DWP rule change, USA News: The Department for Work and Pensions (DWP) has confirmed a major rule change that is set to benefit tens of thousands of benefit claimants. In his first Budget, chancellor John Healey announced that the government would reform Carer's Allowance so that the earnings threshold 'cliff edge' is removed.
Carer’s Allowance is a £86.45 a week payment for people over 16 who spend at least 35 hours per week caring for someone with a disability or health condition. Under the current rules, you can only claim the benefit if you earn £196 per week or less. As soon as you go over the £196 limit, you lose your payment entirely for that week.
This 'cliff edge' has resulted in some claimants receiving notices from the DWP to pay back money that they received after unknowingly exceeding the threshold and not declaring it. The issue of people being penalised for going over their earnings limit for Carer’s Allowance, even by as little as a few pence per week, has previously been branded a "scandal" by charities.
A year-long review, the findings of which were published in 2025, concluded that many carers felt they were “treated as criminals, with resulting feelings of fear and shame”. It has resulted in thousands of unpaid carers, who were in receipt of the allowance between 2015 and September 2025 in England and Wales, having their overpayments reviewed.
The review, carried out by Liz Sayce, found that the way the DWP “treats earnings, especially in averaging and allowable expenses, is inconsistent and unclear, meaning carers were unable to comply with the rules”.
The chancellor's announcement will address the issue, giving carers "greater flexibility to work without the fear of losing out financially", according to Mr Healey's Budget.
Budget Reforms and Implementation Timeline
The government statement noted that the Weekly Earnings Limit will be reformed so that carers no longer lose their entire benefit for exceeding the limit by a single penny. Instead, earnings above the limit will be subject to a taper that reduces the benefit payment as earnings increase.
The rule change is expected to benefit around 48,000 carers in England and Wales, according to the government. The taper will be implemented in 2030, following the development of a new IT system that will automatically adjust payments in line with the taper, it added.
Carers UK welcomed the change, calling it a "very practical measure that carers have been asking for". The charity noted that six out of 10 carers who had experienced issues with the earnings limit found they were unable to work more hours or take on higher paid work, and 41 per cent of these carers had left paid work because of the earnings limit.
Responding to the announcement, Emily Holzhausen CBE, director of policy and public affairs at Carers UK, said that the cliff edge earnings limit is one of the most punitive in the benefits system, creating an all-or-nothing measure with too much uncertainty and worry for carers.
Helen Walker, chief executive of the charity, added that the announcement of funding for a taper in Carer's Allowance in England and Wales should give carers the flexibility to work as much as they are able to alongside their caring role, marking one of the biggest changes to the design of the social security benefit since its introduction in 1976.
