UK households will be handed a boost from the Department for Work and Pensions (DWP) after the Carer’s Allowance benefit threshold is raised to £196 and payments increased by £72.80 per year.
Carer’s Allowance is a benefit paid to anyone who looks after someone else, such as a relative, for at least 35 hours per week. This isn’t for professional carers but for ‘unpaid carers’ who look after a loved one. The benefit pays £81.90 per week to claimants who are eligible, which will increase to £83.30 per week from April – but the issue is that the benefit has a ‘cliff edge.’
It means that those who earn even 1p above the threshold lose their entire allowance, not only not being able to get any money above the threshold but also being made to pay back what they already claimed.
However, the DWP has confirmed it will increase the Carer’s Allowance earnings threshold by £45 a week to £196 from April, meaning people can earn significantly more money and still scoop the new £83.30 per week rate.
Carers can get up to £83.30 per week starting in April if they care for someone for at least 35 hours per week and are getting certain benefits. The care can include helping with washing and cooking, taking the person you care for to a doctor’s appointment, or helping with household tasks, such as managing bills and shopping.
The increased weekly payment rate will add an extra £72.80 per year. The increased threshold of £45 more per week means you can earn an extra £2,340 per year before you lose the eligibility to claim Carer’s Allowance.
The increase to the earnings threshold comes following an independent review to investigate Carer’s Allowance overpayments, as overpayment debt has risen to more than £250 million. Historic overpayments have led to many carers unwittingly racking up unmanageable levels of debt, and some have quit their jobs as a result.
The National Audit Office (NAO) said the DWP paid £3.7 billion in Carer’s Allowance to more than 900,000 claimants in 2023/24 and noted the so-called “cliff edge” created by the current rules, meaning a claimant – who by law must inform DWP promptly if their circumstances change – is either entitled to the whole allowance or none of it, saying this can “quickly build up significant overpayments”. The review will deliver its findings and recommendations to ministers by the summer of 2025.
Chair of the independent review, Liz Sayce OBE, said: “I have already started to hear from carers about the impact overpayments have had on them, in a context in which people face multiple pressures in their lives. I will be collecting views and evidence as I review the issues and develop recommendations.
“In doing so, I will be able to advise the government on ways to minimise overpayments of Carer’s Allowance related to earnings accruing in future and how it can best support those already affected.”
In a statement, the DWP said: “Action has already been taken by the Government by boosting the Carer’s Allowance earnings threshold by £45 a week to £196, benefitting more than 60,000 carers by 2029/30. This is the biggest ever cash increase in the earnings threshold for Carer’s Allowance.”
