Financial assessment for care home fees in 2025

If you need to move into a residential care home or nursing home, your local authority may contribute towards, or cover all of your care costs. To determine whether your council will help you with care home fees, they will carry out a financial assessment also known as a means test to see how much money you have.

Key points

• A financial assessment (means test) determines how much you contribute toward care home fees and how much help you may get from your local authority.
• The assessment considers your income, savings, property, and assets, but excludes personal possessions, life insurance, and part of jointly held capital.
• In 2025/26, the thresholds range from £14,250 to £23,250 in England, with different limits in Scotland, Wales, and Northern Ireland.
• The first 12 weeks of permanent care home residence may qualify for a property disregard, and Deferred Payment Agreements can help avoid selling your home immediately.

What is the purpose of a financial assessment?

The financial assessment for care home fees follows the care needs assessment, where your local authority looks at your needs to determine what type of care and support you require and how it should be delivered.

The point of a financial assessment is to prevent people from paying more than they can afford, while also ensuring local authorities spend their money correctly.

The assessment covers both residential care homes and nursing homes.

There are different thresholds for paying for care depending on where you live in the UK. The more money you have, the less funding you will receive from your local authority.

How does the care home financial assessment work?

When your local authority conducts a financial assessment for care home fees, they look at your savings, income and assets to calculate how much you need to pay towards your care home.

Everyone who is assessed is treated as an individual and only your income is taken into account. This is regardless of whether you are married or are living with a partner.

To determine how much money you have, they add up:

Income: pensions, benefits, annuities, or earnings.

Capital: savings, investments, and property.

Assets: any property or land owned, minus any mortgage.

Expenses: sometimes certain costs, such as disability-related expenses, may be considered. Most benefits will be counted as income, such as Attendance Allowance and Pension Credit.

Some types of income are disregarded, such as certain disability benefits. The means test assumes you receive all the benefits you are entitled to. 

What is excluded from a financial assessment?

1. Personal possessions

Everyday personal items are completely excluded from the assessment. This includes:

• Furniture, household contents, and personal belongings.
• Clothing, jewellery, and sentimental items.
• Cars or mobility aids (unless used purely as investments).

These are considered necessary for daily life, not financial assets.

2. Life insurance policies and their surrender values

• The value of life insurance policies and their surrender values (the amount you would get if you cashed them in) are disregarded from the means test.
• Similarly, investment bonds with life insurance elements are typically excluded, but councils may ask for evidence.

3. Your home (in certain circumstances)

The value of your property may be excluded in specific cases:

• If your spouse, partner, or a dependent relative still lives in the property.
• If you are receiving care temporarily
• During the first 12 weeks of permanent care home placement – this is known as the 12-week property disregard.

This rule is designed to give you time to make decisions about whether to sell, rent out, or use a Deferred Payment Agreement (DPA) to fund your care.

4. Jointly held assets

If you share savings, investments, or property with someone else:

• Only your share (typically 50%) is counted in the assessment.
• For example, if you and your spouse have a joint savings account with £10,000, only £5,000 would be included.

5. Certain types of income

Some types of income are not included, such as:

• Disability Living Allowance (mobility component)
• Personal Independence Payment (PIP) – mobility component
• War Widow’s pensions (in certain cases)
• Child benefit or child maintenance (if relevant)

However, many other benefits such as Attendance Allowance and Pension Credit are counted as income.

6. Income or capital from certain trusts

If your assets are held in a properly established trust such as a Lifetime Interest Trust, they may be excluded depending on the type of trust and your access to the funds. The local authority will assess this on a case-by-case basis.

7. Capital is not included if you are a couple

When one partner moves into care and the other remains at home:

• The council cannot take into account the remaining partner’s income or assets when assessing the person moving into care.
• This ensures the spouse or partner still at home is financially protected.

What is the process for a financial assessment?

The process usually involves:

1. Initial contact: The local council’s adult social care team arranges a care needs assessment to determine the level of care required.
2. Financial information gathering: The council requests documents such as bank statements, pension details, and property information.
3. Calculation: The council calculates how much the person can afford to contribute.
4. Outcome: The council writes to the person explaining how care fees will be divided between the individual and the council.

Thresholds for care home fees 2025/26

There are upper and lower savings thresholds which are different depending on where you live. If you have savings and assets valued above the upper limit, you will usually have to pay the full cost of your care.

However, if your capital is below the lower threshold, your local authority may cover the full cost of your care. If your capital falls between the upper and lower thresholds, you will qualify for some funding, but will be expected to cover some of the costs yourself.

Nation	Lower threshold	Upper threshold
England	£14,250	£23,250
Scotland	£21,500	£35,000	Personal and nursing care are free for those assessed as needing it. Payments can be claimed to cover these parts of care home fees, but food and accommodation are not covered.
Wales	£50,000	N/A	There is only an upper limit. If savings and assets are below £50,000, maximum local authority support is provided.
Northern Ireland	£14,250	£23,250

What is 12 week property disregard?

When you move into a care home permanently, your local authority may disregard the value of your property, or the share you own, for the first 12 weeks.

The 12-week period starts from the day you move into a care home.

If you sell your property before the 12 weeks have passes, the disregard will stop when it has been sold.

You can find out more about the 12 week property disregard on the Age UK factsheet.

If you move into a care home temporarily at first, but your stay becomes permanent, the 12 weeks start from the date your stay becomes permanent.

This is to give people time to decide whether they want to sell their home to pay for care, choose to rent it out or apply for a Deferred Payment Agreement.

A Deferred Payment Agreement means that your local authority secures a loan against your home and the money does not have to be paid back until it is sold.

What is Deprivation of Assets?

Intentionally gifting assets and/or savings to come under the upper threshold and paying for care is known as Deprivation of Assets.

If your local authority believes you have done this, they may still include the savings/assets you have given away in the means test, which could mean you have to self-fund your care home place.

You could, in other words, be told you do not qualify for any support despite not having enough money to pay for it.

For more information, read our guide to Deprivation of Assets.