National Living Wage rise spells bad news for carers

3 mins read

Wednesday 26 April 2023

This month, the National Living Wage (NLW) for over 23s increased from £9.50 to £10.42 an hour.

While this is good news for earners, yet again the government’s failure to raise the Carer’s Allowance earnings threshold will see carers forced to give up work or lose this vital benefit.

What is the earnings limit?

The earnings limit is a rule that prevents carers earning over £139 a week while claiming Carer’s Allowance.

In calculating your earnings for Carer’s Allowance purposes, you can make certain deductions from your gross wages.

If, after making these deductions, your earnings are even 1p over £139 a week, you will lose all of your Carer’s Allowance.

How does the NLW rise affect Carer’s Allowance claimants

We know that many carers want to work alongside their caring responsibilities. Many carers work part-time to balance both roles.

A carer earning the National Living Wage could, until April, work up to 13.5 hours a week while still receiving Carer’s Allowance. Their earnings would come to £128.25 a week – below the earnings limit, which was then £132.

But the same carer will now find their earnings are £140 a week, above the earnings limit of £139. Unless they can reduce their hours or make certain deductions, they will lose their Carer’s Allowance.

The government has continually raised the earnings limit only by a rate that falls below the corresponding rate in the rise in NLW. As a result, carers are losing their earning potential year on year.

The earnings limit must rise to £166.72

We want the government to rise the earnings limit to at least £166.72 a week – that’s 16 hours’ work on the NLW.

This would allow carers to continue working and claiming Carer’s Allowance, while meeting the 16 hours-a-week working thresholds in Employement and Support Allowance (ESA) and Working Tax Credit.

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