Tens of thousands of unpaid carers who were overpaid benefits due to “unclear” government guidance are set to have their debts reduced, cancelled or refunded.
The Department for Work and Pensions (DWP) has launched a reassessment of 200,000 cases where people were overpaid Carer’s Allowance.
The government says around 25,000 carers could see their debts reduced, cancelled entirely or receive refunds.
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It comes after ministers accepted 38 of the 40 recommendations made by the independent Sayce Review, which was published in November 2025.
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In most cases, affected carers will be contacted by the DWP so don’t need to take any action.
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.
“That’s why we accepted the vast majority of the Sayce Review’s recommendations and are now getting to work implementing them, kicking off the reassessment exercise to review cases impacted by unclear guidance.
“Carers are vital to our communities, and we are committed to taking action to rebuild their trust.”
What is Carer’s Allowance?
Carer’s Allowance is a government benefit paid to carers whose caring responsibilities mean they can’t work full-time.
You could claim the benefit, currently worth up to £86.45 a week, if you care for someone for at least 35 hours a week and they receive a qualifying benefit.
This list of benefits includes the daily living component of Personal Independence Payment (PIP), Attendance Allowance and Armed Forces Independence Payment.
Carers must be 16 or over to receive the benefit which is paid weekly in advance or every four weeks.
Why is the government launching a reassessment?
A review led by Liz Sayce (OBE) published in November 2025 found confusing official government guidance in place between April 2015 and September 2025 led to some carers being overpaid Carer’s Allowance.
Carers lose their eligibility for Carer’s Allowance if they breach the “earnings limit”, which is currently £204 a week.
The limit has been described as a “cliff-edge” as if you earn one penny over the limit, your entitlement to Carer’s Allowance is lost.
Carers have to report any changes that could impact their entitlement, such as breaching this earnings limit, however, the Sayce Review found carers were unable to do this due to “unclear” legislation and guidance.
Where carers don’t earn the same each pay period, earnings can be averaged to assess their eligibility for Carer’s Allowance.
However, the review found legislation underpinning how this can be done leaves “extensive scope for interpretation” which can lead to confusion for carers and ultimately overpayments of Carer’s Allowance.
Some carers overpaid Carer’s Allowance have racked up significant debts due to the DWP not informing them of the overpayments.
Figures from the DWP in February 2025 showed 86,900 had an outstanding Carer’s Allowance overpayment debt due to breaching the earnings limit.
As well as the reassessment being launched by the government, ministers are also looking at whether earnings calculations can be automated moving forward and whether the current cliff-edge earnings rule can be replaced with a tapered system, which would reduce the risk of overpayments in the future.
The government has also updated its guidance on fluctuating earnings to ensure that averaging is properly considered. The government says it has worked with carers and carers’ organisations to make sure its communications are clear and accessible.
Reassessment launch ‘an important step’
The launch of the reassessment by the government comes following years of campaigning from charities and pressure groups.
Helen Walker, chief executive of charity Carers UK, said: “We are pleased to see the 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.
“Carers UK has been campaigning on the issue of Carer’s Allowance overpayments for more than seven years, and during that time we have heard from hundreds of carers who have experienced severe financial strain and emotional distress as a result.”
Meanwhile, Kirsty McHugh, chief executive of charity Carers Trust, “warmly welcomed” the reassessment exercise being carried out by ministers.
McHugh added: “This will have a huge impact on thousands of unpaid 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.”
