The Carer's Allowance earnings taper in the Autumn Budget 2026

In the Autumn Budget on 28 October 2026, the Chancellor announced a taper for Carer's Allowance: carers who earn more than the Weekly Earnings Limit will no longer lose the whole allowance, which will instead fall by £1 for each £1 of weekly earnings above the limit. The taper applies in England and Wales from some point in 2030-31. This post explains how the taper works and shows its effect on example carers in 2031-32, the first full year of the taper, using PolicyEngine UK household calculations. It ends with PolicyEngine's estimate of the cost.

Key figures for 2031-32:

• The Weekly Earnings Limit is 16 hours at the National Living Wage, rounded up to the next pound: £234 a week, on the OBR's forecast for April 2031.
• PolicyEngine UK projects Carer's Allowance at £98 a week.
• Under current rules, the earnings limit is a cliff: a carer whose net earnings exceed the limit by any amount, even 1p, loses the whole allowance for that week. With the taper, the allowance falls by £1 for each £1 above the limit. It falls to nothing once a carer's net earnings (pay after income tax and National Insurance, as the test counts them) exceed the £234 limit by the full weekly rate of about £98: at £333 a week or more, which is about £366 a week of gross pay for an employee with no pension contributions.
• A carer who does not claim Universal Credit and earns £240 a week gains £75 a week. At £300 a week, the gain is £38.
• Universal Credit counts Carer's Allowance in full, so it falls by £1 for each £1 of allowance, and the allowance is taxable, so a carer on Universal Credit who pays tax on it loses. At £240 a week of pay, the loss is about £8 a week for an employee whose tax code takes account of the allowance, because Universal Credit then gives back 55% of the tax, as we explain below.
• The government's costing, which the OBR certified, is £38 million in 2030-31 and £79 million in 2031-32 after behavioural responses, of which £5 million and £10 million is extra block grant for Scotland. Our static estimate of the net cost, the figure on PolicyEngine's Autumn Budget 2026 dashboard, is £24 million and £48 million.

Carer's Allowance is a weekly benefit for people who look after someone with a disability. The main rules are:

• Who qualifies. The carer spends at least 35 hours a week caring for someone who gets a qualifying disability benefit, such as Attendance Allowance or the daily living part of Personal Independence Payment. The carer must be 16 or over and not in full-time education (GOV.UK, Carer's Allowance eligibility).
• How much. The allowance is £86 a week in 2026-27 (GOV.UK, benefit and pension rates 2026 to 2027). Later rates are projections, not announced rates. PolicyEngine UK raises the rate each April by the previous September's CPI inflation, the basis on which the Treasury assumes Carer's Allowance rises (policy costings, Annex A, page 114, which also rounds to the nearest 5p; PolicyEngine UK does not round). With a rise of 3.5% in April 2027, September 2026's CPI inflation, and, on the OBR's October 2026 forecast, 3.4% in April 2028 and about 2% a year after that, the rate goes from £86 in 2026-27 to £96 in 2030-31 and £98 in 2031-32.
• Tax. Carer's Allowance is taxable: tax is due on it if the carer's income exceeds the Personal Allowance (GOV.UK).
• Universal Credit. Universal Credit falls by an amount equal to the Carer's Allowance (GOV.UK, effect on other benefits; Universal Credit Regulations 2013, regulation 66(1)(b)(iii)). Universal Credit pays the carer element for the caring itself, whether or not the carer claims Carer's Allowance (regulation 30).
• Overlapping benefits. Carer's Allowance and the State Pension both provide an income in place of earnings, so for a person entitled to both, the rules on overlapping benefits apply before payment and stop the two benefits both meeting the same need (Explanatory Memorandum to SI 2025/352, paragraph 5.1).
• The earnings test. The rules treat a carer whose net earnings in the week before exceed the Weekly Earnings Limit as gainfully employed, so the carer gets no allowance for that week (Social Security (Invalid Care Allowance) Regulations 1976, regulation 8). The test counts net earnings: pay less income tax and National Insurance on the pay, expenses, and half of any pension contributions (GOV.UK; Social Security Benefit (Computation of Earnings) Regulations 1996, regulation 10). The limit is £204 a week in 2026-27. Since April 2025, the government has set it at 16 times the hourly National Living Wage rounded up to the nearest pound, as when it raised the limit from £151 to £196 a week (Explanatory Memorandum to SI 2025/352, paragraphs 5.3 and 5.6).
• The cliff. Today, a carer whose net earnings exceed the limit by even 1p loses the whole allowance for that week. The Budget describes this as losing "their entire benefit for exceeding the limit by a single penny".

