Government announces end to Carer's Allowance earnings cliff edge

HM Treasury announced on 26 October 2026 that the Carer's Allowance earnings cliff edge will be replaced by a gradual taper, under which the allowance is reduced by £1 for every £1 earned above the weekly limit¹. The change was announced ahead of the Autumn Budget and forms part of a set of measures the government calls "everyday fixes"³.

Under the current rules, Carer's Allowance is worth £86.45 a week to eligible people who spend at least 35 hours caring for someone receiving certain disability benefits¹. Claimants can work, but there is an earnings limit of £204 a week, calculated after tax, National Insurance and certain allowed expenses rather than gross pay¹. Earning £204.01 instead of £204 can mean losing the entire £86.45 payment for the affected period¹. One report describes the limit as equivalent to 16 hours of the National Living Wage³.

In a written statement, the chancellor said:

The same statement said the taper "will begin within 2030-31 once the Department for Work and Pensions (DWP) have developed a new IT system to implement the taper"⁴. An exact start date has not been announced¹. The 2030-31 financial year runs from April 2030 to March 2031¹.

Worked example using 2026/27 rates, as published by Skint Dad¹:

The example assumes no work expenses to deduct and no other benefits affecting the figures, and the actual figures could differ when the rules change¹. Someone earning exactly £204 and receiving the full £86.45 would also have £290.45 in total, so the proposed system would not mean gaining more overall for every extra pound earned above the limit¹.

The other eligibility rules are not changing in this announcement, including the 35-hour caring requirement¹. The government has not yet explained fully how the taper will work alongside other benefits; under current rules Universal Credit is reduced by an amount equal to the Carer's Allowance payment¹. Scotland has a separate benefit, Carer Support Payment, with its own £204 weekly earnings limit, and no equivalent Scottish change has been confirmed in this announcement; separate arrangements for Northern Ireland have also not been confirmed¹.

Why it matters for households

The current Carer's Allowance earnings limit stays in place until the new system begins, so carers who work still face losing the whole £86.45 for earning 1p above £204 a week¹. The change, when it comes, would affect carers whose pay rises, overtime or extra shifts take them over the limit, reducing the allowance by £1 for each £1 above it rather than stopping it altogether¹. Carer's Allowance itself is not being abolished¹. Because the start depends on a new DWP computer system, the practical effect on household incomes is not expected before 2030-31¹.

The announcement does not automatically cancel existing overpayments¹. DWP is separately reviewing certain Carer's Allowance overpayments from between 10 April 2015 and 2 September 2025, following problems with guidance about how some earnings were calculated; some carers may have debts reduced or cancelled, or receive a refund, and DWP says it will contact those included without them needing to request a reassessment¹.

What happens next

The Treasury confirmed in a statement to Parliament on 27 October that DWP must develop a new computer system before the change can be introduced¹. No exact start date has been given beyond the 2030-31 financial year¹. Full details of Carer's Allowance eligibility remain as published by DWP in the meantime¹.