Carers Face 180,000-Strong Debt Wipe Under New Benefit Taper

Approximately 180,000 unpaid carers in the United Kingdom accrued overpayment debts totaling £300 million between 2019 and 2025 under a system that penalized earnings above a strict weekly cap. Chancellor John Healey will announce the end of this cliff-edge rule in his budget on Wednesday. The change replaces the binary penalty with a tapered reduction in benefits.

The current rule forces carers to forfeit their entire weekly allowance if they earn more than the set limit. That limit is currently £204 per week. A carer who earns just one penny over that threshold for a full year breaches the limit by 52p. Under the existing rules, that individual would owe the state £4,495.40. The new system removes this disproportionate debt.

Under the new digital taper, carers will lose only £1 of their allowance for every additional £1 earned above the limit. This structure ensures that working extra hours or receiving a small pay raise does not leave carers financially worse off. Healey stated that the old system meant doing an extra shift could leave someone with less money. He said that situation cannot be right.

The Department for Work and Pensions knew about these breaches but often did not warn carers. Officials pursued repayments using legislation designed for drug dealers and organized crime. Some unpaid carers were even convicted of fraud. An independent review led by disability rights expert Liz Sayce found that systemic failures caused widespread depression and hardship among carers.

Healey is introducing these changes as part of five everyday fixes announced ahead of the budget. The government faces a tight fiscal backdrop due to global events, including the conflict in Iran. Treasury insiders describe the upcoming budget as low-key, with major tax and spending decisions delayed until next year's spending review.

The new digital system will not be fully operational before the end of the decade due to technical demands. Campaigners welcomed the reform but noted the delay. Carers UK said the cliff-edge previously stopped many carers from taking part-time work or accepting promotions. The group cited the risk of losing all support as a primary barrier to employment.

Other measures in the budget include making higher tax-free mileage rates permanent. The rate for the first 10,000 business miles is locked at 55p per mile, and the rate above that threshold increases to 35p per mile. The Treasury estimates this move will benefit about 3 million people who use their own vehicles for work. The government is also removing import tariffs on more than 100 products, including baked beans, chocolate, and gherkins.

Healey plans to raise the national minimum wage by about 4% to approximately £13.20 an hour. He will also increase youth rates by a similar margin. Ministers expressed concern that raising the minimum wage for workers under 21 could discourage companies from hiring young employees. This approach departs from previous budgets that saw larger increases for younger workers.