Care home fees represent a significant cost, typically ranging from £800 to £1,700 per week depending on location and level of care needed. For most families, understanding how these fees will be paid is as important as choosing the right home itself.
The UK’s care funding system is complex, with multiple pathways depending on your financial situation, health needs, and where you live. This guide explains who pays for what, when you might qualify for help, and what options exist when you’re paying yourself.
The Three Main Funding Routes
Care home fees in England are paid through one of three main routes, sometimes with a combination of funding sources.
Self-Funding
If you have capital (savings, investments, and property if you’re moving into a care home) above £23,250, you’ll be classified as a self-funder and expected to pay your own care home fees. This threshold applies across England, though Scotland and Wales have different limits.
Local Authority Funding
If your capital is below £23,250, your local council may help pay for care. How much they contribute depends on a financial assessment. Those with capital between £14,250 and £23,250 receive partial funding but must contribute from both their income and a ‘tariff income’ calculated from their capital. Those with capital below £14,250 pay only from their income, with protections to ensure they keep a minimum amount.
NHS Continuing Healthcare
For people with complex, ongoing health needs, the NHS may fund all care costs through NHS Continuing Healthcare. This is not means-tested, so your finances don’t affect eligibility. It’s based purely on assessed health needs.
Self-Funding: What It Means
Around 40% of care home residents in England are self-funders. If this applies to you, you’re responsible for arranging and paying for your own care.
Advantages of Self-Funding
Self-funders typically have more choice over which care home they select and when they move in. There’s no waiting for assessments or approval processes, and you can choose homes that may charge more than local authority rates.
The Cost
Average weekly costs vary significantly by region and care type. Residential care (personal care without nursing) averages £1,200 to £1,500 per week. Nursing care (which includes registered nursing support) typically costs £1,600 to £1,700 per week. London and the South East are considerably more expensive.
Specialist dementia care usually costs slightly more due to the higher staffing levels and specialist training required. Always clarify exactly what’s included in the quoted fee and what attracts additional charges (hairdressing, newspapers, outings, etc.).
When Self-Funding Runs Out
If you start as a self-funder but your capital reduces to £23,250 or below, you can apply to your local authority for help. This is why it’s important to plan ahead and understand when you might need to transition to local authority funding.
However, there’s an important consideration: local authorities often pay care homes less than self-funders do. If your care home doesn’t accept local authority rates, you may need to move to a different home, or a family member would need to pay a ‘top-up’ fee to cover the difference.
Local Authority Funding: How It Works
Local council funding is means-tested, so you’ll need both a care needs assessment and a financial assessment to determine eligibility.
The Care Needs Assessment
This assessment, conducted by social services, looks at what support you need with daily activities, health management, and overall wellbeing. It determines whether you have eligible needs that require residential care rather than care at home.
The Financial Assessment
The financial assessment examines your income and capital to determine how much you can afford to contribute towards care costs.
Income includes pensions, benefits (though some benefits like Attendance Allowance stop after 28 days in a care home if you’re receiving local authority funding), and any rental income from property you own. Most of your income will be used to pay towards care, but you’re entitled to keep a Personal Expenses Allowance (currently £31.15 per week) for personal spending.
Capital includes savings, investments, and the value of your home (unless specific disregards apply). The value of your home is not counted if your partner, a dependent child under 18, or a relative over 60 still lives there. It’s also disregarded for the first 12 weeks of a permanent care home stay.
The Thresholds
If your capital is above £23,250, you pay the full cost yourself. Between £14,250 and £23,250, you pay what you can afford from income plus £1 per week for every £250 of capital above £14,250. Below £14,250, you pay only from your income, and the local authority covers the rest.
What the Council Will Pay
Local authorities set maximum rates they’ll pay for care homes. These are called ‘usual costs’. If you choose a home that charges more than this rate, a third party (usually a family member) must pay the difference as a top-up fee, unless the council agrees to pay more.
It’s worth asking your local authority what their usual costs are early in the process, as this affects which homes you can realistically choose if you’re relying on council funding.
