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Carer's Allowance 2026: The Overpayment Scandal, the New Rates, and Whether You're Owed Money Back

There are around 6.5 million unpaid carers in the UK. Many of them are also claiming Carer's Allowance — the main government benefit for people who provide substantial care to a disabled or seriously ill person. And tens of thousands of them have received letters demanding they repay hundreds or thousands of pounds, often for debts they had no idea they were building up.

On 13 April 2026, the DWP confirmed it has now begun reviewing more than 200,000 Carer's Allowance cases. Around 25,000 carers are expected to have their debts reduced, cancelled entirely, or — if they have already repaid money — receive automatic refunds. The government acknowledged that carers were "let down" by unclear rules, and has accepted 38 of 40 recommendations from an independent review into what went wrong.

This guide covers the 2026/27 rates, who qualifies, how the earnings cliff-edge works, the full story of the overpayment scandal, what to do if you are affected, and what changes are coming.

The 2026/27 Rates

Carer's Allowance increased from 7 April 2026. The current rate is £86.45 per week — up from £83.30 in 2025/26. That works out at approximately £345.80 per month, or £4,495.40 per year.

The weekly earnings threshold — the maximum you can earn from paid work and still receive the benefit — also rose to £204 per week net from April 2026, up from £196. This is calculated after deductions for tax, National Insurance, and certain allowable expenses including pension contributions and the cost of care for your dependant while you work.

In Scotland, Carer's Allowance is being gradually replaced by Carer Support Payment, which is administered by Social Security Scotland. The eligibility conditions and rates are broadly equivalent but administered differently — check mygov.scot for Scottish-specific guidance.

Who Qualifies

To claim Carer's Allowance in 2026/27, all of the following must apply:

You must be 16 or over and not in full-time education (defined as 21 or more hours of supervised study per week).

You must provide at least 35 hours of care per week to the same person. You do not need to live with them or be related to them. The care can include help with washing, dressing, meals, medication, attending medical appointments, managing bills, and general supervision.

The person you care for must receive a qualifying benefit. The main qualifying benefits are: Personal Independence Payment (daily living component, either rate), Disability Living Allowance (middle or higher rate care component), Adult Disability Payment (Scotland), Attendance Allowance, Constant Attendance Allowance at or above the normal maximum rate, Armed Forces Independence Payment, or Child Disability Payment (middle or higher care rate in Scotland).

Your net earnings must be £204 per week or less. This is after deductions for income tax, National Insurance, half of any pension contributions, and the cost of care you pay for your dependant while you work. Only one person can claim for the same individual — if two people share caring responsibilities, they must decide who claims.

You must satisfy UK residency requirements, including the habitual residence test. Special rules apply if you live or work abroad, or if the person you care for is abroad.

Carer's Allowance is taxable if your total income — including the benefit itself — exceeds the Personal Allowance of £12,570. On its own, £86.45 per week (£4,495 per year) falls below the Personal Allowance, so most carers who have no other income pay no tax on it. However, combined with any part-time earnings, it can push you above the threshold.

The Earnings Cliff-Edge: Why It Has Cost Carers So Much

The single most damaging feature of Carer's Allowance is its earnings cliff-edge — and it is the root cause of the overpayment scandal affecting tens of thousands of families.

Unlike Universal Credit, which tapers gradually as earnings rise, Carer's Allowance operates as an all-or-nothing threshold. Earn £204 per week net or below and you receive the full £86.45. Earn £204.01 — one penny more — and you lose the entire weekly payment. Not a proportion. Everything.

This cliff-edge does not cause overpayments on its own. The problem arises because Carer's Allowance continues to be paid automatically even after a carer exceeds the earnings limit — sometimes for months or years — and the DWP then demands the money back in a lump sum.

The way this typically happens: a carer doing part-time work gets a pay rise, works a few extra hours in one week, receives a bonus, or sees their hours vary unpredictably. Their weekly earnings briefly or repeatedly cross £204 net. They may not realise this triggers a breach, or may not understand that they need to report it, or may report it but the DWP fails to act on the notification promptly. Meanwhile, Carer's Allowance keeps arriving in their bank account. Months or years later, a letter arrives demanding repayment of the entire period — often running into thousands of pounds.

