Care home costs and fees advice | How to pay

Care home fees are expensive so finding out who is responsible for paying for your care is important. Nearly half a million people in the UK live in a care home. Around half of these pay their care home costs themselves. These are known as self-funders. The other half receive local authority funding, with a quarter of these paying top-ups.

How much does a care home cost?

Care home fees vary according to where you live in the UK. London and South East England tends to be the most expensive.

• If you are paying for your own care, the average weekly cost of a residential care home in the UK is £1,266.
• For self-funders, the monthly average cost of residential care is £5,064.
•  This means residential care for a whole year (52 weeks) costs on average £65,832.

How much does a nursing home cost?

• Average fees at a nursing home cost £1,528 per week.
• Those paying for their own nursing care in a care home can expect to pay an average of £6,112 a month.
• A nursing home costs on average £79,456 a year.

How much does a dementia care home cost?

• Care homes that offer specialist care, such as care for people living with dementia, tend to charge a higher fee.
• Residential dementia care costs on average £1,306 a week. Annually (52 weeks) a dementia care home costs £67,912.
• Dementia in a nursing home costs an average of £1,554 a week. Annually it costs £80,808.

Is there a cap on care home fees?

There is currently no cap on care home fees in the UK.

The Conservative government had announced that from October 2025 (this was originally due to come into effect in 2023 but was delayed), no one in England would have to pay more than £86,000 in care costs during their lifetime. These reforms were scrapped by the new Labour government on 29 July 2024. Chancellor Rachel Reeves said she needed to tackle a spending ‘black hole’ inherited from the Conservative government.

The idea behind the cap was that it would put an end to home owners having to sell their houses to pay for care.

However, daily living costs at a care home such as accommodation, food and energy bills would not have been covered.

How to pay care home costs

The amount you pay towards your care depends on where you live in the UK.

• If you live in England and have assets (this includes property, savings and investment) of more than £23,250, you will have to pay the full cost of your care and are referred to as a self-funder. If you have assets of £14,250, you will have to pay some of your care home costs.
• In Scotland, the threshold for paying for care home accommodation is £35,000. You need to have capital below £21,500 to be eligible for maximum support. In Scotland if you are eligible for personal care, this will be paid for by your local council.
• In Wales, anyone with capital under £50,000 will receive fully funded care from the local authority.
• In Northern Ireland, the threshold for care and care home fees is the same as England, £23,250 and you pay the whole cost of the care home. If you have £14,250 or less, you will get some help with fees.

If your savings or income fall below the threshold, the local authority should start paying for some or all of your care.

You can ask the local authority to carry out a review while you are in residential care if your savings drop below the threshold or are about to, so it can take over paying the care costs.

Plan your budget

It is important for self-funders to establish how much the care home will cost each year, the benefits that you are entitled to, how much income you require and how best to generate this income from your assets.

It is also vital to establish at the outset what is exactly included in the care home fees. As there are sometimes extras you will need to pay for such as hairdressing, chiropody, newspapers, etc

Your finances need to be planned properly to ensure you do not have to move to a different care home at a later stage. If this happens it can be hugely disruptive and unsettling.

If you or a relative are making your own financial arrangements with the care home, you need to make sure you have a contract spelling out the home’s obligations and fees. Find out how much notice the care home needs to give, if it wishes to increase the fees.

How to work out the value of your assets

The value of your assets is calculated by adding up your investments, savings and the equity from your property. Your property won’t be included as an asset if a husband, wife, civil partner, a close relative over the age of 60 or a dependent child or disabled relative lives with you.

Means test

In the means test only 50% of any jointly held capital, such as a savings account, is counted. Some types of capital and income, such as certain disability benefits or pensions are not included and also personal possessions are ignored. The means test will assume that you are in receipt of all of the benefits that you are entitled to, so you want to ensure that you are claiming them.

If your home is included in your means-test, it is disregarded for your first 12 weeks in a care home. Therefore if other capital assets and income are low, you may only become a self-funder after 12 weeks.

