How Much Is the Carer’s Allowance Earnings Limit in the UK?
Carer’s Allowance is a financial support system for individuals in the UK who dedicate a significant portion of their time to caring for someone with substantial care needs.
While it provides vital assistance, one of the most commonly misunderstood aspects is the earnings limit that affects eligibility. From 7 April 2025, this limit has been updated, impacting thousands of working carers nationwide.
Whether you are currently claiming Carer’s Allowance, are considering applying, or want to ensure your income remains within the permitted threshold, this guide breaks down exactly how much you can earn, what deductions apply, and how to stay compliant with the latest regulations.
Why Does the Carer’s Allowance Have an Earnings Limit?
The purpose of the Carer’s Allowance is to financially assist people whose capacity to work is limited due to their unpaid caring responsibilities.
In order to ensure the benefit targets the right individuals, the government sets an earnings limit that acts as a threshold. If your income from work exceeds this limit, even slightly, you may not be eligible.
This system ensures that those who provide full-time or near full-time care, often at the expense of their careers or income, receive some level of financial support. It also prevents overlap or “double support” for those earning a substantial wage while simultaneously receiving taxpayer-funded benefits.
Importantly, the earnings limit does not prohibit work altogether. Carers are encouraged to engage in part-time work or self-employment to support themselves financially, provided their earnings (after deductions) remain below the specified threshold.
What Deductions Are Considered When Calculating Carer’s Allowance Earnings?
When determining whether a carer’s income remains under the threshold, several deductions can be applied to gross weekly earnings.
These deductions are essential in reducing the total income considered by the Department for Work and Pensions (DWP), helping more carers qualify or remain eligible.
Allowable Deductions Include:
- Income Tax
- National Insurance Contributions
- 50% of Pension Contributions (occupational or personal)
- Work-related Expenses: These must be wholly and exclusively for the purpose of employment and can include essential equipment or transport costs.
- Alternative Care Costs: If a carer pays someone to look after the individual they care for or a child under 16 during their work hours, and this person is not a close relative, those payments may be deducted (up to 50% of earnings after other deductions).
Example:
Let’s say a carer earns £200 per week and contributes £20 weekly to a personal pension:
| Description | Amount |
|---|---|
| Gross Weekly Earnings | £200 |
| Pension Contribution (50%) | -£10 |
| Net Earnings for Carer's Allowance | £190 |
This puts you under the £196/week limit, meaning you’re eligible for Carer’s Allowance.
How Much Is the Carer’s Allowance Earnings Limit?
From 7 April 2025, the Carer’s Allowance earnings limit increased from £151 to £196 per week, reflecting a £45 rise. This change aims to accommodate rising living costs and allows part-time working carers greater flexibility without losing their benefit.
The Carer’s Allowance itself is set at £83.30 per week for 2025/26.
To be eligible, you must also meet the following core criteria:
- Be providing care for at least 35 hours per week
- The person being cared for must receive a qualifying disability benefit
- You must be at least 16 years old
- Not in full-time education
- Your earnings (after deductions) must not exceed £196/week
The increase means more carers can now earn part-time or flexible incomes without risking disqualification.
What Happens If You Exceed the Earnings Limit?
Carers who exceed the weekly limit of £196 (after deductions) will no longer qualify for Carer’s Allowance for that week (or month if paid monthly). If overpayments occur due to late reporting, the DWP may request repayment and, in some cases, impose penalties.
Overpayments generally happen when:
- Earnings fluctuate and push income over the limit
- Changes in working hours or pay rates are not promptly reported
- Bonuses or unexpected income are received
Real-time Example:
Ahmad works part-time and earns £200 per week. He doesn’t pay tax or pension, but pays £50 weekly to a non-relative who cares for his brother. This £50 deduction brings his counted income down to £150, keeping him within the limit. By reporting these deductions properly, Ahmad remains eligible for the allowance.
Can Self-Employed Carers Still Qualify Under the New Earnings Limit?
Self-employed carers can still qualify for Carer’s Allowance under the earnings limit, but the DWP assesses their income based on net profit rather than gross income.
Typically, this is calculated over a 12-month trading period, though shorter or alternative periods may be considered for new businesses or when income fluctuates due to health or market conditions.
Only deductible expenses directly linked to business operations are subtracted from earnings. These may include office rent, travel costs, equipment purchases, and business-related insurance.
After accounting for these expenses, the DWP determines whether the weekly net average income remains below the £196 limit. Careful record-keeping of all income and expenses is essential to ensure eligibility and accurate assessment.
