Government fails to tackle unpaid carers’ earnings anomalies

The government should do more to secure the financial position of unpaid carers, and tackle the difficulties caused by the interactions between carer’s allowance, the minimum wage and tax credits, the Low Incomes Tax Reform Group (LITRG) is warning

The group says the government has recently published its action plan setting out the cross-government programme of work to support carers in England over the next two years which contains ‘sensible recommendations’ but describes the actions the government has come up with around financial well-being as ‘worryingly vague’.

LITRG cites as an example the government statement that ‘The Department for Work and Pensions will ensure that benefits for carers (including carer’s allowance and universal credit) meet the needs of carers and support employment for those carers who are able to work’.

LITRG is particularly concerned by the failure to address the question of uprating the carer’s allowance earnings threshold for the national living wage each year, despite this being a recommendation made by the work and pensions committee in their recent report on employment support for carers.

Currently there is an earnings limit built in to carer’s allowance of £120 per week. In April 2018, the NLW for those aged 25 or over increased to £7.83 per hour which means someone working 16 hours a week will have earnings of £125.28.

LITRG said this means those claiming carer’s allowance and working 16 hours are at risk of losing all of their carer's allowance. While a person in this position could cut their hours so that they still qualify, cutting their hours to below 16 could mean they no longer qualify for another vital strand of financial support – working tax credit (WTC).

Anne Fairpo, LITRG chair, said: ‘Many carers rely on the financial support of carer’s allowance and something must be done to rectify the difficult and often financially detrimental interactions between carer’s allowance, the NLW and the various 16 hour rules.

‘We urge unpaid carers to view the guidance on our website in which we look at the different deductions that may be made from earnings which might help some people retain carer's allowance payments without having to cut their hours.’

Carers action plan 2018 to 2020 is here: https://www.gov.uk/government/publications/carers-action-plan-2018-to-20...

LITRG guide to tax and benefits for carers is here.

Report by Pat Sweet

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