The care home means test, explained
When you move into a care home in England, the council works out how much you should pay using a financial assessment, the means test. Whether the council contributes comes down to two capital thresholds and what counts toward them.
The two thresholds
- Above £23,250 in capital: you pay the full fees yourself (a self-funder).
- Below £14,250: your capital is ignored. The council funds your care and you contribute only from income.
- Between £14,250 and £23,250: the council helps, but you pay a ‘tariff income’ of £1 a week for every £250 of capital in this band, on top of your income contribution.
These thresholds have been frozen for several years. A planned reform to raise them to £20,000 and £100,000 was scrapped, so the figures above are current.
What counts as capital
Capital means savings, investments, premium bonds, most property and land. The big question for most families is the home.
When your home counts
Your home is included as capital unless one of these people still lives there: a husband, wife or partner; a relative aged 60 or over; a relative who is disabled; or a child under 18 you are responsible for. If the home is disregarded for one of these reasons, it is not counted at all.
Even when it does count, it is ignored for the first 12 weeks of a permanent stay (the 12-week property disregard), giving you time to plan. A deferred payment agreement can then let the council pay your fees and recover the money from your estate later, so you may not have to sell the house while you are alive.
Income and the Personal Expenses Allowance
If the council funds your care, you contribute most of your income (pensions, some benefits) toward the fees, but you keep a Personal Expenses Allowance of about £30.15 a week for personal spending. Attendance Allowance usually stops once the council is funding residential care.
Top-up fees
The council only pays up to its own rate. If you choose a home that charges more, someone else, usually a family member, may have to pay a ‘third-party top-up’ to cover the difference. The resident cannot normally top up from their own income. Be sure any top-up is affordable for the long term before agreeing.
How to get assessed
Ask your local council’s adult social services for a care needs assessment first, then a financial assessment. Both are free. See how to pay for a care home for the full route, or estimate your position with the calculator.
England only; Scotland and Wales differ. This is general information, not financial advice. Confirm your position with your council or an independent financial adviser.