Carer’s Work Allowance Threshold Explained

Published 20/09/2025 | By caiesmith

Worried your income might stop you from claiming Carer’s Allowance? This simple guide demystifies the financial thresholds you need to know. We’ll break down the current earnings limit, explain what counts as income, and clarify permissible deductions, helping you quickly assess your eligibility and ensure you receive the support you deserve without the confusion.

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Understanding Carer’s Allowance: The Basics

Stepping into the world of benefits can feel like navigating a maze, especially when you’re dedicated to caring for someone. Carer’s Allowance is a vital, yet often misunderstood, benefit designed to provide financial support to those who dedicate a significant amount of their time to looking after someone else. It’s not a payment for the person being cared for, but rather for the carer themselves, acknowledging the invaluable contribution they make.

At its heart, Carer’s Allowance is about recognising the commitment involved in providing regular, substantial care. To be eligible, you generally need to be providing at least 35 hours of care a week. This care doesn’t have to be physical; it can include things like managing medication, helping with finances, or providing emotional support. Crucially, the person you care for must be receiving certain disability benefits, which we’ll delve into more deeply in later sections.

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It’s easy to confuse Carer’s Allowance with the benefits the person you care for receives. To clarify, here’s a quick comparison:

Feature	Carer’s Allowance	Qualifying Disability Benefit (e.g., PIP Daily Living Component)
Primary Recipient	The carer	The person being cared for
Purpose of the Benefit	Financial support for the carer’s living costs	Financial support for the extra costs of living with a disability
Main Eligibility Focus	Hours of care provided by the carer & their earnings	Impact of disability/health condition on daily living/mobility

Understanding this fundamental distinction is your first step towards grasping how Carer’s Allowance fits into the broader benefits landscape. It’s a benefit that supports you, the carer, enabling you to continue your essential role.

The Core Financial Threshold: What is the Earnings Limit?

While the 35 hours of care per week is a crucial benchmark, Carer’s Allowance also has a significant financial threshold related to your own income. This is often where confusion can arise, but understanding it is key to a successful application.

The core idea behind this earnings limit is to support carers who, due to their substantial caring responsibilities, are unable to work many hours or earn a high income. It’s designed for those whose caring role genuinely impacts their ability to be in full-time, higher-earning employment.

Currently, for the 2024/2025 financial year, you can earn up to £196 a week after certain deductions, and still be eligible for Carer’s Allowance. This figure is not your gross pay, but rather your ‘net earnings’ as calculated by the Department for Work and Pensions (DWP).

What About 2025/2026?

The exact earnings limit for the 2025/2026 financial year is typically announced closer to the new financial year, usually in the Autumn Statement or Budget around November/December. However, it is expected to see an increase from the current £196 per week, in line with general benefit upratings and inflation. We advise checking the official government website (GOV.UK) for the confirmed figure once it is released.

How are Your Earnings Calculated?

It’s vital to understand that the £196 (or the future 2025/2026 figure) isn’t your take-home pay. The DWP makes specific deductions from your gross earnings before comparing them to the limit. These include:

Income Tax
National Insurance contributions
Half of your pension contributions (if you pay into a pension scheme)
Certain allowable expenses related to your work, such as:
Childcare costs: If you pay for registered childcare while you’re at work.
Care costs: If you pay for care for the disabled person you look after while you are at work.

These deductions mean that you can often earn more in gross wages than the headline £196 figure and still qualify. For example, if you earn £200 gross, but pay £20 in tax, £15 in NI, and £10 into a pension (meaning £5 is deducted), your ‘net earnings’ for Carer’s Allowance purposes would be £160. If you then also pay £20 for childcare while you work, your assessable earnings drop to £140, bringing you below the £196 limit.

It’s crucial to keep accurate records of your income and any allowable expenses. If your earnings fluctuate, you might need to average them over a period. Going even slightly over the earnings limit can affect your eligibility, so if you’re close to the threshold, it’s always best to seek advice from an organisation like Citizens Advice or Carers UK.

Calculating Your Earnings: What Counts Towards the Limit?

So, you’ve factored in the deductions for tax, National Insurance, pension contributions, and essential work-related care costs. But what exactly are those ‘earnings’ that the DWP then compares to the £196 a week threshold? It’s crucial to understand the types of income that do count and, perhaps even more importantly, those that don’t.

