Carer’s Allowance
and the earnings limit

For 2025/26, the earnings limit is £196 per week (after deductions – see Q2).

If you are in employment, the following would be deducted from your gross weekly earnings (or gross profit if you’re self-employed) before your earnings are taken into account for Carer’s Allowance:

• Income Tax
• National Insurance
• half of any contributions to your pension
• certain business expenses and some alternative care costs (see Q3)

For example, if you earn £200 a week (after tax and National Insurance have been deducted), you wouldn’t be eligible for Carer’s Allowance. However if you paid £20 into a pension, half of the £20 could be deducted from your earnings.

Your earnings for Carer’s Allowance would then be: £200 - £10= £190. Being under the earnings limit, this would mean you would meet this condition to claim Carer’s Allowance.

You can also take away expenses that are incurred ‘wholly and exclusively for the purposes of the business’.

If you are unsure whether an expense is deductible, it is advisable to contact the Carer's Allowance Unit as the rules for Carer's Allowance may differ from HMRC's treatment of expenses. 

If, because of your work, you have to pay for someone to look after the person you care for, or a child under 16 who you or your partner get Child Benefit for, you can deduct those payments from your earnings up to the value of half your earnings (after the above deductions if they apply).

However, this will not apply if the person you are paying is a close relative of either yourself or the person you are looking after (a close relative is a spouse, partner or civil partner, parent, son, daughter, brother or sister).

Half of any contributions you make (50%) into an occupational or personal pension can also be deducted from your earnings for Carer’s Allowance.

Note: However occupational or personal pensions do not count as earnings and you can be paid Carer’s Allowance in addition to these. 

For example

Ahmad works part time and claims Carer's Allowance. He earns £200 a week which is above the earnings limit.

He doesn’t pay tax or National Insurance and doesn’t pay into a personal pension scheme. However, he pays a friend to care for his brother for an hour during the afternoon to enable him to finish his longer work shifts. He pays the friend £50 a week and this can be deducted from Ahmad's earnings when looking at how much he earns for Carer's Allowance.

He advises the Carers Allowance Unit and keeps a record of the payments. £50 is deducted from his earnings so he is viewed as earning £150 a week which is below the earnings limit.

If you have taxable income

If you do receive taxable income such as occupational or personal pensions or part-time earnings, you should inform the tax office about your Carer’s Allowance, because it is a taxable benefit.

A person's standard tax free personal allowance is £12,570 a year. This is the amount of taxable income that you can earn before you need to start paying Income Tax.

From April 2025, changes to the earnings limit for Carer's Allowance means that if you are paid Carer's Allowance and also earn close to the weekly earnings limit for Carer's Allowance, for the tax year 2025-2026 you may need to pay some Income Tax. If this applies, it would be at the basic rate of 20% on taxable income between £12,571 to £50,270.

In Scotland, Carers Allowance Supplement is also taxable and will be taken into account when looking at whether a person is liable for any Income Tax.

The amount of income tax a person may have to pay depends on their personal circumstances including how much they earn combined with other taxable income.

Carers UK is unable to give advice on taxation issues, but if you have questions you can contact HMRC. You can also visit the Citizens Advice website where there are contact details of organisations that will offer further guidance and tax advice.

For more information about personal allowances visit the government website here.

If you are in employment and have fluctuating earnings, it is possible for your earnings to be averaged out over a recognisable cycle of work or over five weeks, or over another period if this means a more accurate weekly amount can be calculated.

However, this is discretionary, and so you should make sure you discuss your specific circumstances with the Carer's Allowance Unit (or the Disability and Carers Service in Northern Ireland or Social Security Scotland if you get Carer Support Payment) to get further guidance, and to get clarification as to how your particular earnings will be calculated.

If you are in self-employment your average weekly earnings are normally calculated by looking at a specific trading period, which is normally a year. However if you have only recently started your self-employment, or if there has been a change in the pattern of your business, then a different period that's more representative of your average weekly earnings can sometimes be used.

This needs to be discussed and agreed with the Carer's Allowance Unit.

What if there is no regular pattern?

If there is no regular pattern, the decision maker may average your net earnings over five weeks or another period if this leads to a more accurate assessment.

The following amounts are deducted from your gross weekly earnings (if you are in employment) or your gross profit (if you are in self-employment) before your earnings are taken into account for Carer’s Allowance:

• Income Tax
• National Insurance
• half of your contributions towards an occupational/personal pension.
• You may also deduct alternative care costs (see 3 above).
  
  

Example

For example, Rakhi has a zero-hour contract and works as and when she can around her father’s care needs. There is no pattern to her work hours or earnings, but she knows that some weeks she earns over the Carer’s Allowance earnings limit.

She has no deductions that would reduce her earnings for Carer's Allowance.

