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Benefits of Carer's Allowance earnings limit increase cancelled out by rise in National Living Wage

Wednesday 30th November 2016

The earnings limit for Carer's Allowance will be increased to only £116 per week from April 2017. While this will maybe good news for some carers, for others who work 16 hours or more per week, the increase will be of little or no benefit. This is because the National Living Wage will also be increased to £7.50 per hour from April 2017.

So, from April, if you work 16 hours per week at the National Living Wage rate, your earnings will be £120 - and as a result you will not qualify for Carer's Allowance.

It's important to remember that certain expenses such as childcare costs and half of anything paid to a pension scheme can be deducted from your earnings and may help to bring you below the earnings limit.

If you are thinking of reducing your hours in order to keep Carer's Allowance, you should seek advice first especially if you get Working Tax Credit. Unless you have a partner who works at least 16 hours a week, you would lose your Working Tax Credit if you worked less than 16 hours per week.

Contact a Family believes the earnings limit should be £120 to reflect this increase and is disappointed that the government hasn't foreseen this gap across the two policies areas.

Una Summerson, Head of Policy and Campaigns at Contact a Family, says:

"This will be disappointing for the thousands of families who signed our open letter earlier this year calling on the government to increase the Carer's Allowance earnings threshold in line with the National Living Wage to stop parent carers losing out on support. While it's good news that the threshold for Carer's Allowance has at last been increased, it will be meaningless for many of the families we support because of the corresponding increase in the National Living Wage.

"We will continue to campaign on this issue until the government fully understands that as it stands the current Carer's Allowance earnings limit is a disincentive for many parent carers to work and was one of the reasons that many parents with disabled children are forced to reduce their hours or give up work or career opportunities altogether."

More about Carer's Allowance

Find out more about Carer's Allowance by downloading our Carer's Allowance summary factsheet [PDF] or reading our guide on how to get a Carer's needs assessment.