The Department for Work and Pensions (DWP) has confirmed a new £204-a-week earnings rule for Carer's Allowance claimants, effective from July 2026. The change, part of a benefits law update under the Labour government, raises the weekly earnings limit to a record high, enabling unpaid carers to earn approximately £10,000 annually without losing their allowance.
Record increase in earnings threshold
The updated guidance, published by the DWP, increases the previous earnings limit from £152 to £204 per week. This represents a significant boost for carers who balance work with caring responsibilities. The change is designed to help those struggling with the cost of living crisis, allowing them to retain financial support while earning more.
Minister for Social Security and Disability Sir Stephen Timms said: "Unpaid carers are the backbone of our communities — quietly providing support that makes an enormous difference to the lives of those they love. They deserve a system and level of support that properly reflects the contribution they make, and we are determined to deliver that."
Calls for further reform
While welcoming the increase, charities have urged the government to undertake broader reforms to Carer's Allowance. Emily Holzhausen CBE, Director of Policy and Public Affairs at Carers UK, said: "We need to see further reform to Carer’s Allowance because the current system is outdated and no longer reflects the realities of caring today. This includes inflexible rules around the earnings limit which are hard to navigate for carers with fluctuating earnings and can dissuade some from claiming what they are entitled to altogether."
She added: "We welcome the government’s call to gather further evidence around this and its acknowledgement that Carer’s Allowance, which was first introduced 50 years ago, should be a priority for change to better support those who contribute so much to society. Caring is not a one-size-fits-all experience, and so it’s important that the government hears from as many people as possible on this topic in the next six weeks."
Review of Carer's Allowance announced
Kirsty McHugh, CEO of Carers Trust, said: "This major review of Carer’s Allowance is something we, carers, and the 130+ local carer services in our network have long called for. It has been clear for some time that Carer’s Allowance needs to be modernised and brought into the twenty-first century. Society, work and caring have all been thoroughly transformed since Carer’s Allowance was first introduced in 1976, so it’s incredibly encouraging that the Government has recognised this and committed to creating a system that not only reflects these changes but also gives carers the support they really need."
She continued: "We look forward to working with the Department for Work and Pensions to ensure the voices of carers and the services dedicated to them are at the heart of any reforms to Carer’s Allowance. We want this review to be a real step change in the way carers are supported – paving the way for a fairer world for carers."
Impact on carers
The new £204 weekly earnings limit equates to an annual income of £10,608 from work before Carer's Allowance is affected. This adjustment is expected to benefit thousands of unpaid carers across the UK, many of whom have been forced to limit their working hours to remain eligible for the benefit. The DWP has stated that the change will take effect immediately, with claimants advised to report their earnings accurately to ensure they receive the correct amount.
