Carer's Allowance Earnings Limit and Breaks from Caring

If you claim Carer's Allowance and you also work, the amount you can earn is capped. For 2026/27 the earnings limit is £204 a week, up from £196, and it is measured after certain deductions rather than on your gross pay¹. Carer's Allowance itself is worth £86.45 a week in England, Wales and Northern Ireland³.

The rule is unforgiving at the boundary. Earn even £1 over the limit and you lose the whole payment, not a tapered part of it⁴. That is why the deductions matter so much: Income Tax, National Insurance, half of your pension contributions, some business expenses and certain care costs all come off before your earnings are compared with the £204 figure⁵.

Scotland now runs its own version. Carer Support Payment has replaced Carer's Allowance in Scotland and is available across the country, with the same £204 earnings limit and, currently, the same overpayment rules⁶. The DWP is also reassessing past overpayments going back to 2015, which affects carers whose earnings fluctuated⁸.

Carer's Allowance earnings limit: £204 a week

The limit for 2026/27 is £204 a week, and it rose from £196 on 6 April 2026¹. The figure is set in law and is uprated each April as part of the annual benefits uprating. The amount is in line with 16 times the hourly National Living Wage, rounded up to the nearest pound, which is why it moves when that wage moves¹.

What counts is your earnings after deductions, not your headline pay. The limit is described across official and independent guidance as a net figure: £204 a week after tax, National Insurance and expenses⁹. Some sources put it as take-home pay of no more than £204 a week¹¹. The practical effect is the same: the figure that is tested is what is left after the permitted deductions, not your gross salary.

The limit applies to your earnings alone. Carer's Allowance is not means-tested, so your savings and your partner's income are not relevant to it⁹. A partner's earnings can still affect means-tested benefits you claim as a couple, such as Universal Credit, but they do not count towards this limit¹².

The same £204 limit applies to Carer Support Payment in Scotland, measured per award week⁷. Carer Support Payment has replaced Carer's Allowance in Scotland and is now available across Scotland⁶.

Care costs you can deduct, and when you cannot

The deductions are what make the limit workable for carers who pay someone else to provide care while they are at work. You can deduct payments for someone to look after the person you care for, or a child under 16, up to the value of half your earnings⁵. The same rule applies to Carer Support Payment in Scotland¹⁴.

There is a firm exclusion. The deduction does not apply if the person you are paying is a close relative of either yourself or the person you are looking after. That covers a spouse, partner or civil partner, a parent, a son, a daughter, a brother or a sister⁶. Paying a family member for care, in other words, does not reduce your earnings for this purpose.

The other deductions are the ones most workers would recognise. Income Tax, National Insurance, half of any contributions to an occupational or personal pension, and certain business expenses all come off your gross weekly earnings, or your gross profit if you are self-employed, before the limit is checked⁵. For self-employed carers, work-related expenses, payments for alternative care while at work and 50% of pension contributions are offset against the limit⁹.

The order matters. Care costs are deducted after the other deductions, and the maximum you can deduct for alternative care costs is half of your earnings¹⁴. So a carer paying for replacement care cannot use that payment to wipe out the whole of their earnings for the test; at most it halves the figure that is compared with the limit.

Earn £1 over the limit and you lose the whole payment

This is the sharpest edge of the whole system. If you earn anything above the limit, you lose all of your Carer's Allowance or Carer Support Payment¹⁵. There is no taper and no partial payment. Even £1 over the limit means losing 100% of the allowance, which is £86.45 a week in England, Wales and Northern Ireland⁴.

In Scotland the same cliff edge applies to Carer Support Payment: if your earnings after deductions are even 1p more than £204 a week, you lose all of it⁷.

The timing of the loss depends on how you are paid. If your earnings go over the limit in any week, you lose entitlement for the following week⁵. If you are paid monthly, the same logic runs month to month: going over in a month loses entitlement for the following month⁶. That is why a single unusual payment, such as a bonus, can cost a carer a week or a month of benefit even when their ordinary pay is comfortably under the limit.