How Is Carer’s Allowance Affected by Monthly Payments or Bonuses?
Understanding how Carer’s Allowance is affected by monthly payments and bonuses is essential, as the DWP calculates eligibility based on weekly averages.
Whether you receive a regular salary or occasional bonuses, knowing how these are assessed can help ensure you stay within the earnings limit.
Do Monthly Salaries Affect Weekly Eligibility?
Yes. If you’re paid monthly, your total monthly income is multiplied by 12 and divided by 52 to get an average weekly figure. This is then assessed against the £196 limit. If this average stays under the threshold after deductions, you’re eligible.
What About Irregular Bonuses?
Bonuses are counted as income. The DWP will prorate them over the relevant period. For instance, if a quarterly bonus is received, it might be divided over 13 weeks.
If a bonus causes your weekly average to exceed the threshold, your allowance may be suspended for that week or month.
Example Calculation Table:
| Monthly Gross Pay | £950 |
|---|---|
| Deductions (NI, Tax, Pension, Expenses) | £310 |
| Net Monthly Income | £640 |
| Weekly Average (640 × 12 ÷ 52) | £147.69 |
This figure is well within the earnings limit, making the carer eligible.
Is Carer’s Allowance Taxable, and How Does It Impact Your Income?
Carer’s Allowance is a taxable benefit. If your total income (earnings + Carer’s Allowance + any other income) exceeds your personal allowance (£12,570 in 2025/26), you may owe tax.
This applies particularly to:
- Those with other part-time earnings
- Carers receiving occupational pensions
- Recipients of Carer’s Allowance Supplement in Scotland
Tax is usually deducted through PAYE if you inform HMRC of your Carer’s Allowance. It’s essential to declare all your income sources to avoid underpayment or penalties.
What Are the Risks of Carer’s Allowance Overpayments?
Overpayments can happen quickly and often unknowingly. If your income temporarily exceeds the limit due to overtime, holiday pay, or irregular earnings, and you don’t inform the DWP, you may be overpaid.
This can lead to:
- Recovery of overpaid funds
- Benefit suspensions
- Future claims being flagged for manual review
To avoid this:
- Keep accurate weekly records of earnings
- Report changes as they occur
- Communicate in writing with the Carer’s Allowance Unit for documentation
Who Will Benefit Most from the Carer’s Allowance Earnings Limit Rise?
The new limit is a positive step for part-time working carers, especially:
- Those previously earning slightly above £151/week
- Carers on zero-hour contracts with variable income
- Those balancing work with caregiving for elderly parents or disabled children
According to projections, up to 60,000 additional carers could qualify by 2029 under the updated threshold. This shift brings greater flexibility for carers to participate in the workforce while continuing to receive support.
Conclusion
The Carer’s Allowance earnings limit of £196/week, effective from April 2025, opens doors for many part-time working carers.
By understanding how earnings are calculated, what expenses are deductible, and how to navigate fluctuating income, carers can maximise their support without risking eligibility.
Remaining compliant means keeping accurate records, understanding your income patterns, and maintaining open communication with the Carer’s Allowance Unit. As the government acknowledges the increasing value of unpaid carers, such policy updates bring hope for greater recognition and support.
Frequently Asked Questions
Does Carer’s Allowance Count as Income for Universal Credit Purposes?
Yes, Carer’s Allowance is considered income under Universal Credit. It can reduce your UC payment, but you may still benefit from the Carer Element of Universal Credit.
Can You Backdate a Claim If You Were Previously Over the Earnings Limit?
Claims can be backdated for up to three months, but only if you met all the eligibility criteria—including staying under the earnings limit, during that period.
Are Carers in Scotland Eligible for a Higher Earnings Limit?
The earnings limit remains the same across the UK, but Scottish carers receive a Carer’s Allowance Supplement, which is paid twice yearly and is also taxable.
What Should You Do If You Accidentally Go Over the Weekly Limit?
Notify the Carer’s Allowance Unit immediately. You may need to repay the amount for that week but doing so proactively may prevent further penalties or complications.
Does Volunteering or Unpaid Work Count Towards the Earnings Limit?
No. Only paid earnings are counted. Volunteering or unpaid caregiving duties do not affect your earnings assessment.
How Often Should You Report Income Changes to the Carer’s Allowance Unit?
Changes should be reported as soon as they happen, especially if your pay increases, you get a bonus, or your work hours change.
Can You Still Get Carer’s Allowance If You Have a Part-Time Job?
Yes, as long as your net earnings after deductions stay below £196/week, part-time work is permitted and encouraged.