What Income Does Count Towards the Limit?

Essentially, the DWP is looking at income you receive from work. This includes:

Wages from Employment: This is your pay from an employer, after the specific deductions we discussed in the previous section have been made. So, it’s your gross pay minus tax, NI, half your pension contributions, and any allowed childcare or care costs for the disabled person while you work.
Income from Self-Employment: If you’re self-employed, your ‘earnings’ are calculated based on your net profit. This means your total income from your business, minus all legitimate business expenses (e.g., materials, advertising, travel for work). Once your net profit is determined, the DWP then applies its own specific deductions (like half your pension contributions, childcare/care costs) before comparing it to the weekly limit. Keeping meticulous records of all your self-employment income and expenses is vital.

What Income Doesn’t Count Towards the Limit?

This is where many carers find a pleasant surprise, as a significant amount of financial support or other income streams are completely disregarded. This means they won’t affect your eligibility for Carer’s Allowance:

Most Other Welfare Benefits: Crucially, the vast majority of other benefits you or the person you care for receive are not counted as earnings. This includes:

Personal Independence Payment (PIP)
Disability Living Allowance (DLA)
Attendance Allowance
Universal Credit (Carer’s Allowance affects your UC calculation, but UC itself isn’t counted as your earnings for Carer’s Allowance)
Housing Benefit
Child Benefit
State Pension
Any other disability-related benefits received by the person you care for.
Savings and Investments: Any interest you earn from savings accounts, or dividends from investments, are not considered ‘earnings’ for Carer’s Allowance purposes. The amount of savings you have also doesn’t affect Carer’s Allowance eligibility (though it can affect other means-tested benefits like Universal Credit).
Private or Occupational Pensions: Money you receive from a private or occupational pension scheme is also not counted against the Carer’s Allowance earnings limit.
Gifts and Payments from the Person You Care For: Generally, if the person you care for gives you money to help with household expenses, or as a personal gift, this is not counted as earnings. This acknowledges the reality of shared living costs and personal support within a caring relationship. However, if they are formally paying you a ‘wage’ for care services that would typically be paid employment, this could be assessed as earnings, so it’s always best to be clear about the nature of such payments.
Money from a Trust Fund: Income from a trust fund is typically disregarded.

Understanding these distinctions is key to confidently assessing your financial situation against the Carer’s Allowance earnings threshold. It’s often the case that carers can have several sources of income that do not impact their eligibility, allowing them to receive this vital support.

How Carer’s Allowance Interacts with Other Benefits

Understanding the Carer’s Allowance earnings threshold is a crucial step, but it’s equally important to grasp how Carer’s Allowance (CA) interacts with other benefits you might be receiving. This is often where carers find themselves in a tangle, as claiming CA can affect – and be affected by – other financial support. The good news is that, in most cases, claiming Carer’s Allowance is still beneficial, even if it changes your entitlement to other payments.

Carer’s Allowance and Universal Credit (UC)

For many carers, Universal Credit is a key part of their financial support. Here’s how CA fits in:

CA is ‘Deductible Income’ for UC: When you receive Carer’s Allowance, the DWP treats it as income when calculating your Universal Credit award. For every £1 of Carer’s Allowance you receive, your Universal Credit payment will generally be reduced by £1.
The Carer Element: However, there’s a significant upside. If you are eligible for Carer’s Allowance (even if you don’t receive the payment directly due to other benefits, as explained below), you will likely be eligible for the Carer Element within your Universal Credit award. This is an additional amount of money added to your maximum UC entitlement, specifically recognising your caring role.
Why Claim CA on UC? Even though CA reduces your UC payment, the Carer Element often offsets this reduction, or even leads to a higher overall UC award than if you hadn’t claimed CA. Crucially, claiming CA ensures you receive this Carer Element. Therefore, if you’re on Universal Credit and eligible for Carer’s Allowance, you should always claim it.

Carer’s Allowance and Legacy Means-Tested Benefits

If you receive older ‘legacy’ means-tested benefits like Income Support, income-based Jobseeker’s Allowance (JSA), or income-related Employment and Support Allowance (ESA), the interaction is slightly different but similarly positive:

CA as Income: Carer’s Allowance is counted as income for these benefits.
The Carer Premium/Addition: However, claiming Carer’s Allowance (or being eligible for it, even if you don’t get the payment directly) means you qualify for an extra amount called the Carer Premium (or Carer Addition for some benefits). This is an additional weekly amount added to your entitlement for these legacy benefits.
Net Benefit: The Carer Premium is often higher than the Carer’s Allowance payment itself, meaning that your overall weekly benefit income will increase by claiming Carer’s Allowance. Again, it’s almost always financially advantageous to claim CA if you’re on these benefits.