The Budget 2026 document lists the taper among its policy decisions (paragraph 6.13), and the Treasury's policy costings (page 16) set out the rules. The taper changes only the earnings test:

1. Above the limit. Net earnings above the limit reduce the allowance by £1 for each £1, a taper of 100%, instead of removing it. A carer whose net earnings exceed the limit by more than the weekly rate still gets nothing.
2. At or below the limit. Nothing changes: a carer at or below the limit keeps the full allowance, with or without the taper.
3. The limit. The costings set the limit at 16 times the National Living Wage, the rule above: £228 a week in 2030-31 and £234 in 2031-32 on the OBR's forecast.
4. Where. The taper applies in England and Wales. In Scotland, Carer Support Payment has replaced Carer's Allowance, and the taper does not cover Northern Ireland, which runs its own social security system.
5. When. The taper starts at some point in 2030-31. The government will confirm the date later: the costings say the measure "will begin within the 2030-31 financial year, with a precise start date confirmed in due course", and the Budget says the government will implement the taper "following the development of a new IT system".
6. Who. The Department for Work and Pensions (DWP) estimates that around 48,000 people benefit in 2030-31, including people who become newly entitled; around 3,000 of the 48,000 live in Wales (Budget 2026 data sources, page 30).

The Budget and the costings describe no other change. We assume that the caring conditions, the rate, its tax treatment, its effect on other benefits and how the test works out net earnings (weekly, after tax, National Insurance and expenses) stay as they are. The Budget says a new IT system will "automatically adjust payments" for the taper (paragraph 3.20), but not how or over what period the government will measure earnings.

Tax year	National Living Wage an hour (OBR forecast)	Weekly Earnings Limit	Carer's Allowance a week (projection)	No allowance at weekly net earnings of
2030-31	£14.23	£228	£96	£325 or more
2031-32	£14.62	£234	£98	£333 or more

The National Living Wage for each year is the OBR's October 2026 forecast for that April (Economic and fiscal outlook, October 2026, detailed forecast tables: economy, Table 1.13); the Treasury's costing also uses the OBR's projections. Sixteen hours at £14.23 comes to just under £228 a week, and at £14.62 just under £234, so the limits, rounded up to the next pound, are £228 and £234. Carer's Allowance after 2026-27 is PolicyEngine UK's projection, uprated with inflation on the same forecast.

The government's costing, which the OBR certified, puts the cost of the taper at £38 million in 2030-31 and £79 million in 2031-32, and nothing in earlier years (OBR, Economic and fiscal outlook, October 2026, detailed forecast tables: policy, Table 1.1, measure 7); the Treasury's Budget 2026, Table 6.1 (row 7) rounds them to £40 million and £80 million. Negative values are costs to the Exchequer, and the 2030-31 figure covers part of a year. The costing includes behavioural responses: changes in hours worked, which our own estimate below does not model, and take-up by people newly eligible, which it models at a fixed rate.

£ million	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Carer's Allowance less Universal Credit	0	0	0	0	−33	−69
Extra block grant for Scotland	0	0	0	0	−5	−10
Total	0	0	0	0	−38	−79

Source: OBR, Economic and fiscal outlook, October 2026, detailed forecast tables: policy, Table 1.1, measure 7. The Treasury's Table 6.1 (row 7) rounds the total to −40 and −80.

The examples follow two carers in the West Midlands in 2031-32. Each is 40, works as an employee with no pension contributions, and cares for 35 hours a week for a parent aged 72 who receives Attendance Allowance and lives in a separate household. Household net income is therefore the carer's own.

