Key facts
- The 'cliff-edge' rule for carer's allowance will be abolished in the upcoming UK budget.
- A new digital taper system will replace the cliff-edge rule, meaning only £1 of allowance is removed for every £1 earned above the limit.
- The current weekly earnings limit for carer's allowance is £204, with a payment of £86.45.
- An independent review found about 180,000 carers incurred overpayment debts totaling £300 million between 2019 and 2025.
- Higher tax-free mileage rates will be made permanent, benefiting approximately three million people.
- The budget will also extend parental support to an additional 150,000 new parents.
The UK government is set to abolish a controversial 'cliff-edge' rule in the carer's allowance system that has led to thousands of unpaid carers accumulating significant debts. Chancellor John Healey will announce in the upcoming budget the introduction of a digital taper system. This change means that instead of losing their entire weekly allowance for earning even a penny over the £204 limit, carers will have their allowance reduced proportionally to their earnings above the threshold.
The 'cliff-edge' rule, which has been in place for years, has been criticized for causing severe financial hardship and distress to carers, with some facing penalties of thousands of pounds for minor breaches. An independent review commissioned by the government highlighted systemic injustices and DWP administrative failures contributing to approximately 180,000 carers accumulating £300 million in overpayment debts between 2019 and 2025.
Campaigners have welcomed the reform as long overdue, although the new system is not expected to be implemented before the end of the decade due to technical demands. The budget will also include measures to make higher tax-free mileage rates permanent for employees and the self-employed, and extend parental support to more new parents.