Carers Allowance maximum earning allowance

IOWJJBTM2025

My understanding is that the latest info for Carers Allowance 2026 is :-

• Benefit £86.45 per week (£4495.40 per year)
• You can now earn a maximum of £204 per week (£10,608 per year)

My sister has got carers allowance for as long as I can remember and she works self employed. I pay her from my small business for doing my admin book keeping and expenses. She includes her earnings on her self assessment.

The agreement was to previously for her to be paid £500 per month but we noticed that the rates have changed so I can pay her more. I really want to pay her more but she is very nervous of having to pay back the benefit. She has a friend that went £10 over on her earnings and had to pay the whole benefit back a couple of years ago.

She has some savings and last month got £57 interest. I know that she has a Nationwide account and gets the yearly £100 bonus which she says also counts as interest.

This would make a guess of £784 in interest to be earned for this year.

Her big concern is that she understands the new income limit of £204 per week but cannot find if she would get the £1000 interest on savings allowance on top.

Can I pay her £880 per month or should I pay her lower amount of £800 per month to account for the interest or is there a different amount I could pay her?

Any advice would be gratefully received.

Yamor

Only "earnings" count towards the threshold, and interest is not included in earnings.

She would therefore be fine with earnings of up to £880/month

IOWJJBTM2025

Thanks for that.

Have just worked out the £880 per month scenario.

This would mean total earnings of £10,560 per year.

Add the Carers Allowance of £4,495.40 makes total income of £15,055.40.

Her £784 interest income is under the £1000 allowance so not taxable.

If she went over the £1000 interest allowance this would be additional income.

Subtract Personal Tax allowance of £12,570 from £15,055.40 leaves £2,485.40 that is taxable.

@ 20% tax she would have to pay £497.08 tax on her self assessment.

She would therefore need to save £42 per month towards her income tax payment.

Is this correct?

NedS

Or she could pay the taxable £2485.40 into a pension, pay no income tax at all, and receive tax relief of £621.35 on that £2485.40 contribution.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81984199#Comment_81984199

How could she both pay no tax and get basic rate relief at source 🤔

A relief at source contribution does not reduce taxable income, it increases the basic rate band, which doesn't seem to be of any benefit here.

The £621.35 is of course easy money, assuming it stays in the pension and doesn't impact the Carers Allowance.