Where an overpayment has already been made, the amount to be repaid is the full weekly rate for each week affected. If earnings exceeded the limit, the carer has to pay back the full £86.45 for that week¹⁶.

How monthly pay, bonuses and self-employment are worked out

Different pay patterns are converted to a weekly figure in different ways, and the method can decide whether a carer stays under the limit.

If you are paid monthly, your monthly earnings are multiplied by 12 to calculate your yearly income and then divided by 52 to get a weekly figure⁶. That weekly figure is what is compared with the limit. A monthly bonus therefore lands in the month it is paid and can push that month over the threshold.

Bonuses count as earnings and need to be taken into account when checking whether you have gone over the limit⁵. They are not averaged away or ignored.

If you are self-employed, your average weekly earnings are normally calculated by looking at a specific trading period, which is normally a year. A different period is used if that would be more representative⁵. This averaging is the point that sits behind the DWP's current reassessment of past overpayments, because the guidance on how to treat fluctuating earnings was found in some cases not to have been applied correctly¹⁷.

Overpayments and the DWP reassessment

The DWP is reassessing Carer's Allowance overpayments that took place between 10 April 2015 and 2 September 2025⁸. The exercise covers earnings-related overpayments where decisions on fluctuating earnings may not have been correct, because the guidance on how to treat earnings that fluctuate was not always followed¹⁷. The reassessment began on 13 April 2026 and is expected to take up to three years¹⁷.

The DWP estimates that 25,000 people may see adjustments to their overpayment as a result of the review¹⁸. If you had fluctuating earnings which led to a Carer's Allowance overpayment between 2015 and September 2025, you are within the group being looked at¹⁷.

You do not need to contact the DWP in advance. Affected carers receive a letter from the Department for Work and Pensions, and some people may also receive an SMS if more information is needed¹⁷. Carers UK has called for urgent action to accelerate progress on the reassessment process after giving evidence at a Work and Pensions Select Committee session¹⁹.

In Scotland, when your benefit moves over to Carer Support Payment, the DWP will arrange with you if you need to repay an overpayment²⁰. The overpayment rules for Carer Support Payment are currently the same as for Carer's Allowance³.

Can Carer's Allowance make me pay Income Tax?

Carer's Allowance is taxable⁹. You have to pay tax on it if your income is over your Personal Allowance²¹. Because the allowance counts towards your taxable income alongside any wages, a carer who works close to the earnings limit can find that the combination takes them over the Personal Allowance.

From April 2026, Carer's Allowance recipients earning close to the weekly earnings limit may need to pay some Income Tax for the tax year 2026-2027⁵. The allowance is paid gross, so any tax due is collected through the normal system rather than deducted at source.

This is separate from the earnings limit itself. The limit decides whether you keep the benefit; tax decides what you owe on it once you have it. A carer can be under the £204 limit and still have a tax liability if their total income is high enough.

Where to get help

Carer's Allowance sits alongside other support, and the earnings limit interacts with it. Carer's Allowance is not means-tested, but claiming it can passport you to other help, and the Carer's Allowance page sets out the eligibility rules and overlapping payments in full. If you are in Scotland, the Carer Support Payment page covers the Scottish replacement benefit and the Young Carer Grant.

If your earnings vary and you are unsure whether you are over the limit, free and impartial help is available. MoneyHelper publishes guidance on the benefits and tax credits carers can claim⁹. Carers UK runs an overpayments support hub with guidance on what to do if you are contacted about an overpayment¹⁷. Turn2us and EntitledTo both publish free information on how the earnings limit and deductions work¹¹.

If a decision about your Carer's Allowance goes against you, there is a formal route to challenge it. The challenging a decision page explains mandatory reconsideration, and the tribunal appeals page covers what happens if you take it further. For problems with how the DWP has handled your claim, the DWP complaints page explains the ombudsman route.

Carer's Allowance also protects your National Insurance record, and the Carer's Credit page explains how that works if you are not entitled to the allowance itself.