The Department for Work and Pensions (DWP) is set to strip benefits from claimants whose earnings exceed £10,000 following a law change. The new Carer's Allowance earnings limit has been set at £204 per week, allowing carers to earn approximately £10,000 annually before their support begins to be reduced.
New Earnings Limit and Its Impact
The Labour Party government has raised the weekly earnings limit for Carer's Allowance to a record £204, enabling carers to earn around £10,000 a year while retaining their full benefit. Once earnings surpass this threshold, the benefit is gradually withdrawn. This change aims to modernise the system and better support unpaid carers who balance work and caregiving responsibilities.
Call for Evidence on Modernisation
On the same day, the DWP launched a call for evidence targeting organisations and individuals with relevant information on how Carer's Allowance could be modernised. Key areas include the introduction of an earnings taper, the role of earnings rules, and their practical operation. The review welcomes written submissions, existing data, or unpublished analysis from those with lived or learned experience.
In a ministerial foreword, the welfare department stated: "Unpaid carers make a vital contribution to our communities and our country, providing care and support to family members and loved ones, often alongside other responsibilities. Carer’s Allowance plays an important role in recognising that contribution."
Addressing Past Issues
The DWP acknowledged historical shortcomings: "But we know the system has not always worked as well as it should. We inherited a system where some carers, already managing significant caring responsibilities, found themselves with unexpected overpayments and uncertainty about how the rules applied to them." The Independent Review into Carer’s Allowance overpayments revealed mistakes by the previous government, and the current administration is committed to rectifying them.
Modernisation Efforts
Carer’s Allowance, introduced in 1976, has not kept pace with changes in modern working patterns. Many carers desire flexibility to combine paid work with caregiving. The DWP has already taken steps such as linking the weekly earnings limit to 16 times the hourly National Living Wage, updating decision maker guidance, and improving customer communications. This call for evidence represents the next phase in building an evidence base to ensure the system remains clear, fair, and sustainable.
The DWP seeks views from carers, representative organisations, and others to inform future decisions on modernising Carer’s Allowance, including the potential introduction of an earnings taper.
