DWP rule change will see 60,000 more people eligible for £332 a month benefit

Around 60,000 more people will be able to access a benefit worth more than £330 a month after the government announced a major change in the Autumn Budget.

Chancellor Rachel Reeves confirmed that the earnings threshold for Carers Allowance would increase by £45 a week, meaning thousands more carers will have access to the benefit.

The Department of Work and Pensions (DWP) currently pays £81.90 a week to carers who care for someone for 35 hours a week or more. However, if they earn more than £151 a week, they lose the benefit entirely for that week. The DWP has been criticised for the system, which sees carers have to pay back the benefit payment if they earn even £1 over the limit.

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Earlier this month, the DWP launched a review to look into the issue of Carers Allowance overpayments, with Ms Reeves admitting in her Budget speech on Wednesday that she was "concerned" about the "cliff-edge" approach. While any changes to the system will be subject to the review, Ms Reeves did announce one move that will ensure carers can take home more pay while still receiving the benefit.

She confirmed that from April 2025 the earnings threshold would increase to the equivalent of 16 hours a week at the National Living Wage. That means that from next year, carers will be able to earn £196 a week before losing their benefit entitlement.

Also from April next year, benefits will be uprated in line with inflation at 1.7 per cent. That means Carers Allowance will be worth £83.29 a week - around £332 a month.

Announcing the move to MPs, Ms 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 government said it will mean that more than 60,000 additional carers will be able to access Carer’s Allowance. It added that around 70 per cent of people claiming the benefit are women.

Under the new earnings threshold, carers will be able to earn around £2,350 more a year.

The move has been welcome by charities. Helen Walker, chief executive of Carers UK, said: "It’s fantastic to hear that the government will increase the earnings threshold for Carer’s Allowance allowing 60,000 more carers juggling work and care to access this benefit. It’s the largest increase in the earnings limit for Carer’s Allowance since it was introduced in 1976.

"Carers working and claiming Carer’s Allowance can now take on additional hours to earn up to £196 per week from April 2025, or over £10,000 a year. This is a vital poverty prevention measure helping many carers, particularly women, stay in the labour market. It will make a noticeable difference for many, and for the first time in decades, carers will not lose out as the National Living Wage rises. It will help to put much needed cash into the pockets of working carers who do so much to look after their disabled, ill and older relatives.

"Many carers are still struggling with their finances whilst providing so much for society. In addition to today’s announcement, we need to see a full review of Carer’s Allowance as the lowest benefit of its kind at only £81.90 per week for providing a minimum of 35 hours of care. 45 per cent of carers receiving Carer’s Allowance are struggling to make ends meet and urgent steps must be taken to further tackle poverty for carers and their families."

Money saving expert Martin Lewis previously called for a taper system to be introduced to Carers Allowance so that carers did not lose the whole of their benefit for going only slightly over the earnings threshold. He was among a number of campaigners calling for the DWP to address the issue of carers being sent demands for repayments, sometimes worth thousands of pounds, because they had been unaware they had passed the earnings threshold.

In an open letter to the chancellor earlier this year, Mr Lewis wrote: "Most benefits, including Universal Credit, have a taper, so if you go over the threshold, the payment received is gradually reduced. Carer's Allowance only has a cliff-edge, leaving many to plummet off.

"Worse, the system seemingly sets people up to slip over the threshold unwittingly. Many on Carer's Allowance need to restrict any working hours to avoid hitting it (a strange disincentive to work), yet if their wage increases slightly, eg. when the annual minimum wage increases, they can fractionally bust the threshold. If that happens, the terrible disconnectedness and poor benefits systems mean they're often still paid the allowance for months, or even years. Then, even though they may have only earned a pound or two more, they're later asked for unaffordable £100s or £1,000s back.

"I'd ask you to look at ending the cliff-edge going forward, and retrospectively for those carers who are facing requests for crippling back-payments – adding to the burden many are already faced with. The system is fundamentally unjust, and hits many of society's most venerable and vulnerable."

Launching its review earlier this month, the DWP said: "We recognise the challenges carers are facing and we are determined to provide unpaid carers with the support they need and deserve. This is why we have launched a review into Carer's Allowance overpayments to get to the bottom of how overpayments have occurred and to prevent people who devote such time and care to others from facing similar difficulties in future."