Deprivation of assets

If you deliberately transfer ownership of a property into someone else’s name or money into someone else’s bank account to avoid paying for your care, it may be seen as a deprivation of assets and the local authority could refuse to fund your care.

It is advisable to register a Lasting Power of Attorney to give someone you trust control over decisions regarding your health, welfare and finances in case you lose the capacity to make these yourself in the future.

This video will help you find out if you are eligible for state funding or whether you will have to pay for your own care. If you do have to pay for your care home fees yourself, it gives you suggestions on how you can do this.

Advice on paying care home costs

There are a number of different ways self-funders can fund their care, each with advantages and disadvantages. The main decision is often whether you keep or sell your home and then there are various options, some of which we have outlined below.

Selling your home

High interest bank account

One option after selling your house is to find a high interest bank account and put all the cash from the sale of your property in there. The problem is that high interest accounts tend to lock your money away and you need to have it readily accessible so you can pay your care home fees. Look closely at bank interest rates before you make a decision.

Invest to generate income

You can invest your money into cash bonds, equities or shares to generate income to pay for your care. As you need the money to pay for your care, it is not advisable to opt for high risk investments.

Take out a Care Fee Annuity

You can take out a Care Fee Annuity, which works as a payment plan giving a regular income similar to a standard retirement annuity.

The upside of this is the income is tax free if it is paid directly to the care provider and will provide a guaranteed income to pay for care costs for life.

The disadvantage is the cost will vary according to your health and age. Once you take out an immediate needs care fee payment plan, if you change your mind or become eligible for Continuing Healthcare you won’t be able to cancel it and get your lump sum back. If you die six months after going into a care home, your family will lose the lump sum.

However, you can buy a guarantee to insure against dying early so they would still get a lot of the lump sum back. But this can be expensive.

The annuity can allow you to effectively solve your care funding problem using some of your assets, which will hopefully help to protect the remainder of your assets.

Keep your home

Rent your home out

If you don’t want to sell your home to pay for your care, you can rent it out as long as the rental income covers the cost of your residential care. However, it is important to remember rental income is taxable.

Deferred Payment Scheme

All local authorities in England, Scotland and Wales have to offer a deferred payment scheme to people living in residential care. In Northern Ireland there is no formal deferred payment system. But it may still be available so you should contact your health and social care trust and ask them.

The deferred payment scheme means the local authority will pay for your care while you are alive. The council will claim the money back through the sale of your property after you die. You can only apply for the Deferred Payment Scheme if your savings are below the upper means test threshold.

Local authorities can charge arrangement fees to set up the loan. They will also charge interest on the loan from the day it is set up. You have to sign a legal agreement with the council. However you cannot use a deferred payment agreement to pay for respite care.

Local councils in Scotland often use charging orders instead of deferred payment agreements. This places a legal charge on a property ensuring the creditor is paid the money owed to them when the property is sold.

Equity Release

If you have a lot of equity in your home, you can consider raising the money for your care by mortgaging your property. However, with this option you will usually end up paying a relatively high level of interest. This can make it an expensive way of paying for care.

What benefits can self-funders claim?

When you go into a care home, you can still claim a number of state benefits.

The two most common additional state benefits available are the Attendance Allowance and Funded Nursing Care (FNC) for Nursing Care Costs.

You can still claim State Pension and other state benefits. Also, some care and support in the care homes are free of charge.

Attendance Allowance rates – 2025/26

Anyone over the age of 65, needing care and support on a daily basis, is eligible for Attendance Allowance (AA).

If you are under the age of 65, you may be eligible for Personal Independence Payment (PIP).

Attendance Allowance is only available if you pay for the care home yourself. You cannot claim Attendance Allowance if you are local authority funded.

• If you need help during the day, you will receive £73.90 a week.
• If you need help during the day and night, or if you are terminally ill, you will get £110.40 a week.

The amount is paid tax-free and is not means-tested.

Attendance Allowance isn’t available in care homes in Scotland. This is because everyone over the age of 65 in Scotland is entitled to free personal care, regardless of income, if the local authority has assessed them as needing it.

