GUIDE | CARE FUNDING | GOV.UK SOURCE

How care funding works in England

Care in England is funded through a combination of local authority (council) funding and self-funding, depending on a means test. The means test looks at capital assets (savings, investments, property) and income. It does not look at the assets of family members -- only the person needing care.

The means test uses two capital thresholds. Those with capital assets above the upper threshold of £100,000 must pay the full cost of care themselves. Those with assets between £23,250 and £100,000 pay a tariff contribution in addition to their income contribution -- effectively a sliding scale. Those with assets below the lower threshold of £23,250 pay only from their income, and the council funds the rest up to the council's standard rate for that type of care.

Note: The upper threshold of £100,000 was introduced from October 2025 under reforms to the Care Act 2014. Prior to October 2025, the upper threshold was £23,250 (no sliding scale applied -- anyone above £23,250 self-funded entirely). Always verify current thresholds at gov.uk before planning.

What counts as capital in the means test?

Capital includes savings accounts, cash ISAs, stocks and shares, investment bonds, second properties and the value of the person's main home in most circumstances. Personal possessions, life insurance policies with a surrender value below £1,500, and certain trust arrangements are excluded.

The family home is disregarded from the means test for the first 12 weeks of a permanent care home placement (the 12-week property disregard). It is also permanently disregarded if the person's spouse or civil partner continues to live there, if a dependent child under 18 lives there, or if a close relative aged 60 or over or incapacitated lives there.

After the 12-week disregard, if none of the permanent disregard conditions apply, the value of the home is included in the means test calculation. At this point, a deferred payment agreement (DPA) may be available.

Deferred payment agreements

A deferred payment agreement (DPA) allows someone to defer paying their share of care costs until after their death or until they sell their home. The council effectively lends the money, secured against the value of the property. Interest is charged at a rate set by DHSC -- currently 5.0% per annum (2026/27 rate). The loan and interest are repaid from the proceeds of the property sale, either during the person's lifetime or from the estate after death.

Councils must offer deferred payment agreements to those who meet the eligibility criteria: the person must have capital excluding the home below the upper threshold, must own or jointly own their home, and the property must be in England. The council has discretion to refuse if the property is in poor condition or there are legal complications with the title.

NHS Continuing Healthcare

NHS Continuing Healthcare (CHC) is a package of ongoing care arranged and funded entirely by the NHS for adults in England who have a primary health need. It is not means-tested and is completely free, covering both care costs and accommodation if the person is in a care home. It is distinct from NHS-funded nursing care (FNC), which is a flat-rate contribution (currently £235.88 per week in 2026/27) paid by the NHS to nursing homes for residents who do not qualify for full CHC but have some nursing needs.

CHC eligibility is assessed using the NHS Decision Support Tool (DST), which looks at needs across twelve care domains including behaviour, cognition, communication, psychological, mobility, nutrition, continence, skin integrity, breathing, drug therapies, altered states of consciousness, and other significant care needs. A person qualifies if they have a primary health need -- broadly, where health needs are the primary reason for requiring care, rather than social or personal care needs.

The CHC assessment process starts with a CHC checklist, usually completed by a nurse or social worker. If the checklist indicates possible eligibility, a full multidisciplinary team assessment is carried out. Families can request a CHC assessment at any time. Retrospective CHC claims for past periods of care are possible if the person was not assessed correctly at the time -- these claims can go back many years and result in significant refunds.

What the council pays vs what you pay

If the council funds care, it pays up to its standard rate for that type of care in the local area. This is the maximum the council will pay a care home for a funded resident. If the chosen home charges more than the council rate, the difference must be made up by a top-up payment from a third party -- usually a family member. The person in care cannot pay their own top-up (with limited exceptions).

Even where the council funds care, the person contributes from their income. Income includes state pension, private pension, benefits and most other regular income. A personal expenses allowance (currently £30.15 per week in 2026/27) is retained by the person. Everything else above this amount is counted as income and used to reduce the council's contribution.

Scotland, Wales and Northern Ireland

Care funding rules differ significantly across the four nations. In Scotland, personal care is free for all adults over 65 regardless of means, under the Free Personal Care policy. In Wales, the upper capital threshold is £50,000 (lower than England's £100,000). Northern Ireland has its own separate system administered by Health and Social Care Trusts. If the person lives outside England, verify the applicable rules with the relevant authority.

Frequently asked questions

Does my house have to be sold to pay for care?

Not necessarily and not immediately. The family home is excluded from the means test for the first 12 weeks of a permanent care home placement. It is permanently excluded if a spouse, civil partner, dependent child or qualifying relative lives there. If none of these apply after 12 weeks, the home is included in the capital calculation -- but a deferred payment agreement allows you to delay repayment until the property is sold.

What is the £100,000 care cap and when does it apply?

From October 2025, individuals with capital assets above £100,000 self-fund all their care costs. Those between £23,250 and £100,000 pay on a sliding scale. Those below £23,250 pay only from income. The cap on care costs -- a separate measure limiting the total amount anyone spends on personal care over their lifetime -- was announced but then deferred indefinitely by the government in 2023. As of June 2026, there is no lifetime care cap in force in England.

Can I get NHS Continuing Healthcare if I am in a care home?

Yes. NHS Continuing Healthcare can be provided in any setting, including a care home. If a person in a care home is assessed as eligible for CHC, the NHS funds all their care home costs including accommodation. The person moves from being a self-funder or local authority-funded resident to being fully NHS-funded. Families should request a CHC assessment if they believe the person's needs are primarily health-related.

What happens to benefits when someone goes into a care home?

Attendance Allowance and the daily living component of Personal Independence Payment (PIP) stop after 28 days in a local authority-funded care home. They continue for self-funders. Pension Credit, Housing Benefit and Council Tax Support are also affected. State Pension continues in all circumstances. Benefits should be reviewed and notified as soon as a care home placement is made to avoid overpayments that must be repaid.