The independent Sayce Review, published in November 2025, found that carers were not given "clear, consistent or unambiguous" guidance on what changes they needed to report and when. The DWP was also receiving earnings alerts from HMRC but only checking a fraction of them — allowing debts to compound over years in ways carers were entirely unaware of. The review concluded this was a systemic failure, not individual fraud.

Between April 2015 and September 2025, the unclear guidance meant carers with fluctuating incomes — those doing shift work, zero-hours contracts, agency work, or irregular hours — faced particular risk. A week of extra shifts could push them over the limit without any deliberate overpayment.

Martin Lewis of MoneySavingExpert — who gave evidence to the review and had called the system "fundamentally unjust" — described one MoneySaver who had been asked to repay £20,000. By February 2025, 143,922 carers had outstanding overpayment debts totalling approximately £251 million, a 71% rise in cases since 2018/19.

The Reassessment: Are You Owed Money?

On 13 April 2026, the DWP confirmed it has begun reviewing more than 200,000 cases. The scope covers carers whose overpayments arose due to the unclear earnings-averaging guidance that was in place between April 2015 and September 2025.

Specifically, the reassessment applies to carers who had fluctuating or irregular earnings — such as variable hours, shift work, or one-off bonuses — and where the unclear DWP guidance on how to average those earnings across weeks may have resulted in an overpayment being calculated incorrectly.

If the reassessment finds the original overpayment was overstated:

• Outstanding debts will be reduced or cancelled entirely
• Money already repaid will be automatically refunded
• No interest or penalties will be added during the review period

The reassessment is specifically limited to overpayments arising from the guidance on averaging fluctuating earnings. Overpayments that arose for other reasons — for example, where a carer knowingly exceeded the limit and failed to report it — are not within the scope of this exercise.

What If You Are Currently Being Asked to Repay?

If you have received a letter demanding repayment of Carer's Allowance, do not ignore it — but do not panic either, and do not simply pay without first understanding whether your case may be in scope for the reassessment.

Check whether your overpayment falls within the review period (April 2015 to September 2025). If it does and your earnings fluctuated — variable hours, agency work, bonuses, irregular pay — your case may be eligible for reassessment. Contact the Carer's Allowance Unit to ask whether your case has been or will be reviewed.

Request a breakdown of how the overpayment was calculated. You are entitled to know which weeks the DWP believes you exceeded the earnings limit, what figure they used for your earnings, and whether they applied the earnings-averaging rules correctly. Errors in calculation are not uncommon.

Apply for a payment pause if you are in financial hardship. The DWP has committed to more proportionate debt recovery following the Sayce Review, including pausing recovery for carers who cannot afford repayments. Ask the Carer's Allowance Unit directly.

Get free advice before agreeing to any repayment plan. Citizens Advice, Carers UK, and Carers Trust all offer free guidance on Carer's Allowance disputes. Never use a paid claims management company for a benefit debt — free help is available.

If you believe the overpayment is incorrect, you have the right to appeal to an independent tribunal. You must first request a mandatory reconsideration from the DWP, then if unsatisfied, appeal to HM Courts and Tribunals Service. Time limits apply — generally one month from the decision, though late appeals can be accepted in some circumstances.

How Carer's Allowance Interacts With Other Benefits

This is where it gets complicated — and where many carers get caught out financially even when they are receiving the benefit correctly.

Universal Credit: About 70% of Carer's Allowance claimants also receive Universal Credit. UC is reduced pound-for-pound by the amount of Carer's Allowance received. However, UC claimants who receive Carer's Allowance (or are entitled to it) may qualify for the Carer Element — currently £198.31 per month — which is added on top of the standard UC allowance. This partially offsets the pound-for-pound deduction. You do not need to claim Carer's Allowance to qualify for the UC Carer Element — being entitled to it is enough.

Pension Credit: If you receive Pension Credit, receiving Carer's Allowance may trigger an additional Carer Addition of £45.60 per week (2026/27). This can significantly increase the total income of older carers who are also claiming Pension Credit.

State Pension and NI credits: Claiming Carer's Allowance gives you Class 1 National Insurance credits, which count towards your State Pension entitlement. If you are not in paid employment and not building NI through other means, these credits can be valuable — each qualifying year adds around £275 per year to your eventual state pension. Check your NI record at gov.uk/check-national-insurance-record.