Carer’s Allowance and Housing Benefit / Council Tax Reduction

Similar to legacy benefits, Carer’s Allowance is counted as income when your local council assesses your entitlement to Housing Benefit and Council Tax Reduction. However, being eligible for Carer’s Allowance will also make you eligible for the Carer Premium or Carer Addition within these calculations, which can increase your overall entitlement.

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Carer’s Allowance and State Pension: The ‘Overlapping Benefits’ Rule

This is one of the most common areas of confusion for carers, especially those over State Pension age:

The Rule: If you are receiving a State Pension that is equal to or higher than the weekly rate of Carer’s Allowance, you cannot be paid Carer’s Allowance directly. This is known as the ‘overlapping benefits’ rule. The DWP will pay you whichever benefit is the higher amount.
Why Still Claim CA? Even if you can’t be paid Carer’s Allowance directly, it is still vital to claim it if you’re eligible. Here’s why:
Carer Premium/Element: As explained above, simply being eligible for Carer’s Allowance unlocks the Carer Element in Universal Credit or the Carer Premium in legacy benefits. This can significantly boost your overall income.
National Insurance Credits: Claiming Carer’s Allowance (even if not paid directly) provides you with Class 1 National Insurance credits. These credits help to protect your future State Pension entitlement, ensuring that gaps in your employment due to caring responsibilities don’t negatively impact your State Pension. This is particularly crucial for carers who are not yet at State Pension age or are still building up their contributions.

Other Benefits

Disability Benefits: Your claim for Carer’s Allowance does not affect the disability benefits (like PIP, DLA, Attendance Allowance) received by the person you care for. These are for the disabled person’s needs, not the carer’s.
Savings: Carer’s Allowance is not a means-tested benefit in terms of savings. The amount of savings you have does not affect your eligibility for Carer’s Allowance (though it can affect other means-tested benefits like Universal Credit).

The Bottom Line

Despite the complexities of how Carer’s Allowance interacts with other benefits, the general rule of thumb is: if you are eligible for Carer’s Allowance, you should almost certainly claim it. It acts as a gateway to additional financial support through the Carer Element or Carer Premium, and protects your National Insurance record.

Given the intricate nature of benefit calculations, especially when multiple benefits are involved, it’s always highly recommended to seek personalised advice. Organisations like Citizens Advice, Carers UK, or your local welfare rights service can provide tailored guidance to ensure you receive all the support you’re entitled to.

What Happens if Your Earnings Go Above the Threshold?

You’ve diligently tracked your earnings, made your deductions, and stayed below the £196 a week (or future figure) threshold. But what happens if, perhaps due to a temporary increase in hours, a bonus, or an underestimation of your allowable expenses, your earnings for a particular week or period creep above that limit?

This is a critical point to understand, as going even slightly over the threshold can have immediate consequences for your Carer’s Allowance.

The Immediate Impact: Carer’s Allowance Stops

If your assessable earnings go above the weekly limit, you will no longer be eligible for Carer’s Allowance for that period. The DWP’s system is designed to check this threshold rigorously. It’s not a gradual reduction; it’s an all-or-nothing benefit based on that specific earnings figure.

This means:

Your Carer’s Allowance payments will cease.
The Carer Element in your Universal Credit award, or the Carer Premium in legacy benefits (like Income Support or ESA), will also likely stop, as these are contingent on your eligibility for Carer’s Allowance.
You will stop receiving Class 1 National Insurance credits for that period.

The Risk of Overpayment: Report Changes Promptly

One of the most important messages for any benefit recipient is to report changes in circumstances immediately. This is especially true for earnings when you’re claiming Carer’s Allowance.

If your earnings go above the threshold and you don’t inform the DWP, they will eventually find out (for example, through HMRC data). If they continue to pay you Carer’s Allowance when you were not eligible, they will consider this an overpayment. The DWP will then seek to recover this money, which can be a stressful and financially challenging situation.

