The DWP has slapped households with bills for going as little as 1p over the earnings limit, but it could be changed in future.
The DWP could send texts to people over their earnings limit (Image: Getty)
Households up and down the UK are being forced to pay back thousands of pounds to the DWP thanks to a ‘cliff edge’ which can be triggered by a single penny.
A quirk of the benefits system concerning Carer’s Allowance means that if any carer claiming the benefit is overpaid even by a single penny, they must repay their entire benefit – a situation Martin Lewis described as a ‘cliff edge’ instead of being tapered like other benefits such as Child Benefit.
In a letter to the Chancellor in 2024, Martin described the stark problem: “Earn £151 a week or less [now £196], and those eligible can claim the £81.90 per week allowance [now £83.30]. Yet, earn a penny more – £151.01 – and they get nothing. This is perverse – most benefits, including Universal Credit, have a taper, so if you go over the threshold, the payment received is gradually reduced. Carer’s Allowance only has a cliff-edge, leaving many to plummet off.”
He added: “If that happens, the terrible disconnectedness and poor benefits systems mean they’re often still paid the allowance for months, or even years. Then, even though they may have only earned a pound or two more, they’re later asked for unaffordable £100s or £1,000s back.”
A review released by the DWP last week has now revealed that thousands of families have been overpaid Carer’s Allowance due to this cliff edge, with bills landing on doormats to recover the money. In one case highlighted by MSE, one carer was stung with a bill for £20,000.
However, the DWP could in future wipe off debts for some people in a reassessment of 185,000 carers following a review in to the issue.
Money Saving Expert reported: “The Government has now agreed to reassess the overpayments of 185,000 unpaid carers – though, according to its own analysis, it’s estimated that only around 26,000 unpaid carers could be eligible for any adjustments.
“It’s said that where it finds overpayments were lower than originally calculated, carers will either have their debts reduced or wiped entirely – with any money already repaid, automatically refunded. Most people will have their cases reassessed without needing to contact the DWP, with details on this to follow in due course.
“The Government has also agreed with recommendations to resolve the cliff-edge, saying that this work is “vital” and that it’s already working on options to remove or reduce its impact. It added that it has begun to explore potential short- and long-term solutions, including the possibility of an earnings taper – as is currently the case with Universal Credit.”
