The Government has announced plans to end a rule that can leave unpaid carers £86.45 a week worse off for earning just 1p too much.
Under the plans, Carer’s Allowance would be reduced gradually when someone earns over the weekly limit, rather than stopping completely.
But the change won’t happen straight away. The Government says the new system will begin in 2030–31, meaning carers must continue following the existing rules for now.
The announcement was made by HM Treasury on 26 October 2026, ahead of the Budget.
Why can earning just 1p cost carers £86.45?
Carer’s Allowance is currently worth £86.45 a week for eligible people who spend at least 35 hours caring for someone receiving certain disability benefits.
You can work while claiming, but there’s a strict earnings limit of £204 a week.
This is calculated after tax, National Insurance and certain allowed expenses, rather than simply using your pay before deductions.
The problem is what happens when someone earns even slightly more.
Under the current rules, earning £204.01 instead of £204 could mean losing the entire £86.45 payment for the affected period.
That could happen because of extra hours, overtime or a small pay rise.
It’s known as the earnings cliff edge because the payment doesn’t gradually reduce. It can disappear altogether.
What’s the Government changing?
The Government plans to replace the cliff edge with a system that reduces Carer’s Allowance by £1 for every £1 earned above the weekly limit.
It’s called an earnings taper.
So, rather than losing the whole payment when earnings go above the limit, carers would lose only part of their allowance.
The change is intended to make it easier for unpaid carers to balance employment with looking after someone.
Importantly, Carer’s Allowance itself isn’t being abolished. It’s the sudden loss of the payment when earnings cross the limit that the Government wants to remove.
How would the new earnings rule work?
Here’s a simple example using the current £204 earnings limit and £86.45 weekly allowance.
Say you’re receiving the full allowance and your weekly take-home pay increases to £214.
For this example, we’ll assume you have no additional work expenses to deduct and no other benefits affecting the figures.
| Current rules | Proposed rules | |
|---|---|---|
| Weekly earnings | £214 | £214 |
| Carer’s Allowance | £0 | £76.45 |
| Total weekly income | £214 | £290.45 |
Under the proposed system, you would lose just £10 of Carer’s Allowance because your earnings are £10 above the limit.
That would leave you £76.45 better off than under the current cliff-edge rule.
However, there’s something else worth knowing.
Someone earning exactly £204 and receiving the full £86.45 allowance would also have £290.45 in total.
So the proposed system wouldn’t mean you automatically gain more money overall for every extra pound you earn above the limit.
The benefit is that you wouldn’t suddenly lose your entire allowance.
These are example calculations using 2026/27 rates. The actual figures could be different when the rules change.
Skint Dad says:
I think the biggest problem with the current system is how easily a small increase in earnings can turn into a much bigger loss.
Someone could work an extra hour to help with their household bills, only to find they’ve lost their whole Carer’s Allowance for going over the limit.
Replacing that sudden cut-off would make a real difference to how carers can plan their work and income.
But there’s a long wait ahead, and that’s the part I think matters most right now.
Until the new rules begin, carers still face exactly the same risk of losing their payment if their earnings go over the limit.
When will the new Carer’s Allowance rules start?
The Government says the new system will begin during the 2030–31 financial year, which runs from April 2030 to March 2031.
In a statement to Parliament on 27 October, the Treasury confirmed that DWP must develop a new computer system before the change can be introduced.
An exact start date hasn’t been announced.
That means the current £204 weekly earnings limit remains in place, and nobody should assume they can earn more without affecting their Carer’s Allowance.
Who will benefit from the change?
The plans are particularly relevant to people who combine unpaid caring with part-time work or self-employment.
They could help carers whose income increases because of a pay rise, additional shifts or changes in working hours.
But the other eligibility rules aren’t changing as part of this announcement.
You must still meet the requirements for Carer’s Allowance, including providing at least 35 hours of care each week for someone receiving a qualifying disability benefit.
If you receive Universal Credit as well, your situation needs particular care.
Under the current rules, Universal Credit is reduced by an amount equal to your Carer’s Allowance payment. You may also qualify for extra Universal Credit because of your caring responsibilities.
The Government hasn’t yet explained fully how the new taper will work alongside other benefits, so the example above shouldn’t be used to work out your total household entitlement.
Scotland has a separate benefit called Carer Support Payment, which currently has its own £204 weekly earnings limit.
No equivalent Scottish change has been confirmed in this announcement. Separate arrangements for Northern Ireland have also not been confirmed.
What if you already owe Carer’s Allowance money?
The announcement doesn’t automatically cancel existing overpayments.
However, DWP is separately reviewing certain Carer’s Allowance overpayments from between 10 April 2015 and 2 September 2025, following problems with guidance about how some earnings were calculated.
Some carers may have debts reduced or cancelled, or receive a refund.
If your case is included in the reassessment exercise, DWP says it will contact you with its decision or if it needs more information. You don’t need to request the reassessment yourself.
What should carers do now?
If you’re claiming Carer’s Allowance while working, there are a few things worth checking.
- Check your earnings. The current limit is £204 a week after tax, National Insurance and permitted expenses. Some expenses, including half your pension contributions, may be deducted.
- Check your payslips. Pay rises, overtime and bonuses can affect your entitlement. If your earnings change from week to week, ask DWP how they are being assessed, as averaging may be possible.
- Report changes promptly. If you start work, change jobs or your income changes, tell DWP. Don’t assume your employer or HMRC will do this for you.
- Check your other benefits. If you receive Universal Credit, make sure you report relevant changes through your Universal Credit account too.
You can report a change to Carer’s Allowance online through GOV.UK.
If you’re unsure whether your pay is over the limit, contact the Carer’s Allowance Unit and ask them to check how your earnings are being worked out.
You can also read the current Carer’s Allowance eligibility rules, including which work expenses can be deducted.
And if you haven’t checked your wider benefit entitlement recently, our guide to checking unclaimed benefits explains how to use a free benefits calculator.
There’s no new application to make because of the announcement.
For now, the most useful thing you can do is make sure your earnings are being counted correctly and that any changes have been reported.
