If you’ve received a letter from the Department for Work and Pensions (DWP) saying you owe money on Carer’s Allowance, you’re not alone. And you may not actually owe what they say you do.
Between 2015 and 2025, over 212,000 Carer’s Allowance overpayment cases were recorded. The average new overpayment is nearly £1,000. Outstanding debt across all cases reached £251.7 million in 2023-24.
Those numbers aren’t just statistics. They represent parents who were caring for their children, trying to earn a living, and fell foul of a system that punishes them for going £1 over an arbitrary weekly limit. Between 2015 and 2025, 212,000 overpayment cases were recorded, with outstanding debt reaching £251.7 million. The DWP is now reassessing the earnings-related cases that were handled under flawed guidance.
How overpayments happen
Carer’s Allowance has an earnings limit. It was £196 per week in 2025-26 and is £204 per week from April 2026. These are net figures, after deductions for tax, NI, pension contributions, and eligible childcare costs. For a full guide to the eligibility rules, the rate, and how Carer’s Allowance interacts with other benefits, see our Carer’s Allowance guide for SEND parents.
The critical problem: there is no taper. Most benefits reduce gradually as earnings increase. Carer’s Allowance doesn’t. If you’re under the limit, you get the full £86.45 per week. If you’re over by even one penny, you get nothing for that week.
This cliff-edge design means that anyone whose earnings fluctuate (overtime, bonuses, shift patterns, holiday pay) is at constant risk of accidentally triggering an overpayment. And the DWP can ask for the money back weeks, months, or even years later.
The scale of the problem
The numbers tell a stark story.
One in five carers who combined work with caring experienced an overpayment. Half of affected families stopped claiming Carer’s Allowance entirely, losing not just the weekly payment but also the NI credits, the carer element in Universal Credit, and the benefit cap exemption.
If you stopped claiming Carer’s Allowance because of an overpayment scare, you may be losing more than you think. Even if your earnings are over the limit, “underlying entitlement” gives you NI credits, benefit cap exemption, and the UC carer element. Consider reclaiming.
What the DWP is doing about it
An independent review found that the DWP issued overly restrictive operational guidance on earnings averaging from 2020. Staff were told that averaging “never or virtually never happens in practice,” even though the law allows it for fluctuating earnings.
The government committed £75 million to reassess overpayments from the 2015-2025 period that were calculated under this flawed guidance. Approximately 185,000 cases are within scope.
The reassessment will reclassify affected cases as “not recoverable,” stop ongoing recovery, and issue automatic refunds for payments already made towards flawed overpayments.
Are you affected?
The reassessment covers earnings-related overpayments where the DWP failed to apply proper earnings averaging. If your overpayment was caused by your earnings going over the weekly limit and you reported your earnings (or believe you did), your case may be within scope.
Your case is likely within scope if all four of these apply: the overpayment was earnings-related (not fraud or failure to report a change in caring hours); it occurred between 2015 and 2025; the DWP did not apply earnings averaging despite your income fluctuating; and you reported your earnings or attempted to report changes.
If you’re unsure whether your case qualifies, you don’t need to do anything yet.
The DWP says you do not currently need to contact the Carer’s Allowance Unit. They will contact affected carers directly. However, if you have an active overpayment recovery and believe it’s within scope, continue making payments until contacted (Carers UK advice). Stopping payments without DWP agreement could cause problems.
What to do if you receive an overpayment notice
If you receive a new overpayment notice, you have rights.
Request a mandatory reconsideration (MR) within one month of the decision. This is the first step to challenge the amount or the decision itself.
Negotiate repayment terms. If the overpayment stands, the standard recovery rate is one-third of your weekly benefit. You can negotiate a lower amount with DWP Debt Management on 0800 916 0647 if you can’t afford the standard rate.
Request your records. Submit a subject access request (SAR) for your DWP records, including call records. This can show whether you reported earnings changes that the DWP failed to act on.
Check if averaging applies. Under the Computation of Earnings Regulations 1996, earnings can be averaged over a recognisable work cycle, five weeks, or another period producing a more accurate weekly figure. If your earnings fluctuated and the DWP assessed each week individually instead of averaging, the overpayment calculation may be wrong.
Act within one month. You have one month from the overpayment decision to request a mandatory reconsideration. This deadline is critical: you can challenge later at tribunal, but only after requesting the mandatory reconsideration first. Missing this window closes your options.
How to avoid future overpayments
The April 2026 earnings limit increase to £204 per week was part of a wider package of benefit rate changes. Our post on benefit rate changes from April 2026 covers the full picture, including DLA and Universal Credit rates that affect SEND families.
The cliff-edge won’t change until Parliament introduces a taper (which the independent review recommended, but the government has not committed to).
In the meantime, protect yourself.
Calculate weekly earnings accurately. Monthly pay times 12, divided by 52. Don’t divide monthly by 4, as that gives an inaccurate figure.
Include all deductions. Tax, NI, pension contributions (50% deductible), eligible childcare costs (up to 50% of net earnings), and work equipment costs all reduce your assessable earnings.
Watch for spikes. Overtime, bonuses, holiday pay in lieu, and shift premiums can push you over the limit in individual weeks. Track these.
Consider pension contributions. Increasing pension contributions reduces assessable earnings. If you’re close to the limit, a small pension increase could keep you eligible.
Getting help
Carers UK has a free helpline (0808 808 7777) and is campaigning for the earnings limit to be replaced with a taper system. They can help you understand your overpayment notice.
Citizens Advice can help you challenge overpayments, negotiate repayment terms, and check whether you’re still eligible for Carer’s Allowance at the new rates.
Contact supports families of disabled children and has raised concerns about overpayment impacts on SEND families specifically.
How our free tool can help
The AI assistant at SEND Parents Help covers Carer’s Allowance in detail, including the earnings limit, allowable deductions, how to calculate your weekly earnings, and what to do about overpayments. You can describe your situation and get guidance specific to your circumstances.
You were caring, not cheating
Most Carer’s Allowance overpayments happen to people who were doing exactly what the system asked them to do: caring for a disabled family member while trying to earn a living. The cliff-edge design traps people. The DWP’s own guidance made it worse.
If you’re affected, the reassessment may fix it. If you’ve received a notice, challenge it. And if you’ve stopped claiming out of fear, consider whether “underlying entitlement” alone is worth reclaiming.
Sources and further reading
Legislation and official guidance
- Social Security Contributions and Benefits Act 1992, Section 70 (Carer’s Allowance legal basis)
- Carer’s Allowance: report a change (how to report earnings changes)
Statistics and reports
- Carer’s Allowance overpayments: NAO report (overpayment data, £251.7m debt figure)
- Independent review of Carer’s Allowance overpayments (212,000 cases, flawed guidance findings)