Carers will no longer lose all their allowance for earning £1 too much, Chancellor confirms
A taper will replace the Carer's Allowance earnings cliff, and the Treasury has also confirmed higher mileage rates and two weeks of parental pay for self-employed fathers and partners.
Unpaid carers who go even a penny over the weekly earnings limit currently lose their whole Carer's Allowance. The Treasury confirmed on Monday night that this rule will be replaced, one of five changes it published two days before the Budget.
The allowance is £86.45 a week in England, Wales and Northern Ireland. Carers can earn up to £204 a week after tax, National Insurance and some expenses, which the Treasury says works out at about 16 hours on the National Living Wage. At the moment, earning £205 means losing the full £86.45.
Under the new system, £1 of allowance will be withdrawn for each £1 earned above the limit. MoneySavingExpert worked out that someone earning £250 a week would keep £40.45, and the payment would only stop altogether at weekly earnings of £290.45.
Carers should not expect the change soon. MoneySavingExpert reports that the taper is due from the 2030/31 financial year, and the Guardian says it will not arrive before the end of the decade because of the work needed to build the system.
The cliff edge has led to large overpayment debts in recent years. An independent review found that around 180,000 carers ran up debts totalling £300m between 2019 and 2025, according to the Guardian.
Mileage and parental pay
The other changes will reach more people sooner.
Mileage. The tax-free rate of 55p a mile for the first 10,000 business miles in a year is being made permanent. Above 10,000 miles, the rate goes up from 25p to 35p. The Treasury says about three million employees and self-employed people who use their own car for work will benefit, with someone driving 6,000 business miles saving £120 a year in tax and someone doing 15,000 miles saving up to £300.
Parental pay. Two weeks of pay, currently worth up to £194 a week, will be extended to more than 150,000 extra parents a year. They include self-employed fathers and partners, who have not qualified before.
Food and fuel tariffs. Import tariffs are being removed on more than 100 products. They include baked beans, gherkins, garlic, marmalade, boiled sweets, toffees, plant-based milks, chocolate wafers, fertiliser and kerosene heating oil. With tariff cuts already made in June, the government estimates a household could save up to £21 a year on food.
Post Office drop boxes. The number of self-service parcel drop boxes will reach 500 by the end of this year and 1,000 by the end of the financial year, and 600 branches will be upgraded.
The Treasury also used Monday to launch a Warm Homes loans scheme, which offers homeowners across the UK low-interest and interest-free finance for solar panels, batteries and heat pumps.
The full Budget will be delivered by Chancellor John Healey on Wednesday 28 October.
