End to carer's allowance cliff edge announced in Autumn Budget 2026

Chancellor John Healy has announced the government's plans to abolish the carer's allowance cliff edge.

The cliff-edge rule means that carers who earn even a penny a week more than the carer's allowance earnings limit lose their entire benefit for that week. It will be replaced with a new system, where £1 of allowance will taper away for every additional £1 earned.

Here, we explain what carer's allowance is and what's changing.

• Find out more: Autumn Budget 2026 key points

What is carer's allowance?

Carer's allowance is a form of financial support for people who provide significant care for loved ones in England, Wales and Northern Ireland. In Scotland, the equivalent benefit is carer support payment.

The 2026-27 rate for carer's allowance is £86.45 per week.

To qualify, you must be 16 or over, not in full-time education, spend at least 35 hours a week caring for someone who receives a qualifying disability benefit, and earn £204 or less per week after tax.

• Find out more: carer's allowance explained

Carer's allowance cliff edge to end

From the 2030-2031 tax year, the government will abolish the rule that leaves unpaid carers worse off for earning more, and has seen tens of thousands of carers owing large sums after unknowingly breaching the rules.

Under the current rules, carers face a cliff edge: if they earn even a penny over the £204 per week earnings limit, they lose their entire allowance for that week.

For example, a carer who earns £204 per week is eligible for £4,495.40 per year in carer's allowance. But if their earnings rise to £204.01, they lose entitlement to that entire amount, despite their wages increasing by just 52p a year.

Cliff edge overpayments scandal

The cliff edge is at the heart of the overpayments scandal, which saw tens of thousands of carers run up often life-changing debts through no fault of their own, and left some facing criminal charges.

An independent review published in 2025 found that the way the Department for Work and Pensions (DWP) assessed carers' earnings was unclear and inconsistent, with carers having no way of knowing whether they're exceeding the earnings limit.

The government committed to reassess repayment cases and repay money or wipe off debts where fluctuating earnings have been wrongly assessed. The DWP is currently reassessing repayment cases that occurred between April 2015 and September 2025.

• Find out more: Carers' debt could be written off – what you need to know

New digital taper system to be introduced

During the 2030-2031 tax year, the cliff-edge rule will be replaced with a taper system in England and Wales.

Under the new rules, £1 of carer's allowance will taper away for every additional £1 earned over the weekly limit.

For example, if you earned £214 per week – £10 over the current earnings limit – your carer's allowance would be reduced by £10 to £76.45

This would take your total income to £290.45, the same amount you would have received if you earned £204 and received the full amount of carer's allowance.

This example assumes the current earnings limit and carer's allowance rate, both of which may change by the time the taper effect comes in. It doesn't take into account any tax due on carer's allowance.

How will carers be affected by the changes?

Under this system, carers will no longer be left financially worse off for working more or receiving a pay rise – a move that has been broadly welcomed by carers and charities as a necessary and long-overdue reform.

However, as the system tapers at a rate of £1 to £1, any additional earnings up to the value of carer's allowance are in effect cancelled out by the reduction in the benefit. 

And the Government has said the new taper won't come into effect until 2030-31, following the development of a new IT system that will automatically adjust payments in line with the taper. 

These changes will apply in England and Wales, with the government expecting the change to benefit around 48,000 carers.

What other changes to social care have been announced in the Budget?

The Chancellor confirmed changes to the pensions triple lock from April 2030 to fund a new National Care Service – an NHS-style service that is free at the point of use.

Under the proposals, older people in England will receive free personal care, including help with things like washing, eating and using the toilet. 

Today, the Chancellor confirmed that from April 2030, the state pension will rise each year by the highest of inflation, 2.5% each year, or the amount required to maintain its value relative to earnings as reached in April 2029.

The Casey Commission is currently looking at how the National Care Service will be implemented, with final recommendations expected next year. 

How do care payments work at the moment?

The National Care Service won’t be introduced until at least the next parliament, with changes expected to be brought in gradually.

If you need care in the meantime, there are three broad options for funding it:

• Local authority funding: council funding for care is needs and means-tested, meaning you'll only be eligible for support if your savings and assets fall below a certain value. Different thresholds apply in each of the devolved nations. For more information, check our guide on care home costs. 
• NHS funding: In some cases in England, Wales and Northern Ireland, the NHS will cover the cost of care under the Continuing Healthcare scheme. This funding isn't means-tested, but it's hard to get: in the first quarter of 2026-27, just 18% of those assessed for standard continuing healthcare in England were deemed eligible. 
• Self-funding: If you have to pay for your own care, there are various options to consider, including using savings, an immediate needs annuity or, in some cases, the value of your home. A financial adviser specialised in later-life care can help you understand your options – the Society of Later Life Advisers (SOLLA) is a good place to start.

• Find out more: More than half of retirees are worried about care costs – what you need to know