The Department for Work and Pensions (DWP) has approved significant changes to Carer's Allowance, designed to reduce the risk of sudden benefit loss for thousands of people. From April 2026, carers will be able to earn more from paid work without losing their crucial financial support.
Key Changes to Carer's Allowance Payments and Limits
Starting in April 2026, two important increases will take effect. The weekly earnings limit for Carer's Allowance will rise from £196 to £204. This new threshold aligns with 16 hours of work at the National Living Wage. Simultaneously, the weekly benefit payment itself will increase from £83.30 to £86.45.
These adjustments are intended to provide greater financial flexibility for individuals caring for a partner, relative, friend, or neighbour. The move directly addresses the so-called 'cliff edge' risk, where earning slightly over the old limit could result in a total loss of the allowance and a demand to repay funds.
The Critical Need for Precise Weekly Monitoring
Despite the higher limit, experts are issuing a strong warning. Entitlement is still assessed on a strict weekly basis, not a monthly average. This means a single extra shift, overtime, or a small bonus in any given week could push earnings over the £204 threshold.
The consequence of breaching the limit, even by £1, is severe: the carer loses the entire £86.45 payment for that week. This 'all-or-nothing' rule makes accurate payroll tracking essential. Fluctuating pay cycles can complicate calculating weekly gross pay, so meticulous record-keeping of all payslips is vital.
Proactively reporting any pay increases to the DWP's Carer's Allowance unit is recommended to prevent the accumulation of overpayment debts, which can spiral into thousands of pounds.
Impact on Other Benefits and Tax Implications
The changes extend beyond the core Carer's Allowance. The Carer Element within Universal Credit will increase from £201.68 to £209.34 per month. For older carers, the Carer Addition for Pension Credit will rise from £46.40 to £48.15 weekly.
It is also important to remember that Carer's Allowance is a taxable benefit. Recipients must account for it in their annual income planning, checking whether tax is being deducted via PAYE or if they need to set money aside independently.
These reforms from the DWP offer welcome financial relief but come with a clear responsibility for carers in paid work to monitor their earnings closely each week to safeguard their entitlement.
