UK households have been handed a boost from the DWP after the Carer’s Allowance benefit threshold has been raised to £196.
Carer’s Allowance is a benefit paid to anyone who looks after someone else, such as a relative, for at least 35 hours per week. This isn’t for professional carers, but for ‘unpaid carers’ who look after a loved one.
The benefit pays £81.90 per week to claimants who are eligible, but the issue is that the benefit is a ‘cliff edge’.
It means that those who earn even 1p above the threshold lose their entire allowance, not only not being able to get any money above the threshold but being made to pay back what they already claimed.
But the Department for Work and Pensions (DWP) has confirmed it will increase the Carer’s Allowance earnings threshold by £45 a week to £196 from April, meaning people can earn significantly more money and still get the £81.90 per week.
The increase to the earnings threshold comes following an independent review to investigate Carer’s Allowance overpayments as overpayment debt has risen to more than £250 million.
Historic overpayments have led to many carers unwittingly racking up unmanageable levels of debt and some quitting their jobs as a result.
The National Audit Office (NAO) said the DWP paid £3.7 billion in Carer’s Allowance to over 900,000 claimants in 2023/24 and noted the so-called “cliff edge” created by the current rules, meaning a claimant – who by law must inform DWP promptly if their circumstances change – is either entitled to the whole allowance or none of it, saying this can “quickly build up significant overpayments”.
The review is expected to deliver its findings and recommendations to ministers by summer 2025.
Chair of the independent review, Liz Sayce OBE, said: “I have already started to hear from carers about the impact overpayments have had on them, in a context in which people face multiple pressures in their lives. I will be collecting views and evidence as I review the issues and develop recommendations.
“In doing so, I will be able to advise the government on ways to minimise overpayments of Carer’s Allowance related to earnings accruing in future and how it can best support those already affected.”
In a statement, the DWP said: “Action has already been taken by the Government by boosting the Carer’s Allowance earnings threshold by £45 a week to £196, benefitting more than 60,000 carers by 2029/30. This is the biggest ever cash increase in the earnings threshold for Carer’s Allowance.”
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