Carer’s Allowance
and the earnings limit

For 2023/24, the earnings limit is £139 per week (after deductions – see Q2).

If you are in employment, the following would be deducted from your gross weekly earnings or net weekly earnings if you’re self-employed:

• Income Tax
• National Insurance
• half of any contributions to an occupational or personal pension
  certain business expenses (see Q3)

For example, if you earn £140 a week (after tax and National Insurance have been deducted), you wouldn’t be eligible for Carer’s Allowance. However if you paid £10 into a pension, half of the £10 could be deducted from your earnings.

Your earnings for Carer’s Allowance would then be: £140 - £5= £135. Being under the earnings limit, this would mean you would meet this condition to claim Carer’s Allowance.

You can also deduct expenses that are incurred ‘wholly and exclusively for the purposes of the business’, in the same way that you can for income tax purposes.

If, because of your work, you have to pay for someone to look after the person you care for, or a child under 16 who you or your partner get Child Benefit for, you can deduct those payments from your earnings up to the value of half your earnings (after the above deductions if they apply).

However, this will not apply if the person you are paying is a close relative of either yourself or the person you are looking after (a close relative is a spouse, partner or civil partner, parent, son, daughter, brother or sister).

Occupational or personal pensions do not count as earnings and you can be paid Carer’s Allowance in addition to these. However, if you get extra Carer’s Allowance for your partner, their occupational/personal pension could affect this extra amount (some carers previously received extra benefit for their partner as part of their Carer’s Allowance - this was called the adult dependant addition but is not available for new claims).

If you have taxable income

If you do receive taxable income such as occupational or personal pensions or part-time earnings, you should inform the tax office about your Carer’s Allowance, because it is a taxable benefit.

If you are in employment and have fluctuating earnings, it is possible for your earnings to be averaged out over a recognisable cycle of work or over five weeks, or over another period if this means a more accurate weekly amount can be calculated.

However, this is discretionary, and so you should make sure you discuss your specific circumstances with the Carer's Allowance Unit (or the Disability and Carers Service in Northern Ireland) to get further guidance, and to get clarification as to how your particular earnings will be calculated.

If you are in self-employment your average weekly earnings are normally calculated by looking at a specific trading period, which is normally a year. However if you have only recently started your self-employment, or if there has been a change in your circumstances, then a different period more representative of your average weekly earnings can sometimes be used.


What if there is no regular pattern?

If there is no regular pattern, the decision maker should average your net earnings over five weeks or another period if this leads to a more accurate assessment.

The following amounts are deducted from your gross weekly earnings (if you are in employment) or your net profit (if you are in self-employment) before your earnings are taken into account for Carer’s Allowance:

• Income Tax
• National Insurance
• half of your contributions towards an occupational/personal pension

Example:

For example, Rakhi has a zero-hour contract and works as and when she can around her father’s care needs. There is no pattern to her work hours or earnings, but she knows that some weeks she earns over the Carer’s Allowance earnings limit.

Rakhi could report her earnings on a weekly basis and keep having her Carer’s Allowance entitlement reviewed, or the alternative is for the decision maker to decide a suitable period to average her net earnings over. Her net earnings for the last five weeks are:

Week 1 £150
Week 2 £80
Week 3 £30
Week 4 £30
Week 5 £100

There is no recognisable pattern so the decision maker averages Rakhi’s earnings over a five-week period by adding all her earnings over the five weeks together and dividing by five. This gives an average of £78 net earnings per week. Even though her net earnings sometimes go over the limit, the weeks where she earns less, bring her average down and this means Rakhi would meet this condition for claiming Carer’s Allowance.

Rakhi can choose to be paid her Carer’s Allowance in arrears (four weekly or 13 weekly in some cases) instead of weekly in advance, so she can keep an eye on her average earnings and report changes to avoid being overpaid Carer’s Allowance.

If your net earnings often vary because you don’t have fixed work hours or you don’t work every week, your earnings can be averaged.

This means that the decision maker deciding whether you qualify for Carer’s Allowance will look for a regular pattern in your earnings over a period of time, or a ‘cycle’.

Example:

For example, Henry always works three weeks on and one week off. In the three weeks Henry actually works, he has net earnings of £150 a week. In the fourth week, he receives a retainer of £20.

The decision maker decides that the earnings should be averaged over a period of four weeks as there is a regular four-week cycle.

The £150 net earnings per week for the three weeks Henry works and the £20 retainer are added together and divided by four to give an average of £117.50 net earnings per week.

Bonuses count as earnings so need to be taken into account when checking if you have gone over the earnings limit.

There is a set method for working out how long a payment will be taken into account for. Put simply, when you are paid weekly, if your earnings go over the limit in any week, you lose your entitlement to Carer’s Allowance for the following week.

When you are paid monthly, if your earnings go over the limit in any month, you lose your entitlement to Carer’s Allowance for the following month.

Example:

For example, Riley’s net earnings are usually below the earnings limit but he received a one-off Christmas bonus so his monthly net earnings went up to £580 when he was paid at the end of December.

£580 x 12 / 52 = £133.84 a week.

This took Riley’s earnings over the earnings limit for Carer’s Allowance so he had to report this change to the Carer’s Allowance Unit.

For Riley, this meant he did not receive Carer’s Allowance until his earnings fell back below the earnings limit when he was next paid at the end of January 2021.

As he is getting Universal Credit (UC) and Carer’s Allowance counts in full as income when his UC is calculated, Riley updated his online journal immediately to report the loss of his Carer’s Allowance. His UC carer element was not affected as there is no earnings limit for this. If you are getting UC and lose your Carer’s Allowance, make sure you update your online journal; do not assume that they will know.

If you are in work and are paid monthly, your monthly earnings would be multiplied by 12 to calculate your yearly income and then divided by 52 to get a weekly figure.

In this case, your earnings are reviewed over a specific trading period (usually a year). If you have recently changed your job though, a different method may be used that’s more representative of your average weekly earnings and circumstances.

As long as you are not paying a relative or friend, you can deduct these payments you are making from your earnings (up to the value of half of your earnings – once deductions have been made if they apply).

There is an exception around the earnings limit. If you are having a break from caring, and are still receiving Carer’s Allowance, your earnings will be ignored during this time.

Notify the Department of Work and Pensions through the Carer’s Allowance Unit as soon as possible.

Or in Northern Ireland, contact the Disability and Carers Service, ‘Carer’s Allowance’ team.

Your message won’t be passed on between departments so it’s important you speak to these offices in the first instance.

For a benefit check or guidance, contact Carers UK on advice@carersuk.org

See our step-by-step guide on how to challenge a benefits decision.