Is Carer's Allowance means tested?

Carer’s Allowance is £86.45 a week, about £4,495 a year, for people caring at least 35 hours a week.

The short answer: your savings are ignored entirely, but your earnings are not.

That distinction matters, because “means tested” usually makes people think of savings limits, and on that measure Carer’s Allowance is one of the most generous benefits in the system. You could have a large amount in the bank and still qualify.

What is ignored

None of these affect Carer’s Allowance:

• Savings, ISAs, investments and premium bonds, at any level
• Property, including a second home
• Your partner’s income or savings
• Pension income (though see the State Pension overlap below)
• The income or savings of the person you care for

There is no capital limit at all.

What is tested: your earnings

You can earn up to £204.00 a week and keep Carer’s Allowance. Go over it, even by a penny, and you get nothing for that week.

This is a cliff edge, not a taper. It is the single most important thing to understand about the benefit. Someone earning £204.00 keeps the full £86.45. Someone earning a pound more gets zero.

What counts as earnings

Only money from employment or self-employment. Occupational and private pensions do not count as earnings here.

What you can deduct

The limit applies to your net earnings, and the deductions are more generous than people realise:

• Income tax
• National Insurance
• Half of any contributions you make to a pension scheme
• Up to half your earnings if you pay someone (not a close relative) to look after the disabled person or your children under 16 while you work
• Some equipment and travel costs if you are self-employed

The pension deduction is the useful one. If you are just over the limit, increasing your pension contributions can bring your assessed earnings back under it, and you keep the money in your pension rather than losing the whole allowance.

Our Carer’s Allowance calculator works out where you sit and how much headroom you have.

The overpayment trap

Carer’s Allowance has a long history of overpayment problems, and they nearly always follow the same pattern: someone’s earnings creep over the limit through a pay rise, extra shifts, a bonus or a change in hours, and the claim is not updated.

Because it is a cliff edge, a small unnoticed rise can generate months of payments the DWP later reclaims, sometimes running to thousands of pounds.

Protect yourself:

• Tell the DWP straight away about any change in pay or hours, in writing
• Watch out for the weeks where a bonus, back pay or an extra shift tips you over
• Remember earnings are usually averaged over your pay cycle, so a monthly salary is converted to a weekly figure
• Keep copies of everything you report

The other conditions

Being under the earnings limit is not enough on its own. You also need:

• To care for someone at least 35 hours a week
• The person you care for to receive a qualifying disability benefit, such as Attendance Allowance, PIP daily living, or DLA care at the middle or highest rate
• To not be in full-time education of 21 hours a week or more
• To meet residence conditions

If the person you care for is not claiming a qualifying benefit yet, that is the place to start. Helping them claim Attendance Allowance or PIP can unlock your claim as well as theirs.

The State Pension overlap

Carer’s Allowance and the State Pension are overlapping benefits. If your State Pension is more than £86.45 a week you generally cannot be paid Carer’s Allowance on top.

Claim anyway. You may get an underlying entitlement, which does not pay you Carer’s Allowance directly but can increase Pension Credit through the carer addition. For some people that is worth more than the allowance itself.

The warning nobody gives you

Claiming Carer’s Allowance can reduce the benefits of the person you care for.

If they receive a severe disability premium, or the severe disability addition in Pension Credit, your claim can stop it. That premium can be worth more than Carer’s Allowance, so the household can end up worse off overall.

Check the combined position before claiming. Citizens Advice and Carers UK will do this calculation with you for free.

In Scotland

Scotland has replaced Carer’s Allowance with Carer Support Payment, delivered by Social Security Scotland. The earnings rules are broadly similar but the claim route and some of the detail differ. If you live in Scotland, claim through Social Security Scotland instead.

The bottom line

Carer’s Allowance is not means tested on savings, which makes it worth checking even if you have money in the bank. It is tested hard on earnings, with a cliff edge that catches people out every year.

Work out your position with the Carer’s Allowance calculator before you claim, and check the effect on the person you care for at the same time.