Chancellor Rachel Reeves announced during the Autumn Budget that the Carer’s Allowance weekly earnings limit will increase to the equivalent of 16 hours at the National Living Wage from next April. The rule change will enable people providing unpaid care to earn over £10,000 a year without seeing payments reduced by the Department for Work and Pensions (DWP) for being over the threshold.

Ms Reeves told MPs on Wednesday: “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.”

Ms Reeves also announced that State Pensions will rise by 4.1 per cent from April, while all other working age benefits – including Carer’s Allowance – will increase by 1.7 per cent.

This means Carer’s Allowance will rise from £81.90 per week to £83.30. As the payment is typically issued every four weeks this will see monthly payment go up from £327.60 to £333.20.

The policy changes are expected to be adopted by the Scottish Government for people on Carer Support Payment to prevent a two-tier benefits system.

The UK Government announced earlier this month that it is considering the rollout of a text message service to stop people on Carer’s Allowance breaking income threshold rules for the benefit, which has resulted in some claimants having to pay back thousands of pounds to the DWP.

During the DWP oral questions session in Parliament on October 7, Minister for Social Security and Disabilities, Sir Stephen Timms told MPs that the Department was reviewing ways to stop carers getting too much from the system, which can happen when people’s weekly earnings exceed the benefit income threshold of £151.

Sir Stephen said: “The work of unpaid carers is absolutely vital and often heroic. We are determined to give unpaid carers the support they need. We are looking at the moment at options on tackling the problem with overpayments, including the possible introduction of a text alert service.”

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