1.4 million unpaid carers handed 'long overdue' income boost in budget

More than 1 million unpaid carers will be able to earn £45 per week before losing their right to a carer's allowance worth more than £300 month, the government has announced in the budget.

On Wednesday, Rachel Reeves announced that the carer's allowance earnings limit will be increased from £151 to £196, benefitting around 1.4 million carers and making it the largest increase since the allowance was introduced.

Announcing the decision, the chancellor said: “Carer’s allowance currently provides up to £81.90 per week to those with additional caring responsibilities.

“I can confirm that we are increasing the weekly earnings limit to the equivalent of 16 hours at the national living wage per week, the largest increase since carer’s allowance was introduced in 1976.

“That means a carer can now earn over £10,000 a year while receiving carer’s allowance, allowing them to increase their hours where they want to and keep more of their money.”

Who is eligible for carer's allowance?

If you care for someone at least 35 hours a week and you’re aged 16 or over, you are eligible for carer's allowance.

You do not have to be related to or live with the person you care for, the government’s guidelines state. In addition, you do not get paid extra if you care for more than one person.

More eligibility details can be found on the government website here.

How does it work?

Currently, you can only claim carers allowance if you earn £151 a week after tax.

It's a big issue, affecting approximately 3.4 million unpaid carers in the UK.

Without the financial support, they are often trapped in a cycle of poverty, and struggle to juggle their caring responsibilities with paid employment.

The rise will mean that more struggling carers are eligible for support.

If they earn below £196 a week after tax, they will receive equivalent to 16 hours a week at the new national living wage rate — £12.21 — from April 2025.

The amount carers receive at that time will increase too — with the figure rising from £81.90 per week to £83.29.

This is because benefits have been uprated in line with inflation, rising 1.7% in line with the consumer price index (CPI).

'Long overdue'

The announcement gives more carers opportunities to benefit from the allowance, allowing more people the chance to balance their caring role with paid work, the Carer’s Trust has said.

The charity's director of policy and public affairs, Dominic Carter, told Yahoo News the adjustment was long overdue.

“This is not least because it will help remove barriers to getting back into work for many carers,” he said. “The adjustment means thousands of carers will be better able to balance their caring role with paid work.”

However, he said that “this is not the end of the matter", adding that the whole system is “archaic” and needs a major overhaul. “We hope today’s announcement is just the beginning of more fundamental reform of this major benefit for carers," he added.

Repayment 'cliff edge'

The carer's allowance system has faced criticism for how complex it is, leaving some paying huge repayment sums if they are just pennies over the allowance threshold.

Earlier this year, the government promised a plan to “put things right” on overpayments to carers which have led to many unwittingly racking up unmanageable levels of debt and some quitting their jobs as a result.

In the budget, the chancellor nodded to the work and pensions secretary Liz Kendall’s review of overpayments to carer’s allowance claimants, saying: “I am also concerned about the cliff-edge in the current system and the issue of overpayments.”

Money saving expert Martin Lewis also praised the changes, but said that more detail was needed.

Writing on X, Lewis said that the government was looking at what he described as "the unfairness of the cliff-edge".

"This is something I wrote to the chancellor about (ie 1p over you lose it all) but no news on that yet," he added.

The issue of people being penalised for going over their earnings limit for carer’s allowance even by as little as a few pence per week has been branded a “scandal” by Carers UK.

The charity said some people have been left owing “hundreds, thousands and sometimes tens of thousands of pounds” to the Department for Work and Pensions.