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Change to Carer’s Allowance Earnings Rule announced

28 November 2016

As part of a Written Ministerial Statement the Government has today announced it is making a change to the Carer’s Allowance Earnings Rule.

Commenting on today’s announcement Carers UK’s Director of Policy, Emily Holzhausen said: 

“The rise in the earnings threshold is welcome and will enable more people to keep the financial support and important recognition Carer’s Allowance brings and remain in paid employment.

The rise in National Living Wage though good news, has brought difficult decisions for carers by affecting their eligibility for Carer’s Allowance. This has trapped many, already struggling to get by, in a revolving door, moving on and off Carer’s Allowance. 

Removing disincentives for people to work and care means more carers can stay in touch with the labour market improving their financial security in the short and longer term. The increase announced today goes some way to address this but the Government must go further when it publishes it’s Carer’s Strategy next year. Carers UK will continue to call on the Government to guarantee that future rises in the National Living Wage are linked to an equivalent rise in the earnings threshold that allows people to work for at least 16 hours.” 

Background to the announcement:

If you are in paid work (including self-employment) you cannot get Carer’s Allowance if you earn more than £110 a week (after deductions).

The earnings threshold was last increased in April 2015 to £110. The rise in the National Living Wage in April 2016 meant that those working 16 hours a week at minimum wage and eligible for the new national living wage were over the £110 earnings limit, (unless any of the deductions were made).

During the recent Autumn Statement the Chancellor confirmed that the National Living Wage would be increased to £7.50 in April 2017. Without an increase in the earnings threshold this would have meant that those working 15 hours a week would face difficult decisions about remaining in work or losing Carer’s Allowance.

Today the Government has announced the earnings threshold will rise to £116 from April 2017 meaning more people will be able to keep the benefit and remain in work.

Carers UK has consistently called for the Government to ensure that the earnings threshold increases in line with the National Living Wage and National Minimum Wage to ensure that carers are able to work for at least 16 hours without losing entitlement. Working for 16 hours entitles some carers to Tax Credits.

The Written Ministerial Statement is available here.

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