KalinS wrote:To our understanding, once we acquire PR after living in the UK for 5 years, only then can we apply for a British Citizenship for our child? Is that correct?
Yes, your understanding is correctly. Specifically, you will need to have settled status (which is currently permanent residence for EEA citizens, indefinite leave to remain for non-EEA citizens) in order to register your child as a UK citizen using
Form MN1.
KalinS wrote:Does the child have to have lived to the age of 10 in the UK before we can apply?
No. As long as your family are in the UK, once you or your wife acquires settled status, then your child can be registered using from MN1, regardless of how old s/he is.
Children who were born in the UK and have lived here continuously for the first 10 years of their lives (or longer) can register as UK citizens under
Form T, regardless of their parents' immigration status. This is a separate way of registering a child as a UK citizen, and won't be necessary if your child is registered under MN1 in about two years.
KalinS wrote:We also want a dual citizenship (Bulgarian and British) for our child but I heard from our friends that we have to acquire British citizenship first, otherwise dual citizenship will not be possible. I doubt this since we cannot apply for another ~2.5 years but I wanted to ask the question and get some clarity.
If your friends are saying this because they know something about Bulgarian law that makes this true, then I'd listen to them. However, if they're saying that this is because of laws in the UK, then they are mistaken. If your child is approved under form MN1 (or Form T, for that matter), then s/he will be a UK citizen regardless of whether you or your wife are citizens. If there is any problem with being a dual UK/Bulgarian citizen, it will be because of the laws governing Bulgarian citizenship, not the ones for UK citizenship.
You seem to have a good grasp of the rules as they are now, but if the UK is indeed outside of the EU in two years' time, the rules may change. Unfortunately, it's impossible to predict what, if any, new rules there might be, especially those affecting how citizens of the EEA can acquire settled status in the UK. You would be wise to stay abreast of any changes in laws around PR, settled status, and citizenship (though it is unlikely that Brexit will have any immediate impact on naturalisation law, which is separate from immigration law), and to keep any and all documents that establish your presence in the UK (especially those confirming your employment—P60s, P45s, letters from doctor's surgeries, etc.) in a safe place so that your future application can be as painless for you as possible.