Rakhi could report her earnings on a weekly basis and keep having her Carer’s Allowance entitlement reviewed, or the alternative is for the decision maker to decide a suitable period to average her net earnings over. Her net earnings for the last five weeks are:

Week 1 £200
Week 2 £180
Week 3 £40
Week 4 £240
Week 5 £140

There is no recognisable pattern so the decision maker averages Rakhi’s earnings over a five-week period by adding all her earnings over the five weeks together and dividing by five. This gives an average of £86.60 net earnings per week. Even though her net earnings sometimes go over the limit, the weeks where she earns less, bring her average down and this means Rakhi meets the earnings condition for claiming Carer’s Allowance.

Rakhi can choose to be paid her Carer’s Allowance in arrears (eg, four weekly) instead of weekly in advance, so she can keep an eye on her average earnings and report changes to avoid being overpaid Carer’s Allowance.

Note: This method of assessing her earnings would need to be agreed with the decision maker in advance and her earnings would need to be reported to the Carer's Allowance Unit regularly. If an agreement is not in place, then for the weeks a person goes over the earnings limit, they will not be entitled to Carer's Allowance and an over payment will occur. 

If your net earnings often vary because you don’t have fixed work hours or you don’t work every week, your earnings can be averaged.

This means that the decision maker deciding whether you qualify for Carer’s Allowance will look for a regular pattern in your earnings over a period of time, or a ‘cycle’.

Example

For example, Henry always works three weeks on and one week off. He has no allowable deductions that can reduce his earnings for Carer's Allowance. In the three weeks Henry actually works, he has net earnings of £200 a week. In the fourth week, he receives a retainer of £20.

The decision maker decides that the earnings should be averaged over a period of four weeks as there is a regular four-week cycle.

The £200 net earnings per week for the three weeks Henry works and the £20 retainer are added together and divided by four to give an average of £155 net earnings per week.

Note: This method of assessing his earnings would need to be agreed with the decision maker in advance.

Bonuses count as earnings so need to be taken into account when checking if you have gone over the earnings limit.

There is a set method for working out how long a payment will be taken into account for. Put simply, when you are paid weekly, if your earnings go over the limit in any week, you lose your entitlement to Carer’s Allowance for the following week.

When you are paid monthly, if your earnings go over the limit in any month, you lose your entitlement to Carer’s Allowance for the following month.

Example

For example, Riley has no deductions that reduces his earnings for Carer's Allowance.

His net earnings are usually below the earnings limit but he received a one-off Christmas bonus so his monthly net earnings went up to £1000 when he was paid at the end of December.

£1000 x 12 then divided by 52 =
£230.77 a week.

This took Riley’s earnings over the earnings limit of £196 a week for Carer’s Allowance so he had to report this change to the Carer’s Allowance Unit.

For Riley, this meant he was not entitled to Carer’s Allowance until his earnings fell back below the earnings limit when he was next paid at the end of January.

As he is getting Universal Credit and Carer’s Allowance counts in full as income when his UC is calculated, Riley updated his online journal immediately to report the loss of his Carer’s Allowance. His UC carer element was not affected as there is no earnings limit for this. If you are getting UC and lose your Carer’s Allowance, make sure you update your online journal; do not assume that they will know.

If you are in work and are paid monthly, your monthly earnings would be multiplied by 12 to calculate your yearly income and then divided by 52 to get a weekly figure.

In this case, your earnings are reviewed over a specific trading period. If you have recently started your business or there has been a change that has affected the pattern of trading, a different method may be used that’s more representative of your average weekly earnings and circumstances.

This different period needs to be discussed and agreed with the Carer's Allowance Unit.

Example

Sarah is self-employed and has a café. On 30^th August, there is a fire on the premises which means that some of the kitchen is no longer useable. She closes for a fortnight and then continues to trade but cannot offer the same menu and she loses regular customers. The benefit decision maker decides that the assessment period will start from 30^th August. Going forward, she will need to report earnings to the Carer's Allowance Unit on a regular basis.

As long as you are not paying a close relative, you can deduct the payments you are making from your earnings (up to the value of half of your earnings – once deductions have been made if they apply).

A close relative is defined as a parent, son, daughter, brother, sister or partner  of you or the person being cared for. In the same way, you can also deduct payments you make to someone who looks after a child for whom you get child benefit.

One exception to the earnings rule is that if you are working during an
allowed break in care, and are still receiving Carer’s Allowance, your
earnings are ignored. Find out more about this in our factsheet.

Notify the Department of Work and Pensions through the Carer’s Allowance Unit as soon as possible and keep a record that you have done so.

In Scotland, you will need to contact Social Security Scotland when your Carer's Allowance is moved over to Carer Support Payment (the Scotland equivalent of Carer's Allowance).

Or in Northern Ireland, contact the Disability and Carers Service, ‘Carer’s Allowance’ team.

Your message won’t be passed on between departments so it’s important you speak to these offices in the first instance.

For a benefit check or guidance, contact Carers UK on advice@carersuk.org

See our step-by-step guide on how to challenge a benefits decision.