Carer’s Allowance and the National Living Wage

2 mins read

From April 2022, the National Living Wage (NLW) for those aged 25 is £9.50 per hour. This means that someone working 16 hours a week on the NLW will have earnings of £152 per week.

But in order to get Carer’s Allowance, your earnings after allowable deductions must be no more than £132 per week.  Because their wages will be £20 more than the amount they are allowed to earn, many parents working 16 hours or more on NLW won’t be able to get Carer’s Allowance. 

A parent in this position may be tempted to cut their hours to ensure their earnings are no more than £132 per week. 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

It is important to know that there may be deductions that can be made from your earnings that enable you to receive Carer’s Allowance, without having to cut your hours. This includes:

So for example, if you start paying £40 per week into a pension scheme you can then deduct £20 from your earnings. This means that while your actual earnings will be £152 per week, you will be treated as having earnings of £132 allowing you to qualify for Carer’s Allowance.