• Carer 1 owns their home outright, has no housing costs and does not claim Universal Credit.
• Carer 2 rents privately for £750 a month and claims Universal Credit. The maximum award, before Universal Credit takes income into account, is about £330 a week: the standard allowance, the carer element (£55 a week) and a housing element of £160 a week, below the rent because of the Local Housing Allowance.

Each carer has a table for the earnings test (Part A) and one for net income; carer 2 also has a table for Universal Credit. The tables round to whole pounds, so in some columns a total differs by £1 from the sum of the rounded rows above it.

The examples assume that the current-law limit follows the government's rule, 16 × the National Living Wage rounded up to the next pound (£234 in 2031-32), not the £204 that PolicyEngine UK holds after 2026-27. So for carers earning between £204 and £234, the amounts with and without the taper differ from those on PolicyEngine's Autumn Budget dashboard, while the measure's cost and each household's change are the same either way.

Part A: the earnings test, a week	£200	£230	£240	£260	£280	£300	£330
Gross pay	£200	£230	£240	£260	£280	£300	£330
− Income tax on the pay alone	£0	£0	£0	£3	£7	£11	£17
− Employee National Insurance	£0	£0	£0	£1	£3	£4	£7
= Net earnings for the test	£200	£230	£240	£256	£271	£285	£307
Weekly Earnings Limit	£234	£234	£234	£234	£234	£234	£234
Net earnings above the limit (net earnings − £234, or £0)	£0	£0	£6	£22	£37	£51	£73
Carer's Allowance today (£98 at or below the limit, £0 above it)	£98	£98	£0	£0	£0	£0	£0
Carer's Allowance with the taper (£98 − net earnings above the limit, not below £0)	£98	£98	£92	£76	£62	£47	£26

Part A is the test that decides the allowance. At £200 and £230 a week of gross pay, net earnings do not exceed the £234 limit, so the carer gets the full allowance with or without the taper. At £240, the pay falls short of the £247 a week Personal Allowance and National Insurance threshold, so no income tax or National Insurance comes off the pay, and net earnings are £240, £6 above the limit. Today that £6 costs the whole allowance; with the taper, it costs £6, leaving about £92 a week.

Part B: net income, a week	£200	£230	£240	£260	£280	£300	£330
Without the taper
Gross pay	£200	£230	£240	£260	£280	£300	£330
+ Carer's Allowance	£98	£98	£0	£0	£0	£0	£0
= Pay plus allowance	£298	£328	£240	£260	£280	£300	£330
− Income tax on pay plus allowance	£10	£16	£0	£3	£7	£11	£17
− Employee National Insurance	£0	£0	£0	£1	£3	£4	£7
− TV licence	£3	£3	£3	£3	£3	£3	£3
= Net income	£285	£309	£237	£253	£267	£282	£303
With the taper
Gross pay	£200	£230	£240	£260	£280	£300	£330
+ Carer's Allowance	£98	£98	£92	£76	£62	£47	£26
= Pay plus allowance	£298	£328	£332	£336	£342	£347	£356
− Income tax on pay plus allowance	£10	£16	£17	£18	£19	£20	£22
− Employee National Insurance	£0	£0	£0	£1	£3	£4	£7
− TV licence	£3	£3	£3	£3	£3	£3	£3
= Net income	£285	£309	£312	£314	£317	£319	£324
Change in net income	£0	£0	+£75	+£61	+£49	+£38	+£21

Part B works out what the carer has to live on. The income tax in Part A is the tax on the pay alone, as the earnings test counts it: the tax that PAYE would take if the pay were the carer's only income. The income tax in Part B is the tax actually due on pay plus Carer's Allowance, which is taxable. The difference between them is the tax on the allowance. At £240 a week with the taper, pay plus allowance, about £332, exceeds the Personal Allowance, so income tax of about £17 is due, though none is due on the pay alone. Net income rises by the extra allowance less that tax, about £75 a week.

