Tens of thousands of unpaid carers are set to have their debts cancelled or significantly reduced following a sweeping government review into historic overpayments.
The Department for Work and Pensions (DWP) announced it would re-examine some 200,000 cases where individuals owed money due to “confusing” earnings guidance.
Of these, the government estimates approximately 25,000 carers will see their debts wiped, reduced, or receive refunds for amounts already repaid.
This widespread issue, where individuals were penalised for exceeding their carer’s allowance earnings limit by even a few pence, has been condemned as a “scandal” by campaigners.
An independent review, led by former charity boss Liz Sayce and published last November, concluded that many carers felt they were “treated as criminals, with resulting feelings of fear and shame”.
Ministers have since accepted 38 of the report’s 40 recommendations, which identified “ill-defined” guidance and “systemic flaws” in the carer’s allowance system between 2015 and summer 2025, preventing accurate earnings reporting.
The government confirms that approximately half of the promised changes have already been implemented, with further reforms underway to modernise the benefit and avert similar problems in the future.
Historic overpayments led to many carers – who had to earn £151 a week or less to qualify for the allowance – unwittingly racking up unmanageable levels of debt, and some quit their jobs as a result.
The earnings threshold rose to £196 a week last April, and again to £204 net per week for 2026/27.
Carer’s allowance, which is £86.45 a week, is paid to someone who spends at least 35 hours a week regularly caring for someone with an illness or disability.
The review said the so-called “cliff edge”, which meant someone earning just a penny over the limit led to them losing the entire allowance, had a “severe” impact on carers and acted as a disincentive to take on paid work.
Officials say that DWP has all the information it needs to carry out the reassessment in most cases, and that carers do not need to contact the department themselves.
The department will contact people if any further details are needed, they said.
Work and Pensions Secretary Pat McFadden said: “We inherited a system that left unpaid carers building up debt through no fault of their own, something we’re determined to put right.
“Carers are vital to our communities and we are committed to taking action to rebuild their trust.”
Carers UK chief executive Helen Walker said hundreds of carers had suffered “severe financial strain and emotional distress” as a result of the overpayments and that further reform was “sorely needed”.
“We are pleased to see this Government taking decisive action to start putting right the failings of the past and provide carers with the redress they deserve.
“The reassessment process marks an important step in tackling these systemic failures,” she said.
“As we mark the 50th anniversary of carer’s allowance this week, it is encouraging to hear that the Government is also exploring further options for reform.
“This is sorely needed to ensure that it properly supports and recognises the contribution of unpaid carers, while protecting them from financial hardship.”
Carers Trust chief executive Kirsty McHugh said the reassessment would have a “huge impact” on carers “who were penalised for no fault of their own”.
“It has been reassuring to see the Government accept the vast majority of the recommendations of the Sayce Review, whilst the £75 million allocated by last year’s budget is further evidence the Government is serious about righting these wrongs,” she said.
