A huge change to the Department for Work and Pensions (DWP) Carer's Allowance benefit has been confirmed in today's Budget.

The Chancellor Rachel Reeves has confirmed that the working limit to Carer's Allowance will be lifted from next April. This means carers can earn more money from work and still claim the benefit. According to the Chancellor, the rise will allow carers to work a further 16 hours a week at the minimum wage or £45 a week. This will take the limit to £196 a week.

Reeves says the increase will be equivalent of more than £10,000 a year and is “the largest increase in carers’ allowance since it was introduced in 1976”. Alongside this, the government is also reviewing what is happening to overpayments.

Currently, Carer's Allowance, which is claimed by around 1.4million people in the UK - is worth £81.90 a week and is awarded if you care for someone at least 35 hours a week. You can work alongside it, but you cannot earn over £151 a week after tax, National Insurance, pension contributions, and allowable expenses. If you earn even £1 over, then you lose your entire entitlement for the benefit. Carers can also face prosecution for benefit fraud in these instances.

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Earlier this year, charities and campaigners - including Martin Lewis - called out the benefit's cliff-edge nature as a large number of carers came forward to share that they were being forced to repay huge amounts back to the DWP after mistakenly falling foul of the rules. Many said the rules are incredibly confusing, particularly if your earnings fluctuate due to changing hours. As of May 14 2024, DWP was working to recover money from 134,800 people who had been overpaid their Carer's Allowance.

Helen Walker, Chief Executive of Carers UK said it was "delighted" to hear that the working threshold had been lifted. She said the Government was taking "swift action" to end the "significant injustice" to unpaid carers. She added: "It's been heartbreaking and frustrating to hear carers having to choose between paid work and Carer's Allowance simply because of a rise in the National Living Wage - something that is supposed to benefit low paid workers, not put them out of work. We're delighted that this is being addressed.

"Carers have told us that juggling work and care is critical for them, keeping a toe in the labour market whilst caring significant hours for their older, ill and disabled relatives and friends. This is a really important poverty prevention measure and will help many carers, particularly women, stay in the labour market.”

Follow our Autumn Budget 2024 live blog for the latest updates and to see how all the changes affect your money