DWP to cut or cancel debts of 25,000 Carer’s Allowance claimants | Personal Finance | Finance

The Department for Work and Pensions has said that around 200,000 people who owe money will have their cases reviewed because the earnings guidance for Carer’s Allowance is “confusing”.

Of these, the government estimates that around 25,000 carers will have their debts canceled or reduced, or the money they have already paid taken back. Carer’s Allowance of £86.45 per week is paid to someone who regularly cares for someone with an illness or disability for at least 35 hours a week. But one person earning just a penny above the minimum earnings threshold lost their entire allowance, with campaigners branding it a “scandal”.

Historic overpayments have led to many carers unknowingly accumulating unmanageable levels of debt, with some leaving their jobs as a result.

The so-called “cliff edge” had a “serious” impact on carers and acted as a disincentive to take up paid employment, according to an independent review led by former charity boss Liz Sayce last November. It concluded that many carers felt they were “treated as criminals, resulting in feelings of fear and shame.”

Carers previously had to earn £151 a week or less to qualify for this allowance; this increased to £196 net per week last April and again to £204 net per week for 2026/27.

Ministers agreed to 38 of 40 recommendations in the report, which found that the Carer’s Allowance guidance between 2015 and the summer of 2025 was “ill-defined” and “systemic flaws” prevented many people from reporting their earnings properly.

The government said about half of the promised changes had already been made, with further reforms underway to modernize benefits and prevent similar problems in the future.

Officials said DWP has all the information it needs to carry out a reassessment in most cases and carers do not need to contact the department themselves. They said the department would contact individuals if more details were needed.

Work and Pensions Minister Pat McFadden said: “We have inherited a system that has left unpaid carers falling into debt through no fault of their own, and we are determined to fix it. Carers are vital to our communities and we are determined to take action to rebuild their trust.”

Helen Walker, chief executive of Carers UK, said hundreds of carers were suffering “serious financial hardship and emotional distress” as a result of overpayments and further reform was “sorely needed”.

“We are pleased to see this Government taking decisive action to begin to fix the failures of the past and provide carers with the compensation they deserve. The reassessment process marks an important step in tackling these systemic failures,” he said.

“As we celebrate the 50th anniversary of carer’s pay this week, it is encouraging to hear that the Government is exploring other reform options.

“This is desperately needed to ensure that the contribution of unpaid carers is appropriately supported and recognised, whilst also protecting them from financial hardship.”

Carers Trust chief executive Kirsty McHugh said the reassessment would have a “huge impact” on carers who were “punished through no fault of their own”.

“It was reassuring to see the Government accept the vast majority of recommendations in the Sayce Review, while the £75 million allocated in last year’s budget is further evidence that the Government is serious about righting these wrongs,” he said.