Part A: the earnings test, a week	£200	£230	£240	£260	£280	£300	£330
Gross pay	£200	£230	£240	£260	£280	£300	£330
− Income tax on the pay alone	£0	£0	£0	£3	£7	£11	£17
− Employee National Insurance	£0	£0	£0	£1	£3	£4	£7
= Net earnings for the test	£200	£230	£240	£256	£271	£285	£307
Weekly Earnings Limit	£234	£234	£234	£234	£234	£234	£234
Net earnings above the limit (net earnings − £234, or £0)	£0	£0	£6	£22	£37	£51	£73
Carer's Allowance today (£98 at or below the limit, £0 above it)	£98	£98	£0	£0	£0	£0	£0
Carer's Allowance with the taper (£98 − net earnings above the limit, not below £0)	£98	£98	£92	£76	£62	£47	£26

Carer 2's earnings test is the same as carer 1's: at £240 a week, the taper gives about £92 a week of allowance where today there is none.

Part B: Universal Credit, a week	£200	£230	£240	£260	£280	£300	£330
Without the taper
Maximum award	£330	£330	£330	£330	£330	£330	£330
Earned income, for the next row: gross pay − income tax (Part C) − NI	£190	£214	£240	£256	£271	£285	£307
− 55% of earned income	£104	£118	£132	£141	£149	£157	£169
− Carer's Allowance (£1 for £1)	£98	£98	£0	£0	£0	£0	£0
= Universal Credit	£127	£114	£198	£189	£181	£173	£161
With the taper
Maximum award	£330	£330	£330	£330	£330	£330	£330
Earned income, for the next row: gross pay − income tax (Part C) − NI	£190	£214	£223	£241	£258	£276	£302
− 55% of earned income	£104	£118	£123	£133	£142	£152	£166
− Carer's Allowance (£1 for £1)	£98	£98	£92	£76	£62	£47	£26
= Universal Credit	£127	£114	£115	£121	£126	£131	£138

Universal Credit starts from the maximum award and takes off 55% of earned income and all of the Carer's Allowance. At £240 a week without the taper, earned income is the full £240, because no tax or National Insurance is due, so Universal Credit is about £330 − £132 = £198. With the taper, the allowance adds about £17 of income tax. In these examples, that tax counts as tax deducted from pay, so earned income falls to about £223, 55% of it is about £123, and Universal Credit is about £330 − £123 − £92 = £115.

This is our Universal Credit adjustment, explained below. PolicyEngine UK on its own deducts only the tax on the pay alone from earned income, which is £0 at £240, so it would show Universal Credit about £9 lower with the taper.

Part C: net income, a week	£200	£230	£240	£260	£280	£300	£330
Without the taper
Gross pay	£200	£230	£240	£260	£280	£300	£330
+ Carer's Allowance	£98	£98	£0	£0	£0	£0	£0
= Pay plus allowance	£298	£328	£240	£260	£280	£300	£330
− Income tax on pay plus allowance	£10	£16	£0	£3	£7	£11	£17
− Employee National Insurance	£0	£0	£0	£1	£3	£4	£7
+ Universal Credit (Part B)	£127	£114	£198	£189	£181	£173	£161
− TV licence	£3	£3	£3	£3	£3	£3	£3
= Net income	£412	£422	£434	£442	£448	£454	£464
With the taper
Gross pay	£200	£230	£240	£260	£280	£300	£330
+ Carer's Allowance	£98	£98	£92	£76	£62	£47	£26
= Pay plus allowance	£298	£328	£332	£336	£342	£347	£356
− Income tax on pay plus allowance	£10	£16	£17	£18	£19	£20	£22
− Employee National Insurance	£0	£0	£0	£1	£3	£4	£7
+ Universal Credit (Part B)	£127	£114	£115	£121	£126	£131	£138
− TV licence	£3	£3	£3	£3	£3	£3	£3
= Net income	£412	£422	£426	£435	£442	£450	£462
Change in net income	£0	£0	−£8	−£7	−£6	−£4	−£2

Carer 2's net income falls by about £8 a week at £240: the allowance adds about £92, Universal Credit falls by about £83, and income tax rises by about £17.