Can you claim both FNC and Attendance Allowance?

In England, Wales and Northern Ireland, even if a person is paying for their own care in a nursing home, they may still be able to get help with their nursing care costs, through Funded Nursing Care (FNC) or Continuing Healthcare Funding (CHC). If they receive FNC they can continue to get Attendance Allowance. If they receive CHC their Attendance Allowance will stop after 28 days.

In Scotland, everyone, regardless of their income, assets or partner status, who is aged 65 and over, receives free personal and nursing (up to a certain limit) if they have been assessed by the local authority as needing it. They will still have to contribute towards their accommodation costs in the care home.

Personal Independence Payment (PIP) rates – 2025/26

You have to claim Personal Independence Payment (PIP) before you reach the age of 65 and you will have to undergo an assessment.

The PIP daily living component is paid to a person in a care home if they are paying for their own care

Daily Living

• Standard: £73.90
• Enhanced: £110.40

The mobility component is paid in all circumstances whether you are self-funded or government-funded

Mobility

• Standard: £29.20
• Enhanced: £77.05

Funded Nursing Care (FNC) – 2025/26

You may be entitled to receive Funded Nursing Care (FNC) an NHS-funded nursing care contribution. The care home, social worker or GP can arrange to have your nursing needs assessed to find out if you are eligible. This money is only paid if a person who needs nursing care is in a care home that is registered to provide it.

The NHS will pay a flat rate contribution directly to the care home towards the cost of the nursing care.

FNC is a fixed amount each week which is paid to the nursing home.

In April 2025 FNC in England

• The standard weekly rate from April 2025 is £254.06.

• The higher weekly rate from April 2025 is £349.50.

• In Scotland, the rates are £111.90 for nursing care and/or £248.70 for personal care. The funding works slightly differently in Scotland and is provided by the local council rather than the NHS.

• In Wales the FNC rate is £201.74.

• In Northern Ireland it is £100.

If you are a self-funder and paying all your own fees, which include nursing costs, FNC might be deducted from the total bill. However, different care homes have different approaches to this, and in some cases FNC may be paid to the care home in addition to the fees stated to you, to make it possible to cover the cost of additional care required. You should check your contract and speak to the individual care home to find out whether receiving FNC will reduce your bill. 

Continuing Healthcare Funding (CHC)

Continuing Healthcare Funding, funded by the NHS, is available in England, Wales and Northern Ireland. Unfortunately at the moment there is no guiding framework for Continuing Healthcare in Northern Ireland, which means that health and social care teams tend not to mention it. It is available, so you need to ask for it.

CHC is not means tested and pays for the cost of a person’s care. It funds a person’s health and social care (personal care) needs as well as their care home accommodation.

The care home, social worker or GP can arrange to have your nursing needs assessed to find out if you are eligible. CHC will pay for all your health care as well as your personal care needs.

To be eligible you must have a ‘primary health need’ and a care and support package will be put in place that meets your assessed needs.

A person living with dementia may be eligible for NHS Continuing Healthcare funding which will cover the cost of their care. However, because people with dementia are often assessed as having social care needs rather than health care needs, they may be found ineligible.

State Pension and other state benefits – 2025/26

If you are of state pension age you will still be able to get a State Pension. The basic State Pension is £176.45 a week. You can claim the basic State Pension if you’re a man born before 6 April 1951 or a woman born before 6 April 1953.

If you were born after these dates, you will be eligible for the full new State Pension, which in April 2025 went up to £230.25 per week. The actual amount you will get depends on your National Insurance record.

You will not have to pay council tax, if you move into a care home and there is no one living in your property.

Other state benefits might be available such as Pension Credit, Incapacity Benefit, Severe Disablement Allowance, Widow’s Pension, Bereavement Allowance, Widowed Parent’s Allowance, Industrial Injuries Disablement Benefit, Statutory Sick Pay, Employment and Support Allowance.

