The government has confirmed that tens of thousands of unpaid carers are set to have their Carer’s Allowance overpayments debt cancelled, refunded or reduced. More than 200,000 cases will be reassessed as part of a scheme to help those affected by confusing guidance on their earnings that led to ineligible carers being paid Carer’s Allowance, only to be told they needed to pay it back.
The move comes after the government agreed to accept 38 of the 40 recommendations made by the independent Sayce Review into Carer’s Allowance overpayments in November 2025.
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."
How does Carer's Allowance work?
Some of the blame for this issue can be put down to how Carer's Allowance eligibility works. It is currently worth £86.45 a week, but has become known as a 'cliff-edge' benefit, which means that any unpaid carers earning 1p over the limit are not eligible for anything. If they are paid Carer's Allowance when they shouldn't be, they will need to pay the money back.
To qualify, unpaid carers need to earn below the limit (now £204-per-week) from their employment.
They also had to spend at least 35 hours a week caring for someone who receives a qualifying disability benefit, be aged 16 or over and not in full-time education. The £204 limit applies after deductions for tax, national insurance, and half of any pension contributions.
Why are thousands of unpaid carers in debt to the government?
The government has said that from April 2015 to September 2025, guidance on how to average irregularly fluctuating earnings in order to calculate eligibility for Carer's Allowance was unclear and did not accurately reflect the law.
Many carers interpreted the official guidance as saying they could average their earnings across several weeks, so if they were paid a bonus or worked more hours than usual one week, they could balance it out with lower earnings the next week to stay under the limit. However, this was not how the Department for Work and Pensions (DWP) assessed the rules, resulting in carers accidentally breaching the limit.
This meant some unpaid carers who were working around their caring responsibilities were receiving Carer's Allowance payments despite exceeding the weekly earnings limit, resulting in them building up a debt, as those payments were then clawed back.
This has now been put down as a failure of the benefits system, rather than being the fault of those claiming. Partly, this is because the DWP receives real-time earnings data from HMRC, so knew that weekly overpayments were accumulating into significant debt, but did not notify carers until they were sometimes hundreds or thousands of pounds in the red.
The government expects around 25,000 carers will be found to have been overcharged. They will have their debts reduced or cancelled, or be issued refunds for repayments they have already made. £75m has been allocated to fund the scheme.
The official guidance on fluctuating earnings has now been updated to ensure that any averaging is done correctly. Moving forward, the government is expected to review the cliff-edge earnings rule and the DWP is developing an automated link with HMRC to identify overpayments sooner.
How to find out if you qualify for Carer’s Allowance overpayments reassessment
The DWP should hold all the information it needs to resolve most cases, so individual unpaid carers should not need to reach out. The DWP is expected to get in touch if it needs further information.
If you need more advice, help or support for your Carer’s Allowance case, organisations such as Carers UK and Carers Trust are great places to start. You can also find further information for affected carers by contacting the Carer’s Allowance Unit.
Keep in mind that this scheme is specifically for overpayment cases relating to the unclear guidance on averaging irregularly fluctuating earnings between April 2015 and September 2025. If you have an overpayments issue for a different reason, you will not be part of this exercise.
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