Debts from carers’ allowance overpayments rose to more than £250 million last year, according to the government’s spending watchdog.
The National Audit Office (NAO) said the figure had risen by £100 million since 2018/19.
Charity Carers UK said the report was “further evidence of a broken system that fails unpaid carers”.
The government launched an independent review into overpayments in October, after some carers were forced to repay thousands of pounds, leaving many financially strapped.
The Department for Work and Pensions (DWP) paid £3.7bn in carers’ allowance for more than 900,000 claimants last year, according to an NAO report.
If someone spends at least 35 hours a week caring for someone with an illness or disability, they may be eligible for the allowance, which is currently £81.90 per week.
To qualify, a person must not earn more than £151 per week. The limit will rise to £196 per week from April.
If the carer earns just one pound above this number, there is no tapering rate and they are no longer eligible for any payment.
This created a “cliff edge,” meaning large overpayments could accumulate quickly, the NAO said.
Claimants are required by law to inform the DWP immediately if their circumstances change.
But the department has faced criticism for failing to prevent overpayments, even though its systems are weakened when a claimant earns too much.
Some carers told the BBC they were not aware they had exceeded the minimum until they were informed years later, when the amounts reached thousands of pounds.
Claims that exceeded the permissible limit accounted for 58% of new overpayment cases last year.
Other reasons for overpayments include that the claimant no longer provides care, for example if the person receiving the care dies.
Some 136,730 people had overdue debts last year, an increase of 71% compared to 2018/19.
However, the NAO said the average value of new overpayments identified by the DWP has fallen in the past four years, suggesting they were identified earlier.
The DWP seeks to recover all excess benefit payments where it has a legal basis to do so, unless doing so would cause financial hardship or would not be cost-effective.
The department can also refer the case to the prosecution if it deems the overpayment was fraudulent, which happened in 54 cases last year.
Alternatively, you can offer an ‘administrative penalty’ of £350 or 50% of the overpayment, whichever is greater, up to a maximum of £5,000.
The number of administrative penalties has decreased significantly in recent years, from 774 in 2018-2019 to 75 in 2023-2024.
Meanwhile, there has been an increase in the use of £50 civil penalties – with £30,129 imposed last year, a 50% increase on 2018-19.
The report of the government-ordered review, which will look at how to reduce the risk of overpayment and how to support carers who have already run up debt, is due to be submitted by next summer.
Hannah Walker, chief executive of Carers UK, said any recommendations from the review should be implemented as soon as possible.
Dominic Carter, director of policy and public affairs at the Carers Trust, called for a “comprehensive overhaul” of the allowance system, describing it as “overly complex” and “outdated”.
Social Security and Disability Minister Sir Stephen Timms said: “This report sets out the scale of the challenge and underscores the importance of our independent review of overpayments so we can make the system fairer for thousands of dedicated carers.”
“Carers deserve support, which is why we are strengthening the earnings threshold, benefiting over 60,000 people, while our review will get to the heart of the problem so we can protect carers from unfair debt and protect taxpayers’ money.”
