UK plans to abolish benefit-loss rule for carers — The Guardian
The UK plans to announce in its budget the abolition of a rule under which unpaid carers lost their entire weekly benefit if their earnings exceeded the set limit by even one penny. As The Guardian reports, a digital system for gradually reducing payments is to be introduced instead.
How the payment mechanism will change
Currently, a person earning more than £204 per week loses the entire Carer’s Allowance payment of £86.45 for that week. Under the new model, £1 will be deducted from the benefit for every £1 of earnings above the set threshold.
This is intended to eliminate situations in which an extra work shift or a small pay rise left carers worse off financially. At the same time, the earnings limit itself will not be abolished: the payment will be gradually reduced depending on the amount by which it is exceeded.
Under the current rules, a person who exceeded the threshold by just one penny every week for a year would have had to repay £4,495.40 in benefits, although the total amount of the excess would have been 52 pence.
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Debts caused by overpayments
According to the publication, the UK Department for Work and Pensions knew about cases where the limit was exceeded but did not warn benefit recipients, placing the responsibility for reporting changes in income on them. Some people did not know for years that they had crossed the threshold, resulting in accumulated overpayment debts.
An independent government-commissioned review of Carer’s Allowance overpayments found that around 180,000 carers accumulated debts totalling £300 million between 2019 and 2025. The typical size of such debts was between £2,000 and £5,000, while in individual cases it reached £20,000.
Charities representing carers welcomed the decision. However, they noted that due to the technical complexity of developing the digital system, it will not be introduced before the end of the decade. Carers UK said the current mechanism forced people to turn down overtime, bonuses, pay rises or promotion because of the risk of losing the benefit.
