Estimated 25,000 unpaid carers to have debts cut or cancelled

Tens of thousands of unpaid carers are to have their debts cut or cancelled in a sweeping UK Government review of historical overpayments.

Some 200,000 people who were left owing money as a result of “confusing” earnings guidance will have their cases looked at again, the Department for Work and Pensions said.

The Government estimates that of these, about 25,000 carers will have their debts cancelled or reduced, or receive refunds where they have already repaid money.

The issue of people being penalised for going over their earnings limit for carer’s allowance, even by as little as a few pence per week, has been branded a “scandal” by campaigners.

An independent review led by former charity boss Liz Sayce concluded last November that many carers felt they were “treated as criminals, with resulting feelings of fear and shame”.

Ministers accepted 38 out of 40 recommendations in the report, which found that between 2015 and summer 2025, carer’s allowance guidance was “ill-defined” and “systemic flaws” prevented many from properly reporting their earnings.

The Government says about half of the promised changes have already been made, with further reforms under way to modernise the benefit and prevent similar problems in 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.