What the Chancellor’s Budget means for Carers

The Chancellor’s Budget included several measures aimed at helping households cope with rising living costs, but among the announcements was a landmark commitment that could transform life for thousands of unpaid Carers.

While much of the media attention focused on energy bills and tax changes, one announcement stood out: the planned reform of Carer’s Allowance, addressing a long-standing issue that has frustrated Carers for decades.

Change to Carer’s Allowance

For many Carers, the biggest Budget announcement was the commitment to reform the Carer’s Allowance earnings limit.

Currently, Carers face what is often described as a "cliff edge". If a Carer earns more than the earnings threshold, they can lose their entire Carer’s Allowance entitlement. This can leave Carers in the impossible position of having to limit their working hours or decline additional income to avoid losing financial support.

The Budget announced plans to replace this system with a taper. So, instead of losing all support at once, Carers who earn above the threshold will see their allowance reduced gradually as their earnings increase.

According to Carers UK, around 48,000 Carers in England and Wales are expected to benefit.

This is arguably one of the most significant reforms to Carer’s Allowance since the benefit was introduced in 1976.

The change means that, in future, Carers should be able to work additional hours, accept pay increases or take on more flexible employment opportunities without facing an immediate loss of support.

The downside is that implementation is not expected until 2030-31, as the Government says a new IT system will be required before the changes can be introduced.

For many Carers, paid employment and caring responsibilities are already difficult to balance.

Recent discussions with local Carers highlighted the reality of trying to support a loved one while maintaining an income. One working parent described how many support activities take place during working hours, making them inaccessible for those in employment. Others spoke about the difficulties of balancing work alongside caring for family members with complex needs.

Some Carers have given up work altogether because caring became incompatible with employment. One local Carer providing support to both her mother and disabled brother explained that she had to leave her job when her employer wanted her to work additional hours that she simply could not manage alongside her caring responsibilities.

Another Carer supporting his wife with advanced dementia explained that every time he arranged paid care, he had to spend the respite period working in order to cover the cost, rather than using the time to rest or recover.

Against that backdrop, giving Carers greater flexibility to earn without losing their entire benefit is a welcome and long-overdue step.

Help with household energy costs

The Budget also included several measures designed to reduce energy costs:

• A £100 Household Energy Payment for households in council tax bands A-D.

• An extension of the zero VAT rate on electricity bills until July 2027.

• The removal of gas standing charges, with costs instead incorporated into unit rates.

These measures are particularly relevant for Carers.

Many Carers live with disabled, older or seriously ill family members whose needs often increase household energy consumption. Whether due to medical equipment, heating requirements or the fact that someone is at home throughout the day, energy costs can place considerable pressure on already stretched household finances.

For Carers already worrying about how to make ends meet, any reduction in energy costs will be welcome.

Fuel Duty freeze

The Chancellor also extended the 5p fuel duty cut until next July.

For many families, this may seem a relatively small announcement. However, Carers often rely heavily on their cars for hospital appointments, GP visits, pharmacy trips, shopping, social care appointments and day-to-day caring responsibilities which can involve significant travel costs.

At a time when many household budgets remain under pressure, even modest savings on fuel can make a difference.

Support for older Carers

The Budget also introduced a new Pension Tax Allowance, meaning pensioners receiving income up to the value of the full new State Pension will not pay income tax during this Parliament.

This could be particularly beneficial for older Carers, many of whom continue to provide significant levels of care long after retirement age.

Carers UK has also encouraged pension-age Carers to check whether they may be entitled to Pension Credit, including the Carer Addition, which remains underclaimed despite providing valuable financial support.

The bigger picture

While the Carer’s Allowance reform is undoubtedly welcome, it is important to recognise that financial pressures remain a significant challenge for many Carers.

Local Carers continue to report:

• Providing more than 50 hours of care each week.

• Struggling with the financial impact of caring.

• Difficulty accessing respite because of the cost of replacement care.

• Feelings of exhaustion, stress, guilt and isolation.

One recurring theme through the CARES Consultation has been that even when support is available, many Carers find it difficult to prioritise themselves. Focus group participants described feeling trapped, isolated and unable to take meaningful breaks from caring.

Financial support is important, but so too are respite services, flexible support, peer networks and recognition of the enormous contribution that Carers make every day.

A positive step forward

This Budget is unlikely to solve every challenge facing Carers, but it does contain some genuinely positive developments.

The planned introduction of a taper for Carer’s Allowance represents a major shift in how the benefit operates and responds to one of the longest-standing criticisms of the system. Combined with measures on energy costs, fuel duty and pension taxation, the Budget provides welcome recognition of some of the financial pressures Carers face.

The real test will be delivery. Carers will be looking for reassurance that these commitments become reality and that this marks the beginning of wider reforms to better support the millions of unpaid Carers who provide essential care every day.

References: Carers UK Budget Reaction (28 October 2026). Local examples drawn from SCC CARES Respite Focus Groups