Thank you for contacting me about Carer's Allowance and the National Living Wage.
I welcome that the Government has accepted the recommendation of the Low Pay Commission and increased the National Living Wage by 9.7 per cent on 1 April 2023 from £9.50 per hour to £10.42 per hour. Additionally, I welcome that from April 2024, the NLW will increase to over £11 an hour, boosting the pay of those on the NLW by over £1,000 a year.
It is important to note that the National Living Wage and Carer's Allowance have different purposes and therefore a direct comparison cannot be made. The primary purpose of Carer's Allowance is to provide a measure of financial support for people who give up the opportunity of full-time employment in order to care for a severely disabled person. It must be stressed that it is not a carer’s wage or payment for the services of caring, nor is it intended to replace lost or forgone earnings in their entirety.
The Carer's Allowance earnings limit is not linked to the number of hours worked. Instead, it is set at a level that aims to encourage people to maintain a link with the labour market through part-time work. The earnings limit for Carer's Allowance is a net figure, meaning it takes into account income tax, National Insurance contributions and half of any contributions to an occupational or personal pension, and there are also a number of other deductions which can be made. That means that people can earn significantly more than £139 per week gross and still be eligible for Carer's Allowance.
The current rate of Carer's Allowance is £76.75, having increased by 10.1 per cent in April 2023.