Thousands of unpaid carers could have historic overpayments cancelled or repaid after a review found many had been faced with huge debts because of “unclear and confusing regulations”.

The issue of people being penalised for going over their earnings limit for carer’s allowance even by as little as a few pence per week has previously been branded a “scandal” by charities.

A year-long review, the findings of which were published on Tuesday, has concluded that many carers felt they were “treated as criminals, with resulting feelings of fear and shame”.

Historic overpayments led to many carers – who had to earn £151 a week or less to qualify for the allowance – unwittingly racking up unmanageable levels of debt and some quitting their jobs as a result.

The earnings threshold rose to £196

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