Carer's Allowance by gross weekly pay, 2031-32

Weekly Carer's Allowance for a carer with no other income, with and without the taper

Without the taper, the allowance falls from £98 to zero as soon as net earnings pass £234. With the taper, it falls by £1 for each £1 of pay up to about £247 a week, where income tax (above the £12,830 Personal Allowance) and National Insurance on the pay begin. Above that, each extra £1 of gross pay adds 72p to net earnings, after 20% income tax and 8% National Insurance, so the allowance falls by 72p. It runs out at £366 a week.

Change in net income from the taper, 2031-32

Change in weekly household net income, by gross weekly pay

Carer 1 gains most just above the limit, about £80 a week at £235, and the gain falls to zero at £366. Carer 2 loses throughout the taper range: by about £8 a week up to £247, and by less above that.

Universal Credit counts Carer's Allowance as unearned income and deducts it in full (Universal Credit Regulations 2013, regulation 66(1)(b)(iii)). The carer element does not depend on Carer's Allowance. So for a carer on Universal Credit, each £1 of extra allowance takes £1 off Universal Credit. Carer's Allowance is also taxable, and with the standard Personal Allowance every carer in the taper range pays income tax on it: below about £247 of pay, pay plus allowance, about £332 a week, exceeds the Personal Allowance, and above £247 income tax applies to all of the allowance.

Universal Credit deducts from employed earnings the income tax paid in respect of the employment (regulation 55(5)(b)). HMRC says that tax on taxable state benefits is usually taken automatically from a person's other income, and that a tax code can take account of taxable state benefits. For an employee whose tax code takes account of Carer's Allowance, the tax on the allowance is part of the PAYE taken from pay, and so lowers earnings for Universal Credit. Universal Credit's 55% taper gives back 55p of each £1 of that tax, so a carer on Universal Credit loses 45% of the tax on the extra allowance: about £8 a week at £240, £4 at £300 and £2 at £330.

This is our adjustment. PolicyEngine UK 2.151.0 does not yet count the PAYE on the allowance against Universal Credit earned income: it deducts only the tax on the pay itself, and so shows the whole of the tax on the allowance as a loss, about £17 a week at £240. The figures for this measure on PolicyEngine's Autumn Budget dashboard do not include the adjustment. We apply it to employees only. A self-employed carer has no pay for PAYE to take the tax from, so the adjustment leaves them as PolicyEngine UK has them, and this post does not cover them.

Even with the adjustment, carer 2 is better off without the allowance: without the taper, when pay rises from £234 to £235 and the allowance stops, net income rises by about £8.

The taper can also affect the person cared for. Under current rules, Pension Credit does not pay its extra amount for severe disability (£86 a week in 2026-27) while someone receives Carer's Allowance for caring for that person (State Pension Credit Regulations 2002, Schedule I, paragraph 1(1)(a)(iii)), and the severe disability premium in other benefits works the same way (GOV.UK, effect on other benefits). Today a carer above the limit gets no allowance, so the person they care for can keep that amount. A tapered award would end it, unless the carer already has Universal Credit with the carer element, which stops the addition too. The Budget does not say whether this will change. Our examples show only the carer's household, and PolicyEngine UK does not link a carer to someone they care for in another household, so neither the examples nor the population estimates include this.

The effective marginal tax rate is the share of an extra £1 of gross pay that the carer loses to income tax, employee National Insurance, the change in Carer's Allowance and the withdrawal of Universal Credit. It is 1 minus the change in household net income for a £1 rise in weekly gross pay, as in PolicyEngine's marginal_tax_rate, so it is 100% minus the share kept: a 72% rate means the carer keeps 28p of each extra £1.

Gross weekly pay	Not on UC, without the taper	Not on UC, with the taper	On UC, without the taper	On UC, with the taper
£0 to £148	0.0%	0.0%	55.0%	55.0%
£148 to £234	20.0%	20.0%	64.0%	64.0%
£234 to £247	0.0%	100.0%	55.0%	55.0%
£247 to £366	28.0%	85.6%	67.6%	61.1%
Above £366	28.0%	28.0%	67.6%	67.6%

Effective marginal tax rate for a carer, 2031-32

Share of each extra £1 of gross pay lost to income tax, National Insurance, lower Carer's Allowance and lower Universal Credit

The "Without the taper" series is for a carer not on Universal Credit. The table above gives the rates without the taper for a carer on Universal Credit.