The overlapping benefits rule: Carer's Allowance cannot be paid at the same time as certain other benefits at the same rate or higher — including State Pension, contributory Employment and Support Allowance, and Jobseeker's Allowance. If you are entitled to one of these benefits at a rate above £86.45 per week, you may not actually receive Carer's Allowance as a payment, but you may still be treated as entitled to it — which matters for the UC Carer Element and NI credits. This is known as being an "underlying entitlement" carer.

What Changes Are Coming

The overpayment scandal has forced a reckoning with Carer's Allowance that is likely to produce the most significant reforms to the benefit since it was introduced 50 years ago in 1976.

The cliff-edge: The government has committed to exploring a taper system — similar to Universal Credit — under which Carer's Allowance would reduce gradually as earnings rise above the threshold rather than cutting off entirely. No legislation has been passed yet and no timetable has been confirmed, but the government has described this work as "vital" and says it has begun exploring both short-term and long-term options.

Automated earnings checks: The DWP is exploring whether earnings data from HMRC can be used to automatically check whether carers have exceeded the threshold, rather than relying on carers to self-report. This would significantly reduce the risk of debts building up unnoticed.

Improved communications: Following the Sayce Review, DWP has already updated internal guidance, improved letters to carers, and hired additional staff to process earnings notifications more quickly. The aim is to prevent large debts accruing by contacting carers much sooner when a potential breach is identified.

The earnings limit: The threshold has risen significantly in recent years — from £151 in 2024 to £196 in 2025 and now £204 in 2026 — and is now linked to 16 times the hourly National Living Wage, meaning it will rise automatically as the minimum wage increases.

How to Claim Carer's Allowance

If you are not already claiming and believe you qualify, apply online at gov.uk/carers-allowance or by calling the Carer's Allowance Unit on 0800 731 0297. You will need: your National Insurance number, details of the person you care for (including their NI number and the qualifying benefit they receive), and details of any paid work and earnings.

Claims can be backdated by up to three months if you were eligible during that period. There is no deadline for claiming, but every month you delay is a month's payment lost.

If you are refused, you have the right to request a mandatory reconsideration and then appeal. A significant proportion of refused claims succeed on appeal — always challenge a decision you believe is wrong.

Frequently Asked Questions

I was asked to repay Carer's Allowance a few years ago and already paid it. Can I get it back? Possibly. The DWP has confirmed that carers who have already repaid money and whose cases fall within the reassessment scope will receive automatic refunds if the recalculation shows they were overcharged. You do not need to contact the DWP — they will reach out if you are in scope.

My earnings fluctuate week to week. How is the £204 limit calculated? This is the crux of the problem. The rules on how to average fluctuating earnings were unclear between 2015 and 2025. In principle, the DWP should average earnings over a representative period rather than treating each week in isolation. If your earnings varied significantly and you were assessed week-by-week, your case may be within the reassessment scope.

Can I claim Carer's Allowance if I also receive Universal Credit? Yes, and you may also qualify for the UC Carer Element on top. However, UC is reduced pound-for-pound by your Carer's Allowance payment, so the net cash gain from Carer's Allowance itself may be small. The NI credits and eligibility for the UC Carer Element are the key reasons to claim even if the direct cash benefit seems low.

What if the person I care for is in hospital? Carer's Allowance can continue to be paid for up to 12 weeks if the person you care for goes into hospital. After 12 weeks, entitlement typically ends — but check with the DWP as the rules depend on the specific qualifying benefit the person receives.

Does claiming Carer's Allowance affect the person I care for? Yes, in some cases. If the person you care for receives Pension Credit, their Severe Disability Premium may be reduced or removed when you claim Carer's Allowance. This is a known interaction worth checking before you claim — contact the DWP or Citizens Advice for advice specific to your situation.

Free help and support:

• Carers UK: carersuk.org / 0808 808 7777
• Carers Trust: carers.org
• Citizens Advice: citizensadvice.org.uk
• Carer's Allowance Unit (DWP): 0800 731 0297
• MoneyHelper: moneyhelper.org.uk

This article is for informational purposes only and does not constitute financial, legal, or benefits advice. Rates and rules are correct for 2026/27 as published by the DWP and HMRC. If you are dealing with a Carer's Allowance overpayment or dispute, please contact a free advice service such as Citizens Advice or Carers UK before making any repayments.