How to Report: You can report changes online via your Carer’s Allowance account, by phone, or by post. Don’t delay!

What if it’s Temporary? Reclaiming Carer’s Allowance

Life is rarely static, and your earnings might fluctuate. If your earnings go above the limit for a period but then drop back down, you can reclaim Carer’s Allowance.

Reclaiming Process: You’ll need to contact the DWP to inform them your earnings have fallen below the threshold again. You might not need to complete a full new application if it’s a recent change, but they will need to reassess your eligibility based on your current income.
Be Proactive: If you anticipate a short-term increase in earnings that will take you over the limit, it’s often best to report it, have your CA suspended, and then report when your earnings drop back down. This prevents the build-up of overpayments.

Planning and Seeking Advice

Given the strict nature of the earnings threshold, it’s incredibly important to:

Monitor Your Earnings: Keep a close eye on your payslips or self-employment income and expenses.
Understand Deductions: Remember that allowable deductions (tax, NI, half pension contributions, childcare/care costs) can make a significant difference. Don’t just look at your gross pay.
Seek Guidance: If you’re consistently close to the earnings limit, or if you’re unsure how a particular type of income or expense will be treated, don’t guess. Contact organisations like Citizens Advice, Carers UK, or a local welfare rights service. They can help you calculate your assessable earnings accurately and advise on the best course of action.

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Navigating the earnings threshold requires vigilance, but understanding the rules and reporting changes promptly will help you avoid complications and ensure you receive the support you’re entitled to when eligible.

Maintaining Eligibility: Reporting Changes in Income

The journey to securing Carer’s Allowance doesn’t end with a successful application. Maintaining your eligibility, particularly concerning your earnings, requires ongoing vigilance. The DWP’s earnings threshold is a strict line, and crossing it, even inadvertently, can have significant implications. This is why understanding the importance of reporting changes in your income is paramount.

Why Reporting Changes is Non-Negotiable

The Carer’s Allowance earnings limit is designed to support carers whose ability to work is constrained by their caring responsibilities. It’s not a flexible benefit in terms of earnings; you’re either below the limit and eligible, or above it and not.

Avoid Overpayments: The primary reason to report changes promptly is to prevent overpayments. If your assessable earnings exceed the £196 a week (or future figure) threshold and you continue to receive Carer’s Allowance, the DWP will consider these payments an overpayment. They will eventually discover this through data matching with HMRC, and you will be legally obliged to pay the money back, often with deductions from future benefits or direct repayment plans. This can be incredibly stressful and financially burdensome.
Maintain Related Benefits: Remember, your eligibility for the Carer Element in Universal Credit or the Carer Premium in legacy benefits (like Income Support) is directly tied to your eligibility for Carer’s Allowance. If your Carer’s Allowance stops due to earnings, these additional payments will also cease, impacting your overall household income.

What Changes Do You Need to Report?

Any change that could affect your assessable earnings needs to be reported. This includes:

Increases in Pay: A pay rise, taking on extra shifts, receiving a bonus, or starting a second job.
Decreases in Pay: Reduced hours, a pay cut, or leaving employment.
Changes in Allowable Expenses: For example, if your childcare costs increase or decrease, or if the costs for care for the disabled person while you work change.
Starting or Stopping Self-Employment: The DWP will need to reassess your earnings based on your new circumstances.

How and When to Report

The DWP expects you to report changes as soon as they happen – ideally within a month of the change occurring.

Online: You can often report changes via your online Carer’s Allowance account on GOV.UK. This is usually the quickest and most convenient method.
Phone: You can call the Carer’s Allowance Unit. Make sure to keep a record of the date and time you called, and who you spoke to.
Post: You can write to the DWP. Always send letters by recorded delivery and keep a copy for your records.

Don’t wait for your next payslip to arrive if you know your earnings have changed. Proactive reporting protects you.

