Carers' Benefits

Unpaid carers play a vital role in supporting the elderly, disabled relatives or friends. Sometimes unpaid carers will need to turn to the benefit system for financial support, so it is right that we keep Carer’s Allowance under review, to see if it is meeting its objectives, and giving unpaid carers the help and support they need and deserve.

The Government has announced that from April 2025 the weekly Carer’s Allowance earnings limit will be pegged to the level of 16 hours work at the National Living Wage (NLW) and in future it will increase when the NLW increases. This means that unpaid carers will be able to earn up to £196 per week net earnings and still receive Carer’s Allowance compared to £151 now. This means that an additional 60,000 unpaid carers will gain eligibility for the benefit between 2025/26 and 2029/30.

This important change reduces a work disincentive inherent in the current Carer’s Allowance earnings system, but, as the Chancellor said at the Budget, we also need to look at the current “cliff edge” earnings rules. A taper, for example, could further incentivise unpaid carers to do some work. It could also reduce the risk of significant overpayments. However, introducing a taper in Carer’s Allowance is not without challenges and could significantly complicate the benefit as it currently stands and would mean a significant rebuild of the Carer’s Allowance computer system. DWP has begun some scoping work to see whether an earnings taper in Carer’s Allowance might be a feasible option in the longer term.

Many carers who are receiving Carer’s Allowance and doing some work will also be receiving Universal Credit. For those receiving Universal Credit, the 55% taper rate and any applicable work allowance will help to ensure that people are better off in work.