Financial assessment for care home fees

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 to see how much money you have.

This is also known as a means test and it examines your capital and income. In Northern Ireland, social care funding is arranged by the Health and Social Care Trusts.

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.

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.

Thresholds for paying for care

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.

Savings threshold for care home fees 2024/25

England

• Upper threshold: £23,250
• Lower threshold: £14,250

Scotland

• Upper threshold: £35,000
• Lower threshold: £21,500

Personal and nursing care is free for those who have been assessed as needing it. You can claim payments to cover these parts of your care home fees. Other costs such as food and accommodation charges are not covered.

Northern Ireland

• Upper threshold: £23,250
• Lower threshold: £14,250

Wales:

• Upper threshold: £50,000
• Lower threshold: N/A

In Wales, there is only an upper limit. If you have savings and assets below £50,000, you will receive maximum support 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 your income, investments, savings, stocks and shares and equity from your property (if you have one), and subtract any debts including the mortgage.

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. 

Your personal possessions and life insurance policies are excluded.

Tariff income

If your capital is between the upper and lower thresholds, some of it will be treated as income, known as a ‘tariff income’. The tariff income is calculated as £1 a week for every £250 of capital you have above the lower threshold.

For example:

You live in England and have savings and assets worth £20,000. The first £14,250 will be disregarded, leaving you with £5,750.

The remaining £5,750 is divided into parts of £250. There will be 23 chunks, meaning your local authority assumes an income of £23 per week from your capital.

If you own your own home and move permanently into a care home, its value will be counted towards your capital unless any of the below still live there:

• Your spouse or partner
• A child under 16 you are responsible for
• A close relative aged over 60 or who is disabled
• A younger relative who is incapacitated
• A former partner who you are divorced or estranged, who is a lone parent with a dependant child

The value of your property will not be counted if you are moving into a care home temporarily.

Generally, only 50 per cent of any jointly held capital, such as a savings account, will be counted. This means that if your home is jointly owned, only your share will be taken into account. 

Homeowners: The 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.

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.

Can you give money away to avoid care home costs?

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.