Unpaid carers will have their Carer's Allowance earnings related overpayments reviewed and potentially cancelled or repaid, following an independent review that found unclear guidance left people facing unexpected debts.
- Carers forced to repay debts because of unclear guidance - in place between 2015 and summer 2025 - are set to have their cases reviewed.
- DWP will reassess all related overpayment cases and reduce debts or refund money to those affected.
- It comes in wake of independent Sayce review, as Government commits to fixing inherited system failures as part of Plan for Change.
Unpaid carers will have their Carer's Allowance earnings related overpayments reviewed and potentially cancelled or repaid, following an independent review that found unclear guidance left people facing unexpected debts.
The independent Sayce Review, launched in October last year, found unclear guidance on averaging fluctuating earnings prevented carers from understanding what changes to their pay needed reporting to the Department for Work and Pensions.
This meant tens of thousands of people juggling 35 hours of care with paid work built up debts without realising they had breached the weekly earnings limit.
The DWP has accepted that unpaid carers were let down by confusing rules - in place between 2015 and summer 2025 - and this government is now moving to fix these inherited problems.
Where it is found that overpayments were lower than originally calculated, carers will have their debts reduced or cancelled entirely, with the Government refunding any money already repaid.
Work and Pensions Secretary Pat McFadden, said:
Carers are vital to our communities, and when the system lets them down, we have a duty to put it right.
The Sayce Review has shown us clearly that the guidance on earnings averaging was confusing. We inherited this mess from the previous government, but we've listened to carers, commissioned an independent review, and are now making good for those affected.
Rebuilding trust isn't about warm words - it's about action, accountability, and making sure our support works for the people who need it most.
Most people will have their cases reassessed without needing to contact DWP. Carers who have already repaid their debts will still be able to have their cases reassessed and details on the best way to do this will be set out in due course.
Chancellor of the Exchequer Rachel Reeves said:
This will be welcome news for thousands of carers failed by the system under the previous government.
We will right these wrongs, carers give so much to their families and to their local communities, and they deserve our support.
The Sayce Review made 40 recommendations, the vast majority of which have been accepted.
DWP has already made immediate improvements in the wake of this. This includes:
- Updating internal guidance so staff properly record and explain wage averaging decisions.
- Hiring additional staff to process earnings notifications more quickly to prevent large debts building up over time.
- Ensuring letters to unpaid carers clearly explain what changes need reporting Appointing a senior service owner to drive delivery of the Review's recommendations.
Independent reviewer Liz Sayce said:
My review found that overpayment debt has had major impacts on carers' health, finances and family well-being, and been a disincentive to work. I'm glad Government now plans to review cases and cancel or reduce debts affected by flawed guidance.
This wasn't wilful rule-breaking - it simply wasn't clear what earnings fluctuations carers should report.
I'm pleased DWP has tackled the backlog of earnings data, so people shouldn't suddenly face large debts going back years.
I hope those affected feel they have been heard.
Longer-term reforms are also underway to modernise Carer's Allowance to build fair public services that treat people with respect, as part of the Plan for Change.
The DWP is also considering how regulations might better reflect modern working practices, developing automation that links directly to HMRC data, and exploring potential solutions to reduce the impact of the current Carer's Allowance earnings cliff edge.
It follows wider work to tackle fraud and error in the benefits system, with the Fraud, Error and Recovery Bill bringing forward the biggest fraud crackdown in a generation, that will save £9.6 billion by 2030.
Helen Walker, Chief Executive of Carers UK, said:
It's a really important day for carers today and in Carers UK's 60 year history.
Carers UK is really pleased that this issue we've raised for nearly 8 years is finally being addressed, with system failures acknowledged.
We welcome the fact that Government has committed to writing off debt, where overpayments were lower than originally calculated, reducing or cancelled debts entirely, with refunding any money already repaid.
It's absolutely right that the Government took the key decision to conduct this review, given how challenging and distressing Carer's Allowance overpayments have been.
Government and Liz Sayce OBE have clearly listened to carers and the evidence that Carers UK has provided.
Carers are the backbone of our society with their care worth a staggering £184 billion a year. They need support and systems that work, not extra challenges.
The Government recognises the vital role carers play supporting the people they care for, their communities and the country, and is committed to making their lives easier.
As part of this commitment, the Government has already raised the earnings threshold by £45 to £196 - the largest ever increase - benefiting over 60,000 carers by 2029/30.
Alongside this, it has launched a review of employment rights for unpaid carers, which will look at how the current package of rights is used and identify where any improvements might be needed to help carers balance their work with caring responsibilities.
Minister for Social Security and Disability Sir Stephen Timms said:
Carers deserve a benefit that reflects their vital contribution to society but, we inherited problems with Carer's Allowance which we're determined to fix.
Every day, they provide care and support that enables their loved ones to live with dignity - and we owe them a system that works properly.
I want to reassure carers that this issue doesn't affect many cases. But where it's gone wrong, we'll put it right.