Without the taper, carer 1's rate is 0% up to about £148 a week, where pay plus the full allowance reaches the Personal Allowance, and 20% from there to the limit, because the allowance uses part of the Personal Allowance and income tax takes 20% of pay above about £148. Above the limit, with no allowance, the rate is 0% up to about £247 and 28% above it, from 20% income tax and 8% National Insurance. With the taper, carer 1's rate is 100% from £234 to about £247, because the allowance falls by the same £1 that pay rises. From £247 to £366 it is 85.6%: income tax and National Insurance on the pay take 28p of each extra £1, the allowance falls by 72p, and the income tax on the allowance falls by 14.4p.

Carer 2's rate is 55% up to about £148, from Universal Credit's 55% taper alone, 64% from there to the limit, once income tax starts, and 55% from £234 to about £247, with or without the taper. From £247 to £366, it is 61.1% with the taper, against 67.6% without, because the loss from the tax on the allowance shrinks as the allowance falls.

The table and chart leave out the £1 step at the limit itself. Without the taper, a carer whose net earnings rise from £234 to £235 a week loses the whole allowance, so for that one step carer 1 loses more than the £1 gained: net income falls by about £80. Carer 2's net income rises by about £8 at that step, because Universal Credit replaces most of the lost allowance and the tax on the allowance goes. With the taper, the step is like any other in the taper range.

We also ran the measure on PolicyEngine UK's microsimulation model, which uses survey data on UK households; we projected the data to 2030-31 and 2031-32 on the OBR's October 2026 forecast. The estimate is static: carers do not change how much they work, and take-up of Carer's Allowance follows the assumptions in PolicyEngine's data. This is the run behind the figures for this measure on PolicyEngine's Autumn Budget dashboard, split here into its parts. The model applies half a year of the taper in 2030-31, because the taper starts at some point in that year. Like the dashboard, the run keeps PolicyEngine UK's current-law limit of £204. Unlike the worked examples, it does not yet count the PAYE on the allowance against Universal Credit earnings (regulation 55(5)(b)); with that adjustment, our calculation gives a net cost of about £28 million in 2030-31 and £55 million in 2031-32.

£ million, cost to the Exchequer	2030-31	2031-32
Higher Carer's Allowance	78.5	160.1
Lower Universal Credit	−39.2	−80.6
Higher income tax	−15.4	−31.8
Net cost	23.8	47.6

We round the rows, so they may not sum to the net cost.

Setting the current-law limit to the government's rule in both runs, as in the worked examples, gives the same figures throughout this section.

About 82,000 people have a higher Carer's Allowance in 2030-31, and about 83,000 in 2031-32, all in England. About half live in families on Universal Credit, and almost all of them lose a little, because Universal Credit falls by the whole of the extra allowance and income tax is due on it.

For 2030-31, DWP estimates that around 48,000 people gain a higher award, including around 3,000 in Wales, against our 82,000. Both counts compare awards with and without the taper and include people who become newly entitled, but DWP's also depends on assumptions about how carers respond, while ours assumes they work the same hours.

Of our £160 million of extra Carer's Allowance in 2031-32, lower Universal Credit offsets about half and higher income tax about a fifth, leaving a net cost of £48 million. In 2030-31, with half a year of the taper, the net cost comes to £24 million.

The government's costing, £38 million in 2030-31 and £79 million in 2031-32, measures something different from ours. It includes £5 million and £10 million of extra block grant for Scotland, which gained powers over Carer's Allowance in 2018. The other £33 million and £69 million cover the extra Carer's Allowance less the Universal Credit saving, and the costing has no entry for income tax. Against those £33 million and £69 million, our extra Carer's Allowance less lower Universal Credit comes to £39 million and £79 million, about a sixth more. Neither the Treasury nor the OBR splits the Carer's Allowance cost from the Universal Credit saving.

