Warning for tens of thousands on benefits forced to repay £251.7million due to ‘cliff edge’ rules

DEBT accrued by households claiming Carer's Allowance has reached a staggering £251.7million.

The mounting pile of money owed has soared by £151.7million from £100million just six years ago, according to new figures from The National Audit Office (NAO).

Households who claim Carer's Allowance can receive up to £81.90 per week from the government.

To qualify, you must care for someone for at least 35 hours a week. You don't need to be related to them or live with them.

But there is a cut-off point for how much you can earn while claiming the benefit, which is currently set at £151 a week.

If you earn over this amount, the Department of Work and Pensions (DWP) will look to claw the moeny back.

This is different to other benefits like Universal Credit, which has a tapered approach to earnings so that those who do work don't lose all of their money at once.

However, in some cases, the DWP doesn't flag if people have breached the earnings limit until several years later.

This means those people have overpaid massive sums which need to be paid back.

If you don't engage with this repayment process, you can be taken to county court - increasing the costs further.

The NAO said these rules create a "cliff edge" with claimants either entitled to all of the money or none of it.

Figures by the NAO found the number of people with outstanding debt due to an overpayment has risen every year since 2018, and is up by almost three quarters from 80,169 people to 136,730 in 2023/24.

It was also found that 54 cases were referred for prosecution in 2023/24, down from 246 in 2018/19.

There were 75 dministrative penalties, which are an alternative to prosecution, down from 774 in 2018/19.

And there were 30,129 civil penalties, up by around 50% from 20,023 in 2018/19.

The NAO said DWP can write off debt if it determines that there is no realistic possibility of recovering it or where a claimant has been dead for more than two years.

Helen Walker, chief executive of Carers UK said the report is “yet further evidence of a broken system that is failing unpaid carers”.

And, she described the rise in the number of people with outstanding debts as “a serious failure which has left thousands of carers experiencing emotional distress and financial hardship for years”.

GOVERNMENT ORDERS A REVIEW

The issue of carer’s allowance overpayment is already the subject of a Government-ordered review, due to report to ministers by the summer of next year.

The terms of the review were revealed earlier this week with the DWP set to uncover why this has happened and what changes can be made.

Stephen Timms minister for social security and disability, said: Carers wishing to pursue more financial independence should be encouraged to do so and not be unknowingly punished.

“We need to get to the bottom of what has been going on."

The Carers Allowance earnings threshold will be increased from £151 to £196 come April 2025.

This is the biggest life since the limit was introduced in 1976.

WHAT TO DO IF YOU BREACH THE EARNINGS LIMIT?

If you breach the earnings limit, you should try and proactively report it to the DWP as it is classed as a change in circumstances.

You can report any change in circumstances online via the Government's website.

But you'll need your National Insurance (NI) number to hand, details of the person you're caring for and details of the change.

If you have been overpaid Carer's Allowance, you will have to pay it back in full or in instalments via the DWP Debt Management platform.

This is also on the Government's website.

If you don't do this, the DWP can take deductions from your work salary, or even pass your case on to a debt collector.

If you don't engage with the debt collector, it may then take your case to the county courts.

You can dispute an overpayment if you don't agree with it, but you'll need evidence as to why you claim to not have overpaid.

You can do this via what's known as a "mandatory reconsideration", which you can submit to the DWP online, via phone or by letter.

The specific contact details you'll need to send any correspondence to will be on the decision letter you receive from the DWP.

Once the DWP has received your mandatory reconsideration, you will receive a "mandatory reconsideration notice" informing you whether it has changed its decision.

If you disagree with that outcome, you can appeal to the Social Security and Child Support Tribunal.

A judge will listen to both sides of the argument before making a decision.