What is the Carer’s Allowance earnings limit

For many carers in the UK, balancing paid work with unpaid caring responsibilities is a daily reality. The Carer’s Allowance exists to recognise and support those who dedicate time to care, but eligibility depends on meeting specific conditions.

One of the most important is the earnings limit. This rule ensures that while carers can still earn some money through employment, the benefit is directed to those who provide significant unpaid care.

Understanding how the limit works, what deductions apply, and the consequences of exceeding it is essential for anyone considering or receiving Carer’s Allowance.

Current earnings limit (2025/26)

As of 7 April 2025, the earnings limit for Carer’s Allowance is £196 per week. This is calculated after tax, National Insurance, and certain allowable deductions.

Previously, during the 2024/25 tax year, the limit was £151 per week. The increase of £45 represents the largest rise in the earnings threshold since the benefit was introduced. The change has been widely welcomed, as it allows carers to earn more while still being entitled to claim Carer’s Allowance.

How earnings are calculated and allowable deductions

The calculation of whether you are under or over the earnings limit depends on your net weekly earnings. This applies whether you are employed or self-employed. The following items can be deducted before assessing your income:

• Half of your pension contributions paid into a private or workplace scheme.
• Work-related expenses such as special equipment, uniforms, or travel between different workplaces (if not reimbursed by your employer).
• Care costs that you pay for someone else to look after your children or the person you care for, while you are working. Up to 50% of these costs can be deducted, provided the care is not provided by your partner or close family member.

For example, if your gross pay is £220 per week but after tax, NI, and deductions your net countable earnings fall to £190, you would still qualify under the £196 limit.

What happens if you exceed the limit

The earnings limit is strict. If your countable income rises above £196 per week, you will not be eligible to receive Carer’s Allowance for that period. This is often described as a “cliff edge,” because exceeding the threshold by even £1 means losing the entire benefit, not just part of it.

If you continue receiving Carer’s Allowance while earning above the limit, the Department for Work and Pensions (DWP) may consider it an overpayment, and you could be asked to repay the money. In some cases, failing to report a change in income can also lead to penalties or loss of entitlement to other benefits.

Practical examples and who benefits

The rise in the earnings limit means that more carers — particularly those working part-time — can combine employment with caring without losing out. For example:

• A carer working 15 hours per week at £13 per hour would previously have exceeded the old limit. Under the new £196 threshold, they may now qualify.
• Carers with fluctuating or seasonal income (such as the self-employed) have a greater buffer before crossing the threshold.

It is estimated that around 60,000 carers may now be eligible thanks to this increase. The change is especially valuable during a period of rising living costs, as it allows carers to maintain more financial independence alongside their caring duties.

How to verify and check your own earnings

If you are unsure whether you fall below the earnings limit, you can use resources provided by the government and support organisations:

• GOV.UK Carer’s Allowance eligibility page: official details on how earnings are calculated and what counts as allowable deductions.
• Carers UK guidance: offers step-by-step advice and practical examples to help carers calculate their position.
• Carer’s Allowance Unit (DWP): you can contact them directly for clarification.
  • Telephone: 0800 731 0297
  • Textphone: 0800 731 0317
  • Relay UK: dial 18001 then 0800 731 0297

Keeping records of your earnings and any deductions is strongly advised, particularly if your income varies from week to week.

❓ FAQ – Carer’s Allowance earnings limit

1. What is the current earnings limit for Carer’s Allowance?
From April 2025, it is £196 per week after tax, National Insurance, and allowable deductions.

2. When did it change from £151 to £196?
The increase took effect on 7 April 2025, at the start of the 2025/26 financial year.

3. What deductions are allowed before calculating earnings?
Half of your pension contributions, certain work-related expenses, and up to 50% of childcare or replacement care costs.

4. What happens if I exceed the limit by a small amount?
Even going £1 over the limit means you will not be entitled to Carer’s Allowance for that week. The rule is strict and does not taper gradually.

5. Does self-employed income count toward the limit?
Yes. Net income from self-employment is included, after deducting tax, NI, and eligible expenses. Fluctuating income must be carefully monitored to ensure you remain below the threshold.