If you are looking after disabled, ill, frail or older person, or someone is caring for you, it’s important to know how Carer’s Allowance works.
While around 1.4 million claim the allowance, many more could get support and it will be worth more from April 6, 2025.
Today, Carer’s Allowance pays £81.90 a week if you care for someone at least 35 hours a week and earn less than £151 a week.
That’s a low earnings threshold but it’s going up.
From next April, Reeves will increase the amount that working carers can earn from £151 to £196 a week. That’s the equivalent of working 16 hours on the national living wage, which rises to £12.21 from April.
That’s the biggest boost to the allowance since 1976.
It works out as an increase of £45 a week and means another 60,000 should be able to juggle work and access Carer’s Allowance, said Helen Walker, chief executive at Carers UK. “Claimants can take on additional hours to earn more than £10,000 a year, up to £2,340 a year more.”
She said this should help many carers, particularly women, stay in the labour market. In another plus, they’ll no longer lose out as the National Living Wage rises.
The new earnings threshold will rise each year with the living wage, so workers will no longer have to reduce working hours to compensate for any pay rise. “This will put much-needed cash into the pockets of working carers,” Walker said.
However, a new study by retirement specialist Just Group suggests awareness is low among those who might stand to benefit.
Among those who do claim, many are unable to work as long as they like, because if they take on extra hours they will lose the allowance.
That might get easier next April, said Stephen Lowe, group communications director at retirement specialist Just Group. “From April, carers will have more flexibility to work and strengthen their financial security, but only if they are aware of this benefit in the first place.”
Lowe said Carer’s Allowance can be especially helpful for “sandwich” carers, who can struggle to juggle the needs of their children and their adult relatives.
Citizens Advice and Age UK can offer valuable advice and support, or visit government website Moneyhelper.org.uk or its online benefits calculators at Gov.uk/benefitscalculators.
To qualify for Carer’s Allowance, the person needing care needs to have claimed certain state benefits, notably the daily living component of the Personal Independence Payment, Disability Living Allowance (at the middle or highest rate) or Attendance Allowance.
Carers don’t have to be related to, or live with, the person they care for.
However, they don’t get paid extra if they care for more than one person. If someone else also cares for the same person as you, only one can claim.
A claim can affect your access to other benefits and payments are taxable if your total income is over the £12,570 personal allowance.
Carers’ Allowance has been controversial, as many claimants have been wrongly overpaid because they didn’t realise they had accidentally exceeded the earnings limit.
Earlier this year it emerged that the government was seeking to recover money from more than 134,000 carers who had unwittingly exceeded the earnings limit.
Even going £1 over the weekly limit means they must repay the entire benefit. So a carer who earned £1 more than the £151 threshold for 52 weeks would be forced to repay their full allowance of £4,258.80.
Last month, Liz Kendall, secretary of state for work and pensions, commissioned an independent review of the overpayments.
