John Healey to end carer allowance cliff-edge in budget

Unpaid carers in the United Kingdom will no longer lose their entire weekly allowance if they earn slightly more than the permitted threshold. Chancellor John Healey will announce a new digital taper system in the budget on Wednesday, October 28. This change removes the administrative penalty that previously triggered large repayment debts for small earnings overages.

Under the current rules, a carer earning even one penny above the weekly limit of £204 forfeits the full weekly payment of £86.45. Over a year, a carer who exceeded the limit by 52 pence was required to repay £4,495.40. The new system reduces the loss to one pound of allowance for every additional pound earned above the cap. This adjustment ensures that carers are not financially worse off for working extra hours or receiving a pay raise.

The Department for Work and Pensions had long known about the distress caused by this rule but did not warn carers when they breached the limit. An independent review published last year found that approximately 180,000 carers accumulated overpayment debts totaling £300 million between 2019 and 2025. The review, led by disability rights expert Liz Sayce, identified systemic failures in the administration of carer's allowance as the primary cause of these debts.

Healey described the previous system as working against carers, noting that taking an extra shift could leave a person with less income. He stated that the new taper allows carers to work a little more and earn a little more without suddenly losing all their support. The change is part of a package of five everyday fixes announced ahead of the budget, which is being shaped by a tight fiscal backdrop resulting from global events including the conflict in Iran.

Other measures in the budget include making higher tax-free mileage rates permanent. The rate for the first 10,000 business miles will be locked at 55p per mile, while the rate above that threshold will increase to 35p per mile. The Treasury estimates this move will benefit about three million people who use their own vehicles for work. Additionally, Healey is expected to raise the national minimum wage by roughly 4% to about £13.20 an hour.

Carers UK noted that the old rule made it difficult for carers to balance paid work with their minimum 35 hours of weekly caring duties. Many carers gave up jobs or refused promotions to avoid the risk of breaching the limit. Emily Holzhausen, the organization's director of policy, said the taper should give families more choice about working and still caring. The new digital system will not be introduced before the end of the decade due to technical development requirements.