State pensioners warned little known rule could 'catch you by surprise' and cost you £4,258 a year

Carer's Allowance is a benefit for people who are giving regular and substantial care to disabled people.

It is paid to people who spend at least 35 hours a week looking after someone else and they claim certain benefits.

Pensioners are warned they are at risk of losing the benefit if they earn above the £81.90 threshold.

Suzanne Bourne from Mobilise, a community for unpaid carers, said: “Understanding the rules and regulations around what you’re entitled to as an unpaid carer can be incredibly complicated. Unpaid carers, who already have a huge amount to contend with, must wade through admin sludge to claim support such as Carer’s Allowance.

"On top of that, they then have to be aware that those payments will stop as soon as you start to receive the state pension. It’s not a well understood element of the Carer’s Allowance rules and can catch people by surprise. it’s vital to know that this cliff edge exists and to plan your finances around it.”

Carer's Allowance in the UK is £81.90 a week, which means a total £4,258 a year to support someone in their caring role. This is paid directly into their bank account, building society or credit union account.

Under the current rules, people cannot get any Carer's Allowance while receiving the state pension, if their pension payments are more than £81.90 a week.

This changes for working age claimants, who can get Carer's Allowance as long as they earn under £151 a week, after tax, National Insurance and expenses are deducted.

Those whose state pension is less than £81.90 a week can claim Carer's Allowance to top up their income to this amount. Ms Bourne said it may be worth claiming the benefit even if one's state pension is above this total.

She explained: "If it’s more than £81.90 per week, you should still go through the process of applying for Carer’s Allowance, as you may be assessed as having 'underlying entitlement'.

"This means the state recognises you’re in need of additional financial assistance and it could lead to a boost in other benefits you’re receiving. Pensioners on lower incomes should also explore applying for pension credit, which can unlock extra payments to support you with the cost of living."

There are many unpaid carers that are left out of pocket due to complexities in the benefit system.

As well as pensioners, sandwich carers are predicted to be left out of pocket by an average of £257 a week - and a total of £1,546 over the six weeks of summer holidays, according to new research from Employee Benefits Provider Seniorcare By Lottie.

The out-of-pocket costs include expenses like household bills, childcare or summer camp costs (which can total £1,257 per child), and any equipment or external support when caring for a loved one.

Lydia, a sandwich carer for her step-grandfather aged 88, who is living with dementia and her two young children said: "We have to plan very carefully during the summer holidays. There are a lot of spreadsheets involved, and literally every penny in this period is accounted for.

"Although we're fortunate that my husband can do all the childcare and we don't have to pay for holiday clubs, childminders, and so on, it also means we're down to just my income for six weeks. It's the same with any school holiday.

"Still, a 2-week period of a single income (e.g. over Easter) is a lot easier to manage than a 6-week one (especially when that period has all kinds of additional costs like our annual holiday, days out, more petrol, more meals at home etc).

It's estimated that 1.3 million people in the UK are sandwich carers, equivalent to four per cent of the workforce.

George Howard, Senior Manager at Seniorcare by Lottie has warned of the financial and wellbeing crisis many sandwich carers are facing this summer.

He said: "We've found that sandwich carers face additional financial pressures during the summer months, being out of pocket by £1,546.

"With additional childcare costs averaging £1,257 per child and an eight per cent increase in elderly care costs over the last year, these expenses quickly increase.

"The financial and caregiving burdens placed on carers over the summer months put them at higher risk of mental health issues such as burnout, stress, and anxiety."