Carers Will Keep Allowance for Earning More as Treasury Drops Tariffs on 100 Foods

An unpaid carer who picks up a few extra hours in Britain currently risks losing the whole Carer’s Allowance for earning one penny over the weekly limit. The Treasury says that cliff edge is going. In a package published on Monday, ahead of Wednesday’s Budget, the government replaced it with a taper. Only £1 of allowance is withdrawn for every extra £1 earned above the limit, which equals 16 hours at the National Living Wage.

Five fixes, in order of reach

1. Mileage. The tax-free rate of 55p a mile for the first 10,000 business miles becomes permanent, and the rate above that rises from 25p to 35p. The Treasury says this helps about three million employees and self-employed people who drive their own vehicles for work, including nurses and care workers.
2. Parental pay. Eligible parents get two weeks of pay worth up to £194 a week, now including self-employed fathers and partners. The Treasury counts more than 150,000 additional parents a year.
3. Carers. The cliff edge in Carer’s Allowance is replaced by the £1-for-£1 taper described above.
4. Tariffs. Import tariffs go on more than 100 products, among them baked beans, garlic, gherkins, chocolate-coated wafers, fertiliser and kerosene heating oil.
5. Post Office. Hundreds more drop boxes bring the total to 1,000, so parcel returns need fewer queues.

What the tariff cut is worth

Together with suspensions introduced in June, the government says households could save up to £21 a year on the food shop. The BBC reports that Business Secretary Jonathan Reynolds put the combined saving at about £500 million a year, and that the Treasury will publish the full product list on Wednesday. Removing tariffs on fertiliser is aimed at farmers’ costs, and the kerosene change at households that heat with oil. Chancellor John Healey told the BBC that none of this changes the world, but that he wants to fix what the government can at the margins.

Wages: a slower rise for the youngest

The package comes with a leaked wage decision. Personnel Today says The Times has reported that both the National Living Wage and the 18-to-20 rate will rise by 3.9% from April 2027. That would take the living wage from £12.71 to around £13.20 and the 18-to-20 rate from £10.85 to around £11.27. The Treasury has not confirmed the figures, and the Chancellor is due to set the rates on Wednesday after hearing from the independent Low Pay Commission.

Chart: GoodBad. Data from Personnel Today (2023–2026 rises) and The Times as reported by the BBC and Personnel Today (April 2027, unconfirmed).

For low earners the rise matters more than the tariff cut. A full-time worker on the living wage would earn £0.49 an hour more on the reported figure. Personnel Today quotes the Low Pay Commission as saying around 70% of 20-year-olds are already paid at or above the living wage. The slower pace for young adults follows rises in the 18-to-20 rate of 44.9% over 2023 to 2026, against 22.0% for the living wage, according to Personnel Today. UKHospitality’s chair, Kate Nicholls, told The Times that stepping off the accelerator is welcome. The Low Pay Commission has said it found no robust evidence that higher youth rates caused falls in youth employment.

Who gains, and when

Most of the measures have no start date in the release. The carer’s change does: the BBC says it will not come in until 2030. Carers Trust chief executive Kirsty McHugh welcomed it, saying carers should now be able to earn a bit more without being pushed into debt. For anyone weighing the package this week, the full tariff list and the confirmed wage rates arrive on Wednesday.