Chancellor Healey replaces carer's allowance cliff-edge with taper in budget

Chancellor John Healey will announce the end of the carer's allowance cliff-edge in the budget presented on Wednesday. The change replaces a binary penalty with a digital taper system. This reform addresses a rule that forced carers to repay entire weekly benefit payments if their earnings exceeded a specific limit.

Under the current system, a carer earning more than the £204 weekly threshold forfeits the full £86.45 carer's allowance payment. A single penny over the limit for a year results in a breach of 52p, yet the carer must repay £4,495.40. The Department for Work and Pensions tracked these breaches but did not notify recipients, relying on carers to self-report changes in income.

An independent review commissioned by the government found that approximately 180,000 carers accumulated overpayment debts totaling £300 million between 2019 and 2025. The review, conducted by disability rights expert Liz Sayce, identified systemic failures in the administration of the benefit. One case detailed in the review involved a carer penalized £2,000 for earnings over the limit that totaled only £5, a discrepancy caused by a faster increase in the national minimum wage than the earnings limit.

The new taper mechanism will remove only one pound of carer's allowance for every additional pound earned above the limit. This structure ensures that working extra hours or receiving a pay raise does not leave the carer financially worse off. Carers UK noted that the previous rule discouraged many from taking on part-time work or accepting promotions due to the financial risk.

Healey described the previous system as working against carers, stating that an extra shift could leave someone worse off. He said the new taper gives carers the freedom to work a little more without suddenly losing all support. The change is one of several everyday fixes announced ahead of the budget, a period when the Treasury has limited fiscal room due to global economic pressures.

Other measures in the budget include making higher tax-free mileage rates permanent. The 55p per mile rate for the first 10,000 business miles will be locked in, and the rate above that threshold will rise to 35p per mile. The Treasury estimates this will benefit approximately 3 million employees and self-employed individuals. The government is also removing import tariffs on over 100 products, including baked beans and chocolate.

The budget will extend parental support to an additional 150,000 new parents, including self-employed fathers and partners, offering up to £194 a week. Healey is also expected to raise the national minimum wage by about 4% to £13.20 per hour. Youth wages will see a similar increase, a decision made as ministers weigh the impact on hiring for workers under 21. Andy Burnham, the prime minister, said the changes aim to address everyday problems that cost people money.

Campaigners welcomed the taper as a long-overdue reform, though they noted the digital system will not be fully implemented before the end of the decade. Pat McFadden, the work and pensions secretary, said the government intends to end the rule that leaves carers worse off for taking on modest work. Kirsty McHugh of Carers Trust urged the government to use this change as a springboard for broader reform of a benefit she described as outdated. Emily Holzhausen of Carers UK said the taper gives families more choice about working and caring.