Carer's Allowance overpayments: thousands of debts are being cancelled -- here's what to do if you're affected

If you are an unpaid carer and you have ever received a letter about a Carer's Allowance overpayment, or if you are worried that you might have one, there is some genuinely good news worth knowing about right now.

The DWP has begun a major reassessment of over 200,000 Carer's Allowance cases, following its acceptance of 38 of the 40 recommendations made by the independent Sayce Review. Around 25,000 carers are expected to have their debts reduced, cancelled entirely, or receive refunds where money has already been repaid. This has been underway since April 2026 but has not been widely covered, meaning a lot of carers who are affected may not yet know about it.

Here is everything you need to understand: why the debts happened, who is covered by the reassessment, and what you should do.

How did these overpayments happen?

Carer's Allowance is worth £86.45 a week and is paid to people who provide at least 35 hours of unpaid care per week to someone with a qualifying disability or illness. You can receive it while working, but only if your net earnings stay below a weekly limit, which is currently set at £204 for 2026/27.

The problem is in how that limit works. If your earnings go even a penny over the threshold in any given week, you lose the entire week's Carer's Allowance payment, not just the amount by which you exceeded the limit. There is no taper and no middle ground. A Christmas bonus, a run of overtime, or annual leave paid as a lump sum could push you over the limit in a single week, even if your typical earnings were well within it.

Between April 2015 and September 2025, the DWP's own guidance on how to handle irregularly fluctuating earnings was unclear and did not accurately reflect the law. Carers built up debts without realising they had exceeded the limit, and in many cases were not told about the overpayment until years later when large sums had accumulated. By February 2025, nearly 144,000 carers had outstanding overpayment debts totalling around £251 million, a 71% rise in cases over six years.

The Sayce Review, commissioned in late 2024, concluded that this was a systemic failure, not a failure by individual carers. The government has accepted that finding.

What is the DWP now doing about it?

The DWP began its reassessment exercise on 13 April 2026. It is reviewing all Carer's Allowance overpayment cases that arose between 10 April 2015 and 2 September 2025 where the debt related to unclear guidance on fluctuating earnings.

In most cases, the DWP already holds the information it needs to carry out the reassessment. You do not need to contact the DWP -- it will get in touch if it needs anything further from you, and will write to you with a decision once your case has been reviewed.

The possible outcomes for affected carers are:

• Your remaining debt is reduced

• Your remaining debt is cancelled entirely

• You receive a refund if you have already repaid money that is found to have been incorrectly calculated

What if you have received an overpayment letter and are not sure what to do?

If you currently have an outstanding Carer's Allowance overpayment and have been asked to repay money, the reassessment may affect you. You do not need to take any action to be included, but there are a few things worth doing while you wait.

• Do not stop receiving care or make any changes to your claim on the basis of an overpayment letter alone, without first understanding whether your case falls within the reassessment period of April 2015 to September 2025.

• If you are also claiming Universal Credit, be aware that Carer's Allowance and UC interact in ways that are not always clear. If a Carer's Allowance overpayment is reduced or cancelled, there may be a corresponding underpayment of UC that you are entitled to. The systems do not talk to each other automatically, so it is worth contacting UC separately once you have had a decision on your Carer's Allowance case. GOV.UK

• If you are experiencing financial hardship because of an active repayment demand right now, the DWP has committed to pausing debt recovery for carers in genuine hardship while cases are being reassessed. You can ask for this by calling the Carer's Allowance Unit on 0800 731 0297. GOV.UK

• If you want independent advice on where you stand, Carers UK (carersuk.org) and Citizens Advice (0800 144 8848) can both talk you through your position for free.

What else has changed for Carer's Allowance in 2026?

Alongside the reassessment, the earnings limit has been increased and, for the first time since the benefit was introduced in 1976, permanently linked to an external measure. The threshold is now set at 16 hours per week at the National Living Wage, which means it will automatically increase in future years rather than being left to fall further behind rising wages as it has in the past. For 2026/27 the limit is £204 per week net.

The cliff-edge structure of the benefit remains in place for now, but the government has committed to exploring a taper system that would reduce Carer's Allowance gradually as earnings rise rather than cutting it off entirely at a single point. No timetable for that reform has been confirmed yet.

If you are not currently claiming Carer's Allowance but think you might be eligible:

You can check your eligibility quickly and for free using the Turn2Us benefits calculator at turn2us.org.uk. Carer's Allowance supports around 1.3 million people in the UK, but it is consistently underclaimed, particularly among carers who work part-time and are unsure whether their earnings disqualify them.