Increasing the Carer's Allowance earnings threshold in line with National Living Wage (NLW)
In April 2019 the National Living Wage for those aged 25 or over will increase from £7.83 per to £8.21 per hour. While this will be good news for most low paid workers, it may cause problems for some parents on low earnings if they are claiming both Carer's Allowance and Working Tax Credit.
In order to get Carer's Allowance from April 2019, your earnings after allowable deductions must be no more than £123 per week.
However, with the National Living Wage for the over 25s increasing to £8.21 per hour from April, someone working 16 hours a week will have earnings of £131.36 per week. Because their wages will be £8.36 more than the amount they are allowed to earn, they are at risk of losing all of their Carer's Allowance.
A parent in this position may be tempted to cut their hours so their earnings do not increase. However, depending on your circumstances, cutting your hours to below 16 could mean you no longer qualify for Working Tax Credit. This is particularly likely if you are a lone parent.
If you are a working parent with a three-four year old, dropping your hours will also mean that you will no longer qualify for an extra 15 hours free childcare.
Advice if you are affected
If you think this will affect you, get advice urgently. There may be deductions that can be made from your earnings to help you retain your Carer's Allowance payments without having to cut your hours.
It's important to be aware that when calculating how much you earn, the Carer's Allowance Unit deduct certain expenses from your earnings. This includes:
- Some alternative care costs - for example paying someone to look after your children whilst you are at work. There is no need for the caring to be done by a registered childcare provider. Costs can be deducted so long as you pay someone other than a close relative. However there is a cap on the maximum amount that can be deducted for care costs.
- Half of any contributions that you make into a work or personal pension.
So for example, if you start paying £18 per week into a pension scheme you can then deduct £9 from your earnings. This means that while your actual earnings will be £131.36 per week, you will be treated as having earnings of £122.36, allowing you to qualify for Carer's Allowance.
What we want
- The Carer's Allowance earnings limit to be increased in line with future rises to the NLW.
What you can do
If you have been affected by this issue, please email Una.firstname.lastname@example.org or call 020 7608 8742.
What we're doing
- We ask you to sign a letter to the Minster for Disabled People calling for an increase in the Carer's Allowance earnings threshold in line with the NLW.
- With the 2,433 signature we wrote to government about the issue and met with DWP offficials.