Major DWP Carer's Allowance change confirmed in Budget 2024

There has been a huge change to benefits handed to carers in the Labour party's first Budget in more than 14 years this afternoon (October 30).

Among a series of announcements in the House of Commons, Chancellor Rachel Reeves unveiled a National Living Wage increase of 6.7% to £12.21 an hour. She also revealed the Government would make a significant change to Department for Work and Pensions (DWP) Carer's Allowance.

The working limit to Carer's Allowance will be lifted from next April. This means carers can earn more money from work and still claim the benefit.

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Reeves said: “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 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.”

Currently, Carer's Allowance, which is claimed by around 1.4million people in the UK - is worth £81.90 a week and is awarded if you care for someone at least 35 hours a week. You can work alongside it, but you cannot earn over £151 a week after tax, National Insurance, pension contributions, and allowable expenses. If you earn even £1 over, then you lose your entire entitlement for the benefit. Carers can also face prosecution for benefit fraud in these instances.

Earlier this year, charities and campaigners - including Martin Lewis - called out the benefit's cliff-edge nature as a large number of carers came forward to share that they were being forced to repay huge amounts back to the DWP after mistakenly falling foul of the rules. Many said the rules are incredibly confusing, particularly if your earnings fluctuate due to changing hours.

As of May 14 2024, DWP was working to recover money from 134,800 people who had been overpaid their Carer's Allowance.