Carers face £1 taper for every extra pound earned

Unpaid carers will no longer lose their entire weekly benefit if they earn a single penny above the current limit. Chancellor John Healey is set to announce a new digital taper system in Wednesday's budget that replaces the existing cliff-edge rule. Under the new framework, only £1 of carer's allowance will be removed for every additional £1 earned above the earnings threshold.

The previous system operated as a binary switch. If a carer earned more than £204 in a week, they forfeited their full £86.45 payment for that week. A carer who earned just one penny over the limit for a year would owe the government £4,495.40. This structure created massive debts for individuals who were unaware they had crossed the line.

The Department for Work and Pensions (DWP) knew when carers breached these limits but did not issue warnings. Officials insisted that the responsibility to report changes lay with the carers. Many individuals spent years unaware of the breach. This resulted in overpayment debts typically ranging from £2,000 to £5,000, with some cases reaching £20,000.

Welfare officials pursued these debts using legislation designed for drug dealers and organized crime bosses. Some unpaid carers were convicted of fraud. An independent review by disability rights expert Liz Sayce found that systemic failures caused about 180,000 carers to accrue £300 million in debt between 2019 and 2025.

Healey described the old system as working against carers. He stated that doing an extra shift or getting a small pay rise could leave someone worse off. The new taper gives carers the freedom to work more without suddenly losing all their support. The digital system will not be fully introduced before the end of the decade due to technical requirements.

This announcement is one of five everyday fixes revealed ahead of the budget. Healey's fiscal room for manoeuvre is constrained by global events, including the conflict in Iran. Treasury insiders described the upcoming budget as low-key, with major tax and spend decisions delayed until the spending review next year.

The budget will also make higher tax-free mileage rates permanent. The rate for the first 10,000 business miles will remain at 55p per mile, while the rate above 10,000 miles will increase to 35p per mile. The Treasury estimated this move would benefit approximately 3 million employees and self-employed individuals who use their own vehicles for work.

Additional measures include raising the minimum wage by about 4% to £13.20 per hour. The government will also raise youth rates by a similar amount rather than the higher inflation-busting levels seen in previous budgets. Ministers expressed concern that raising wages for workers under 21 might discourage companies from hiring young employees.

Carers UK said the cliff-edge rule complicated part-time work around minimum caring duties. Many carers gave up paid work or refused promotions to avoid financial penalties. Emily Holzhausen, the organization's director of policy, said the new taper should give families more choice about working and still caring. The government will also benefit 150,000 new parents with parental support worth up to £194 a week.

Ministers are removing import tariffs on more than 100 products, including baked beans, chocolate, and gherkins. They are supporting farmers facing higher fertiliser bills and households that rely on paraffin. The government will install hundreds of Post Office drop boxes, bringing the total to 1,000, to allow people to send and return parcels without queuing.