UK carers can now earn more without losing entire weekly benefits

A major change to how unpaid carers receive financial support will be introduced in the UK.

Chancellor John Healey plans to announce a new digital taper system for Carer's Allowance in his budget on Wednesday. This move abolishes the existing rule known as the cliff edge. Under the old system, if a carer earned even one penny above the weekly limit of £204, they lost their entire weekly payment of £86.45. A carer who exceeded the limit by just 52 pence over a year was required to repay £4,495.40.

The previous rule created substantial debt for many families. The Department for Work and Pensions was aware of these breaches but did not warn carers. Instead, officials chased the money using legislation designed to recover funds from organized crime. Some carers were even convicted of fraud. Between 2019 and 2025, approximately 180,000 carers accumulated overpayment debts totaling £300 million. Typical debts ranged from £2,000 to £5,000, though some reached £20,000.

The new tapered system changes the calculation method. For every extra pound earned above the limit, only one pound of the allowance is removed. This ensures that working more hours or receiving a pay rise does not leave carers financially worse off. The change responds to an independent review by disability rights expert Liz Sayce. Her report found that the outdated benefit design and administrative failures caused widespread distress, including depression, among unpaid carers.

One case cited in the review involved a carer who was penalized when the national minimum wage rose faster than the earnings limit. Her hours remained unchanged, but she was 15 pence a week over the limit. Months later, she received a bill for a £2,000 penalty based on total above-limit earnings of just £5.

The announcement is part of a package of five measures described as everyday fixes. Healey's fiscal position is constrained by global events, including the conflict in Iran. Treasury insiders expect the budget to be low key, with larger tax and spending decisions deferred until next year's spending review. Other measures include making higher tax free mileage rates permanent and adding 1,000 Post Office drop boxes.

The new digital system will not be in place before the end of the decade due to technical demands. Campaigners welcomed the change but urged the government to modernize the broader benefit, which dates back to the 1970s. Healey stated that the old system made it unfair for carers to take on extra shifts or receive small pay rises. Under the new rules, allowance will taper as earnings increase, giving carers more freedom to work.