parents do next?

If you’re separating or planning to, the most important step is getting your financial arrangements legally finalised so both parties are protected.

This requires a financial consent order, which remains the only way to secure a legally binding settlement after divorce.

You have two options:

✔ Clean Break Consent Order (£399)

For couples who agree on everything and want to end all future financial claims permanently.
Ideal when: you have savings, property, or pensions to divide.

✔ Managed Consent Order (£649)

Solicitor-drafted order including pensions, complex assets, or detailed arrangements.
Ideal when: you want a solicitor-led service from start to finish.

Summary

Budget 2025 brings welcome support for larger families by lifting the child benefit cap. But while this change will help with everyday living costs, it stops short of addressing the real affordability crisis facing separating couples, particularly the cost of finding and maintaining two homes.

If you’re separating and want clarity on your financial options, we can help you secure a binding agreement quickly and affordably.