Tens of thousands of unpaid carers are set to have Carer’s Allowance debts reduced, cancelled, or refunded, following a major government reassessment of past overpayments linked to confusing earnings guidance.
The move follows ministers’ acceptance of 38 out of 40 recommendations made by the independent Sayce Review, published in November 2025, which examined long‑standing issues with how Carer’s Allowance overpayments were calculated and communicated.
Between April 2015 and September 2025, official guidance on averaging irregular and fluctuating earnings was unclear and did not accurately reflect the law.
As a result, many carers, who balance paid work alongside at least 35 hours of unpaid caring each week, unknowingly exceeded the weekly earnings limit and accrued debts without realising they were no longer entitled to the full benefit.
The government acknowledged this as a system failure, rather than an error by carers, and has committed to putting the situation right.
The Department for Work and Pensions will now review more than 200,000 Carer’s Allowance cases affected by the unclear guidance.
It is estimated that around 25,000 carers could:
- Have their debts reduced
- See overpayments cancelled entirely
- Receive refunds where repayments have already been made
In most cases, the DWP already holds the information needed to carry out the reassessment. Carers do not need to contact the department, and will only be approached if additional details are required.
The reassessment follows other recent government action aimed at improving financial support for unpaid carers.
In April 2025, the weekly Carer’s Allowance earnings limit was increased by a record amount, and this will rise further to £204 net per week in 2026/27.
This change means some unpaid carers can now earn around £10,000 a year while still remaining eligible for Carer’s Allowance, providing greater flexibility to balance work and caring responsibilities.
Around half of the recommended reforms to Carer’s Allowance have already been implemented, with further changes underway to modernise the benefit and reduce the risk of future overpayments.
The government is:
- Exploring whether earnings calculations can be automated
- Considering replacing the current cliff‑edge earnings rule with a tapered system
- Updating guidance so that the averaging of fluctuating earnings is clearly and consistently applied
Work and Pensions Secretary Pat McFadden said:
“We inherited a system that left unpaid carers building up debt through no fault of their own, something we’re determined to put right.
“That’s why we accepted the vast majority of the Sayce Review’s recommendations and are now getting to work implementing them, kicking off the reassessment exercise to review cases impacted by unclear guidance.
“Carers are vital to our communities, and we are committed to taking action to rebuild their trust.”
Work has also been carried out with carers and carers’ organisations to ensure communications are clear, accurate and accessible.
DWP has now updated its official guidance on fluctuating earnings to ensure:
- Averaging is properly considered
- Legal requirements are accurately reflected
- Carers have a clearer understanding of how earnings affect entitlement
The reforms come as 2026 marks 50 years since Carer’s Allowance was introduced.
Image credit: iStock
