Rachel Reeves announced the moves as part of the autumn budget, saying: “Carer’s allowance currently provides up to £81.90 per week to those with additional caring responsibilities.
“Today, 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.”
The changes had been discussed by money campaigner Martin Lewis, who had written to the chancellor to push for changes to the allowance, calling it “broken, old fashioned, unjust and in need of urgent change”. One of the key issues with it is the ‘cliff edge’; which currently sees anyone earning a penny over the threshold unable to claim, rather than a tapering off system.
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.”
But, there are still issues with the system, as Will Donnelly, co-founder and CEO of London-based online care finder Lottie, explains: “While raising the earnings threshold for Carer’s Allowance is a step, it’s far from what’s needed. With unpaid carers still facing significant out-of-pocket costs, the financial and emotional impact is profound.
“Many carers juggle their own financial responsibilities, work, and the rising costs of care, often without adequate support. For Carer’s Allowance to be genuinely impactful, it needs to reflect the real costs of care in today’s economy and alleviate the burden that leaves so many carers struggling.”
