Guidance

HB A8/2026: The UC, HB and State Pension Credit (Carer’s Allowance Reassessment Capital Disregard) (Amendment) Regulations 2026

Updated 4 August 2026

Who should read

All Housing Benefit colleagues and wider if appropriate.

Action

For information.

Subject    

The Universal Credit (UC), Housing Benefit (HB) and State Pension Credit (Carer’s Allowance Reassessment Capital Disregard) (Amendment) Regulations 2026

Guidance manual

The information in this circular does affect the content of the HB Guidance Manual.

Please annotate this circular number against paragraph BW1.80 of Chapter BW1 and paragraph BP1.181 of Chapter BP1.

Queries

For queries about the

• technical content of this circular, contact housing.policyenquiries@dwp.gov.uk
• distribution of this circular, contact lawelfare.correspondence@dwp.gov.uk

Extra copies of this circular and copies of previous circulars can be found at Housing Benefit for local authorities: adjudication circulars.

Crown Copyright 2026.

Recipients may freely reproduce this circular.

Introduction

1. This circular provides guidance on The Universal Credit, Housing Benefit and State Pension Credit (Carer’s Allowance Reassessment Capital Disregard) (Amendment) Regulations 2026 (Statutory Instrument (SI) 2026/681) which amends The Housing Benefit Regulations 2006 (SI 2006/213) and The Housing Benefit (Persons who have reached the qualifying age for state pension credit) Regulations 2006 (SI 2006/214).

2. SI 2026/681 was laid on 25 June 2026 and came into force on 16 July 2026.

Background

3. Carer’s Allowance has a weekly earnings limit. Guidance correctly dealt with cases where weekly earnings were constant or where they fluctuated in a regular cycle. However, where there were irregular fluctuations in the weekly amounts, the guidance did not accurately reflect the statutory position. It should have guided decision makers to consider averaging earnings over a period of weeks in such cases. Instead, it instructed them not to consider averaging the earnings.

4. On 25 November 2025 the government published the findings and recommendations from an Independent Review it had commissioned on Carer’s Allowance overpayments due to earnings.

5. The Department for Work and Pensions has already taken positive steps to make the improvements recommended in the review by:

• updating the instructions around how earnings are averaged
• improving the decision letters that customers will receive.

6. From 13 April 2026, ringfenced teams began work on a reassessment exercise for those customers who may have incurred an inaccurate overpayment relating to their employment between April 2015 and 2 September 2025.

New Capital Disregard

7. SI 2026/681 amends both SI 2006/213 and SI 2006/214 so that any refund payments received as a result of reassessing Carer’s Allowance overpayments will be fully and indefinitely disregarded as capital from the date of issue.

Impact on local authorities

8. The department expects around 25,000 cases will result in either lump sum payments or reductions in outstanding overpayments of Carer’s Allowance. Around two thirds of people in receipt of Carer’s Allowance are in a household which is also in receipt of means-tested benefits, the majority of which are receiving Universal Credit (UC). If a person is in receipt of UC or the guaranteed credit element of Pension Credit, there is no impact on their Housing Benefit claim. Therefore, the impact on local authorities is low.