Some care and support must be free of charge

These include:

• Intermediate care, including reablement (for up to six weeks) paid by NHS
• Aids and minor adaptations to a person’s home which cost less than £1,000 paid by the NHS
• The NHS is responsible for funding any after-care in a care home, if the person with dementia has been assessed or treated in hospital under the Mental Health Act 1983
• NHS services
• any services that an authority has a duty to provide based on other legislation

You may also be eligible for other NHS services such as continence aids or specialist services such as chiropody, physiotherapy, pressure relief mattresses and mobility or communication aids.

State funded care

Care needs assessment

If you feel you may be eligible for state funded care, the first step to take is to get your local authority to carry out a care needs assessment. This will identify exactly what support and how much help you need. The needs assessment should look at your physical care needs, as well as your mental, emotional, psychological, social, cultural and religious needs.

See our section Care Needs Assessment for further details.

Financial assessment

The local authority will then carry out a financial assessment which is a means test based on national guidelines and calculate how much you have to pay towards your care home fees.

Personal budget

If you are eligible for local authority funding, the local authority will set a personal budget. This comprises of the total cost of meeting your needs, the amount you have to contribute and the outstanding amount the local authority has to pay.

The amount you must pay will include money you receive from most of your benefits, such as State Pension and income you have from any assets. If the local authority does pay your care home fees, then any payments you receive for Attendance Allowance, Disability Living Allowance (DLA) or Personal Independence Payment (PIP) will stop after you have been living in the care home for 28 days.

It may feel like your privacy is being invaded when someone is asking details about your finances. However, if you refuse to answer questions about your finances, you may be charged automatically for your own care.

If you wish you can get a written statement from the local authority detailing their calculations and how much you should contribute.

How much will a local authority pay?

There is usually an upper limit on how much a local authority will pay for someone’s residential care costs. This is often called the usual or standard rate. The local authority may give you a list of local care homes and they must offer you at least one care home that is suitable for your care needs.

Best place to search for a care home

The best place to search for a care home is carehome.co.uk as this is the UK’s leading reviews site for care homes. Here you can read genuine reviews of care homes written by family members, friends and the care home residents themselves. It also has transparent fees and if you are struggling to find a care home, it has a free care helpline where experts can guide you in your search for a home.

If there are no places in care homes available at your personal budget level, the local authority should organise a place in a more expensive care home and increase your personal budget to cover the additional cost.

If your local authority is currently funding your care and you wish to move to a care home in another county to be closer to family, you can do this. It will still be responsible for paying for your care.

The local authority should place you on a waiting list for a care home if there are no vacancies. It should then organise alternative arrangements in the interim period for another care home or care in your home with a high level of care.

How to pay top-up fees

If you or your relative sets their heart on a more expensive care home, the local authority may agree to pay for it. But this is only if a third party, such as a family member, friend or charity pays the extra. You, as the resident, cannot pay this extra amount, which is often referred to as a top-up fee.

Local authorities can only ask for a top-up fee if you refuse a care home that meets your assessed needs and choose a more expensive home instead.

Whoever is paying the top-up fee will have to sign a contract with the local authority agreeing to pay the fee. The agreement will state what will happen if the fees change or if the top-up fees can no longer be paid.

The top-up fee can be paid either to the local authority or to the care home. If the top-up fee can no longer be paid, the local authority has the right to move the person to a cheaper care home that meets their assessed needs.

Personal expenses allowance (PEA)

If you are state-funded, benefits such as a state pension or a private pension will be paid towards the cost of care. However, you will still need an income each week. This is called the Personal Expenses Allowance and is a set amount a person should be left with. In Wales it is called the Minimum Income Amount (MIA).

Personal Expenses Allowance for 2025 is:

• England: £30.15
• Scotland : £34.50
• Wales: £43.90
• Northern Ireland: £27.19

The allowance is for personal items such as stationery, birthday cards and toiletries. 

This amount will not be taken into account by the local authority when it is calculating how much you should contribute towards your care. English local authorities have the discretionary power to increase the personal expenses allowance in special circumstances such as if the resident has property-related expenses or is supporting a spouse.