The comparison sets a static estimate against a post-behavioural one. The government's costing, which the OBR certified, includes behavioural responses. Its note says that some carers would increase their earnings or enter work, which lowers Carer's Allowance and Universal Credit spending, and that it accounts for take-up of tapered awards by people newly eligible for them, which adds to the cost. (These are responses of the people affected; the note describes no feedback through the wider economy, which is what a "dynamic" costing usually means.) Our estimate has no labour-supply response. It does include claims by carers whom the current limit keeps out: PolicyEngine's data assumes that 60% of them claim, which may differ from the government's assumption. These differences could explain some of the gap between our figures and the official ones, in either direction.

The estimate rests on fewer than 50 survey households, so it is imprecise, and we do not show a breakdown by income decile.

• The worked examples are household calculations for single carers. The carer and the parent live in separate households, so the parent's income does not count.
• Neither the examples nor the population estimates include the effect on the person cared for. A tapered award would stop Pension Credit's extra amount for severe disability, or the severe disability premium in other benefits, for the person cared for, unless the carer already has Universal Credit with the carer element, which stops the addition too. PolicyEngine UK does not link a carer to someone they care for in another household.
• Weekly amounts are annual amounts divided by 52, so pay is the same each week. The earnings test is weekly, so a carer whose pay varies can exceed the limit in some weeks and not in others.
• PolicyEngine UK works out net earnings for the test as pay less National Insurance and the income tax that PAYE would take on the pay alone with a standard tax code. It does not model the deduction for the cost of care while the carer works, which can reach half of net earnings, so it can overstate earnings for carers who pay for care.
• PolicyEngine UK holds the current-law earnings limit at £204 after 2026-27. In the worked examples, we set it to the government's rule with and without the taper: £228 in 2030-31 and £234 in 2031-32, the same limit the taper uses. The population estimates keep £204, as the dashboard does. The choice does not change the measure's cost or any household's change, because the taper changes nothing for carers at or below the limit; the population run gives the same figures either way.
• The worked examples count the PAYE on Carer's Allowance against Universal Credit earned income for employees, which PolicyEngine UK 2.151.0 and the dashboard do not yet do. The population estimates, like the dashboard, do not. This adjustment and this post do not cover self-employed carers.
• Carer's Allowance, Universal Credit and the National Living Wage for 2030-31 and 2031-32 are projections. PolicyEngine UK does not round its projected Carer's Allowance to the penny.
• The examples assume that each carer claims Carer's Allowance and, for carer 2, Universal Credit. The population estimates use the take-up assumptions in PolicyEngine's data.
• The taper does not change Scotland's Carer Support Payment. In Northern Ireland, Carer's Allowance keeps the current rule.

We used the policyengine Python package (version 6.11.1) with PolicyEngine UK (version 2.151.0). PolicyEngine UK does not yet include the taper, so we added it as a structural reform that changes Carer's Allowance entitlement (the carers_allowance_pre_overlap variable) above the earnings limit. The rules and values match the Carer's Allowance taper in the draft update to PolicyEngine's Autumn Budget 2026 dashboard; the worked examples differ in two ways: they set the current-law limit to the government's rule, and they count the PAYE on the allowance against Universal Credit earnings (see the assumptions). The population estimates are the dashboard's own run.

Both sides of every calculation use the OBR's October 2026 forecast, as the dashboard does. In the worked examples, both sides also set PolicyEngine UK's current-law earnings limit to the government's rule and use our Universal Credit adjustment: for a person with employment income, we work out the income tax that Universal Credit deducts from earnings by treating Carer's Allowance as part of the earnings, so it includes the tax on the allowance. We calculated each household for gross pay from £0 (marginal rates) or £150 (other charts and tables) to £400 a week, in £1 steps for the other charts and tables. The charts of the allowance and of net income plot whole-pound points where the schedules change slope and a point every £20. The marginal tax rates are PolicyEngine UK's marginal_tax_rate variable, with its pay rise set to £52 a year (£1 a week) on both sides; the chart plots a point every £100 of annual pay and the points where the rates change, and leaves out the points whose £1 rise crosses one of those points, which would average two rates. The variable agrees with a direct difference of household net income to within 0.01 percentage points. PolicyEngine UK reduces all employees' pay by 0.16% in 2031-32, to reflect employers passing on the cost of the salary sacrifice cap, so we set pay 0.16% higher to give whole-pound gross pay.