Carer's Allowance Overpayment: When You Have to Repay

You can work and get Carer's Allowance as long as your earnings are £204 or less a week after tax, National Insurance and expenses in 2026/27. If your earnings in a week are over £204, the regulations treat you as gainfully employed on every day of the following week, and you are only entitled to Carer's Allowance for a day on which you are not gainfully employed. The independent review describes the effect: a claimant is entitled to either the whole allowance or none of it, and even small pay changes can lead to large overpayments.

The Independent Review of Carer's Allowance Overpayments, led by Liz Sayce OBE, and the government's response were published on 25 November 2025. The review found that Carer's Allowance overpayment debt had increased to £250m in 2023 to 2024, from £150m in 2018 to 2019, and that the number of people with outstanding overpayment debt rose from 80,169 to 136,730 over the same period, an increase of 71%. In 2023 to 2024 the main cause of identified overpayments referred to Debt Management was claimants having earnings over the permitted limit, in 57.6% of cases referred. The government agrees that its guidance on averaging earnings between 2015 and summer 2025 did not accurately reflect the statutory position for people with fluctuating earnings.

Section 71 of the Social Security Administration Act 1992 entitles the Secretary of State to recover a payment where a person has misrepresented, or failed to disclose, a material fact and the payment was made in consequence. The review says DWP's general principle for Carer's Allowance and other legacy benefits is that overpayments are recoverable except in the case of Official Error. It also says that where DWP has no record of earnings being reported, it has classed the overpayment as claimant error and deemed it recoverable.

An overpayment decision turns on three questions:

• Has the decision that awarded the benefit been revised, superseded, or reversed or varied on appeal? Except where regulations otherwise provide, an amount is not recoverable under section 71 unless it has
• Did you misrepresent or fail to disclose a material fact, and was the payment made in consequence of it?
• How much is recoverable, and over what period? The decision must determine whether any amount is recoverable, and if so what, and specify the period during which it was paid

A penalty of £50 can be imposed when all three of these are true:

• ✓Yes: You negligently made an incorrect statement or representation, or negligently gave incorrect information or evidence, in or in connection with a claim or an award
• ✓Yes: You failed to take reasonable steps to correct the error
• ✓Yes: The error resulted in the making of an overpayment

A penalty cannot be imposed if:

• ✗No: You have been charged with an offence or cautioned, or been given a notice under section 115A, in respect of the overpayment

The independent review found that DWP often adds a civil penalty, a fine of £50, to an overpayment, and that in the FYE 2025 46% of all civil penalties issued by DWP were issued to individuals claiming Carer's Allowance. It found this inappropriate in cases where the cause was lack of clarity in DWP's regulations, guidance and communications. Our benefit fraud and overpayments guide covers how DWP treats penalties and investigations.

The government's response to the review accepted or partially accepted 38 of the 40 recommendations. GOV.UK's update note gives 13 April 2026 as the date the Carer's Allowance reassessment exercise begins.

What the reassessment means for you:

• DWP is reassessing Carer's Allowance overpayments that took place between 10 April 2015 and 2 September 2025
• If you have been affected, you may get a refund or your debt reduced or cancelled
• You do not need to contact the Carer's Allowance Unit about a reassessment, because DWP will contact you with a decision or if it needs more information
• The government response ties the exercise to the guidance on averaging earnings, and says it may lead to a reduction in an overpayment or, in some cases, to its complete elimination
• Allowable expenses will not form part of the offer, because the government did not agree that the expenses guidance was unclear or ambiguous

Yes. Where an amount is recoverable from a person who holds an account with a bank, the Secretary of State may make a direct deduction order in respect of that account. The bank account and driving disqualification provisions of the Public Authorities (Fraud, Error and Recovery) Act 2025 came into force on 24 June 2026.

The Secretary of State may not make a direct deduction order if:

• ✗No: It is reasonably possible to recover the amount from you by way of deductions from earnings
• ✗No: You are entitled to and in receipt of a relevant benefit

Before using these powers the Secretary of State must have:

• Given you a reasonable opportunity to settle your liability in respect of the amount
• Notified you that the power may be used if you do not settle your liability
• Given you a summary of how the power would be exercised

Other ways DWP recovers an overpayment:

• If you are still receiving benefits, the regular amount you get will be reduced until you have paid back the money
• If you no longer receive benefits, DWP Debt Management writes to you explaining how to repay. If you do not pay or make contact, it may ask your employer to make deductions from your pay, pass your case to an independent debt collector, or pass it to the DWP Debt Enforcement Team
• If you do not contact the Debt Enforcement Team or follow your repayment plan, the team will submit a claim against you to HM Courts and Tribunals Service and add extra costs to the money you owe
• The Secretary of State may use the driving disqualification powers only if satisfied that it is not reasonably possible to recover the amount by way of a direct deduction order

Ways to cut the risk of an overpayment:

• Check your weekly earnings against the £204 limit (2026/27) after tax, National Insurance and expenses, including overtime, bonuses and back pay
• Expenses can include 50% of your pension contributions, and care costs of up to 50% of your earnings if the carer is not your spouse, partner, parent, child or sibling
• You must report changes in your circumstances. They can include starting a job, starting or ending full-time education, changes to your income, you or the person you care for changing address, stopping being a carer, and the person you care for no longer getting their disability benefit
• You could be taken to court or have to pay a penalty if you give wrong information or do not report a change in your circumstances
• The review heard that Universal Credit was designed to mitigate the effect of the earnings cliff edge for carers on low incomes, but that claiming both Carer's Allowance and Universal Credit increased risk, as well as administration, because the systems do not link up