John Healey is set to announce a new digital taper system for Carer's Allowance in Wednesday's budget, replacing the cliff-edge rule that cut off the full weekly payment when earnings rose even slightly above the limit. The change would mean carers lose support gradually instead of losing the whole £86.45 payment at once.
Under the current rules, the weekly earnings limit is £204. A carer who goes even a penny over that threshold loses the full week’s payment, and a year of tiny breaches can turn into a repayment demand of £4,495.40.
The new system would remove only £1 of Carer's Allowance for every additional £1 earned above the limit. That is the practical difference carers have been asking for: extra hours or a small pay rise would reduce support, not wipe it out in one step.
Guardian investigation and review
The change follows a Guardian investigation that showed hundreds of thousands of carers had run up life-changing debts after overstepping weekly earnings thresholds by just a few pence. The reporting also triggered a government-commissioned independent review of carer’s allowance overpayments by Liz Sayce, published last year.
That review said unpaid carers suffered depression and hardship on a huge scale after falling foul of systemic injustices including the cliff edge. It came after warnings linked to the Department for Work and Pensions, which was aware when carers breached earnings limits but refused to warn them.
Department for Work and Pensions
Thousands of carers spent long periods unaware that they had crossed the line, in some cases for years. The debts were typically £2,000 to £5,000, and in some cases as much as £20,000.
The rules also exposed carers to penalties that could far exceed the small amount they earned over the limit. Under the old system, a carer who earned a penny over the limit for a year would breach it by 52p but would still be asked to repay £4,495.40.
Some unpaid carers were convicted of fraud as a result. The new taper is designed to stop that kind of cliff-edge outcome by making deductions proportional to earnings, but the budget announcement is only the start of the change. What happens to existing overpayment debts will be the immediate question for carers who are already dealing with repayments.
