The government is removing the controversial "cliff edge" rule that has penalised unpaid carers for exceeding their earnings limit by even a penny. Under the current system, those receiving Carer's Allowance lose their entire entitlement if they go over the weekly earnings threshold of £204 by just a few pence.
This will be replaced by a new taper, meaning someone would lose £1 from their benefit for every £1 earned over the threshold, rather than losing the whole amount for going slightly over the limit. The changes are due to take effect from the 2030/31 financial year.
Why the cliff edge was criticised
Charities have criticised the existing rule as hard for unpaid carers to manage, particularly when wages fluctuate from week to week. It has sometimes taken months or years for overpayments to be spotted, with some people ordered to repay thousands of pounds despite only going slightly over the earnings limit.
Earlier this year, the government announced that thousands of unpaid carers affected by this issue would have their debts reduced, cancelled, or refunded.
What Carer's Allowance is worth
Carer's Allowance is worth £86.45 a week in England, Northern Ireland and Wales, and up to £98.15 a week in Scotland. It is claimed by around 1.4 million people.
You are eligible for Carer's Allowance if you care for someone at least 35 hours a week and they claim certain benefits, such as Personal Independence Payment.
Government and charity response
Work and Pensions Secretary Pat McFadden said: "I understand the huge difference unpaid carers make to their families and communities. Many balance work alongside their caring responsibilities.
"We have listened to their concerns about the cliff-edge built into the system which leaves them financially worse off for taking on a few more hours, or getting a modest pay rise, and intend to bring that to an end."
Emily Holzhausen CBE, Director of Policy at Carers UK, said: "We have been calling for a taper to the earnings limit and an end to the cliff edge on Carer's Allowance for many years and we're pleased that the Chancellor has committed to this next step.
"Our evidence from unpaid carers found many having to give up part-time paid work altogether or turning work down because they cannot risk going over the limit and losing 100% of their Carer's Allowance."
She added: "Once introduced, it should also help to significantly reduce the number of overpayments related to earnings which carers have found devastating financially and emotionally."