Tips for Staying on Top of Your Earnings

Keep Meticulous Records: Hold onto all your payslips, self-employment income and expense records, and receipts for any allowable deductions (childcare, care costs). This will be invaluable if the DWP needs to verify your earnings.
Understand Your Net Earnings: Don’t just look at your gross pay. Regularly calculate your assessable earnings after all DWP-approved deductions (tax, NI, half pension, childcare/care costs) to ensure you remain below the £196 threshold.
Plan Ahead for Fluctuations: If you know you’re likely to have a period of higher earnings (e.g., seasonal work, a one-off project), contact the DWP in advance. They can advise on the best course of action, which might involve a temporary suspension of your Carer’s Allowance payments to avoid overpayments.
Seek Expert Advice: If you’re consistently close to the earnings limit, or if your income sources are complex (e.g., multiple jobs, self-employment), get personalised advice from organisations like Citizens Advice or Carers UK. They can help you accurately calculate your assessable earnings and navigate any tricky situations.

By being proactive and diligent in reporting changes, you can confidently maintain your eligibility for Carer’s Allowance and ensure you receive the vital support you’re entitled to without the added stress of overpayment issues.

Key Takeaways: Navigating Carer’s Allowance Thresholds

Navigating the intricacies of Carer’s Allowance can feel like a complex journey, but by understanding the core thresholds, you’re well-equipped to secure and maintain this vital support. Let’s recap the essential points to keep in mind:

The Twin Pillars of Eligibility

Care Hours: You must provide at least 35 hours of care per week. This is a non-negotiable benchmark that underpins your caring commitment.
Earnings Limit: For 2024/2025, your assessable earnings must be no more than £196 a week. Remember, this isn’t your gross pay, but your income after crucial deductions like Income Tax, National Insurance, half your pension contributions, and essential work-related childcare or care costs for the disabled person.

What Counts (and Doesn’t Count) Towards Your Earnings Limit

Understanding what the DWP considers ‘earnings’ is paramount. Here’s a quick guide:

Feature	Income That Counts Towards the Limit	Income That Doesn’t Count Towards the Limit
Nature of Income	Directly from work/employment	Most non-work-related income
Primary Examples	Wages (after DWP-approved deductions), Net profit from self-employment (after DWP-approved deductions)	Most welfare benefits (PIP, DLA, AA, UC, State Pension, Child Benefit, Housing Benefit), Savings interest, Private/Occupational Pensions, Gifts from the person you care for, Trust fund income
Key Action	Monitor closely, apply deductions accurately	Generally disregarded for CA eligibility

Interplay with Other Benefits: The ‘Gateway Effect’

Carer’s Allowance acts as a gateway to additional support, even if the payment itself is reduced or ‘overlapped’:

Universal Credit & Legacy Benefits: Being eligible for Carer’s Allowance unlocks the Carer Element (for UC) or Carer Premium (for legacy benefits), which can significantly boost your overall benefit income, even if CA reduces your direct UC payment.
State Pension: If your State Pension is equal to or higher than Carer’s Allowance, you won’t be paid CA directly. However, it’s still crucial to claim it to gain National Insurance credits, which protect your future State Pension entitlement.

The Golden Rule: Report Changes Promptly

The Carer’s Allowance earnings threshold is strict. Going even slightly over the limit means you’re no longer eligible for that period.

Avoid Overpayments: Always report any change in your income or circumstances to the DWP immediately. Failing to do so can lead to an overpayment, which you’ll be legally obliged to pay back.
Reclaiming: If your earnings fluctuate, you can reclaim Carer’s Allowance once your assessable income falls back below the threshold.

Empowering Yourself with Knowledge

The world of benefits can be complex, but armed with a clear understanding of the Carer’s Allowance thresholds and how your income is assessed, you can navigate it with confidence. Keep meticulous records, understand your deductions, and don’t hesitate to seek expert advice from organisations like Citizens Advice or Carers UK. Your vital role as a carer deserves every support available, and understanding these rules is your first step to securing it.

FAQ Section

Q: What happens if my earnings exceed the Carer’s Allowance threshold?
A: Earning above the threshold can affect your eligibility for Carer’s Allowance. The exact rules depend on the payment you get. Check your recent statement from the payment agency and/or contact your local social care provider.
Q: What income is included when calculating whether I’m below the threshold?
A: Generally, earned income (from employment or self-employment) is included. Specific types of income are disregarded, such as certain disability benefits.
Q: How often are the Carer’s Allowance thresholds reviewed and updated?
A: The thresholds are typically reviewed annually. Check the UK government’s official website for the most up-to-date information.
Q: Does caring for more than one person affect my Carer’s Allowance?
A: You can only claim Carer’s Allowance for one person, even if you provide care for more than one. You may be able to claim another benefit for the other person.

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