Briefing from Carers Trust. On 26th November, Chancellor Rachel Reeves delivered the Autumn Budget, announcing a series of tax rises and targeted support measures for households, which the Chancellor says are designed to strengthen public services, reduce child poverty, and stabilise the nation’s finances
There was no mention of either social care or the Better Care Fund, although more clarity on both may be published in the Local Government Finance Settlement in December. The UK Government has allocated £75 million to cover the costs of the Carer’s Allowance Overpayment reassessments following the publication of the Sayce Review, and there was the abolition of the Two Child Benefit Limit, which will be welcome by many carers. More broadly, there was an increase in the Living Wage, and investment announced in the Youth Guarantee and Neighbourhood Health Centres.
Carers Trust released a statement which can be read here.
Carer’s Allowance
Carer’s Allowance will increase by 3.8% in line with inflation. From April 2026, we estimate that Carer’s Allowance will be £86.45. The Earnings Limit (now set to 16 times the Living Wage) will be £204 per week.
Carer’s Allowance Overpayments
As part of the Autumn Budget, the government has allocated £75 million over three years to the Department for Work and Pensions (DWP) to review cases where overpayments were caused by unclear or incorrect operational guidance, particularly in situations where carers’ earnings fluctuated and were not averaged correctly over time. Many carers will have their cases reviewed, with debts potentially reduced, cancelled, or refunded if the overpayment was not their fault. This follows the Independent Review of Carer’s Allowance Overpayments, led by Liz Sayce which was released two days before the Budget. Carers Trust were pleased with the recommendations set out in the report and shared a press release in support on the Carers Trust website.
State Pension Increase
The Chancellor has also announced that both the basic and new state pension payments will rise by 4.8% from April 2026, in line with the government’s “triple lock” policy (which ensures the state pension will raise every year to ensure it does not lose real term value). This means that this year’s increase will be more than current CPI measure of inflation. The full new State Pension will increase to £241.30 per week, while the full old State Pension will rise to £184.90 per week.
Removal of the two-child cap on means-tested benefits
The government also announced the end of the two-child limit which was introduced in 2017. This will end the policy of restricting families claiming means-tested benefits such as Universal Credit and tax credits to only the first two children, with any additional children excluded. From April 2026, parents with three or more children will be eligible to receive increased Universal Credit and/or tax credits for all their children. This change could mean an additional nearly £3,500 for each additional child beyond the first two. The government estimates that this measure will lift approximately 450,000 children out of poverty.
The government have also extended entitlement to Child Benefits for
a) parents of young people aged 16–19 with an illness or disability who are studying for 12 hours or fewer per week and
b) parents of 16–19 year olds who are educated full-time outside school or college where this began after the age of 16.
Youth Guarantee
As part of this year’s Autumn Budget, the government have granted £1.5 billion the Youth Guarantee and the Growth and Skills Levy for this Spending Review period. £725 million of this will be invested in mechanisms that widen access to training opportunities and support the “earn or learn” support needed. We hope to work with DWP to ensure young adult carers are enabled to benefit from the Youth Guarantee alongside their peers.
Premium Cars Excluded from Motability Scheme
From 2026, the Motability Scheme will be refocused to ensure it continues to meet its core aim of being a cost-effective option for those on mobility allowances. Currently, the scheme allows for the lease of a wide range of vehicles, including some luxury models, and offers generous tax breaks. The new restrictions will mean that cars from specific ‘premium’ brands will be excluded, and overseas breakdown cover will no longer be included as part of the package. Other changes to the scheme include removing VAT relief on top up payments, introducing an Insurance Premium Tax for the first time and reducing the annual mileage cap. This will likely make leasing a car through the Motability Scheme more expensive.
For local carer services
There was an omission of social care funding in this year’s funding. For many organisations, the lack of dedicated social care funding means that many of the challenges facing carers such as access to respite, support services, and sustainable workforce solutions remain unaddressed.
There was also no further clarification on the future of the Better Care Fund (BCF). We know that the BCF, and how it will work, is being reformed, and continue to make the case for its vital importance to local carer services.
National minimum wage
From April 2026, the national minimum wage for workers aged 21 and over will rise by 4.1% to £12.71 per hour. For those aged 18 to 20, it will increase by 8.5% to £10.85 per hour. This will increase costs for local carer services. Without corresponding increases in funding, organisations may be required to review staffing levels or adjust service provision to manage these additional expenses.
Salary Sacrifice Pensions
As of April 2029, salary sacrifice pension contributions above £2,000 per year will become subject to National Insurance contributions. For local carer services, this may affect both staff who make pension contributions through salary sacrifice and those with multiple roles or higher earnings.
Neighbourhood Health Centres
Within the Autumn Budget speech, the Chancellor reinstated the government’s commitment to invest in reducing NHS waiting lists and will continue with their plans to build up to 250 neighbourhood health centres in England. They have committed to ensuring that 120 of these centres are operational by 2030.
Expansion of Warm Home Discount
It was announced that the Warm Home Discount scheme will be expanded so that all billpayers receiving means-tested benefits will qualify. This means that an additional 2.7 million homes could receive the £150 discount, in addition to measures that will remove approximately £150 from average household energy bills from April next year.
Education and SEND provision
The Autumn Budget introduced plans to centralise Education and SEND funding from 2028-2029. This is set to cost central government approximately £6 billion in 2028-2029, rising to an estimated £9 billion by 2030-2031. This will change the way SEND provision is funded within schools and education settings, but more detail is to follow.
Costs of prescriptions will remain the same
The cost of a single NHS prescription in England will remain at £9.90.
Additional duties and taxes on vehicles and private hire cars
- The government has extended the 5p per litre “temporary” cut in fuel duty on petrol and diesel until September 2026. After this, the fuel duty will gradually return to previous levels over six months and from April 2027, this will be increased in alignment with the Retail Prices Index (RPI).
- A new mileage-based tax will be introduced from 2028 for electric and plug-in hybrid vehicles.
- The cost of private-hire vehicles, such as Ubers, will now be subjected to 20% VAT, in alignment with taxi fares. This may impact parent carers and local authorities who use private hire vehicles transport to schools, in particular SEND schools.
Information provided by Carers Trust