Applying for Local Authority Funding
Contact your local council’s adult social care department to request a care needs assessment. Even if you think you won’t qualify for funding, an assessment provides valuable information about care options and support available.
Your Home and Care Home Funding
For many people, their home represents most of their wealth. Understanding how it’s treated in care funding is crucial.
When Your Home Is Counted
If you’re moving into a care home permanently and nobody qualifying for a disregard still lives there, the value of your home will eventually be included in your financial assessment. However, it’s disregarded for the first 12 weeks, giving you time to consider options.
Deferred Payment Agreements
If most of your wealth is tied up in your home, you don’t have to sell it immediately to pay for care. Deferred Payment Agreements allow you to use your home’s value to pay for care without selling during your lifetime.
Here’s how they work: the local authority pays your care home fees on your behalf, or loans you the money to pay them. The debt, plus interest, is repaid when your home is eventually sold (either during your lifetime if you choose, or after death from your estate).
To qualify for a Deferred Payment Agreement, you must have less than £23,250 in savings and other assets (excluding your home), have equity in your home sufficient to cover the loan, and meet certain other criteria. Your home must be registered with the Land Registry, and the council will place a legal charge on it to secure the debt.
Interest is charged on the amount owed, currently around 4-5% per year (rates are set by the government and reviewed twice yearly). There are also setup and administration fees.
You can rent out your property during a Deferred Payment Agreement, and rental income reduces the amount you need to borrow, though typically you’d need to contribute a portion of this rental income toward care costs.
Deferred Payment Agreements give you flexibility and mean you won’t be forced to sell your home quickly, potentially at an unfavourable price. However, they do accumulate debt that reduces what you can pass on to beneficiaries. Seek independent financial advice before entering into one.
More information on Deferred Payment Agreements is available through MoneyHelper.
NHS Continuing Healthcare
NHS Continuing Healthcare provides full funding for people whose care needs are primarily health-related rather than social care needs. If you qualify, the NHS pays for all your care, including care home fees if residential care is needed.
Who Qualifies
There’s no list of conditions that automatically qualify you. Instead, eligibility is assessed based on the complexity, intensity, and unpredictability of your needs across various health domains, including cognition, behaviour, psychological needs, mobility, nutrition, continence, and others.
It’s most commonly awarded to people with conditions like advanced cancer, severe stroke effects requiring ongoing nursing care, late-stage dementia, motor neurone disease, or complex physical health needs.
The Assessment Process
Assessment begins with an initial screening using a checklist. If this suggests you might be eligible, a full assessment follows, conducted by a multidisciplinary team of health and social care professionals. You or your representative can participate in this assessment.
A decision should normally be made within 28 days. If you’re found eligible, your local Integrated Care Board arranges and funds your care. The package is reviewed after three months and then annually.
Fast-Track Pathway
If someone is rapidly deteriorating and approaching the end of life, a fast-track process can provide NHS Continuing Healthcare funding much more quickly than the standard route.
NHS-Funded Nursing Care
Even if you don’t qualify for full NHS Continuing Healthcare, if you need care from a registered nurse in a care home, you may be eligible for NHS-Funded Nursing Care. This is a weekly contribution (currently around £236 per week for the standard rate) paid by the NHS directly to the care home to cover nursing care costs. It doesn’t cover the full care home fees, just the nursing element.
More information on NHS Continuing Healthcare is available on the NHS website.
Benefits That Can Help With Care Costs
Several benefits can provide additional income to help pay for care, though some are affected once you move into a care home.
Attendance Allowance
For people over State Pension age who need help with personal care or supervision, Attendance Allowance provides £73.90 or £110.40 per week. It’s not means-tested. However, if you’re receiving local authority funding in a care home, Attendance Allowance typically stops after 28 days. Self-funders can continue receiving it.
Personal Independence Payment (PIP)
For people under State Pension age, PIP provides similar support, with daily living and mobility components. Like Attendance Allowance, it’s affected by care home residence and local authority funding.
Pension Credit
Pension Credit tops up income for people over State Pension age. If you’re self-funding in a care home and your income is low, you might still qualify for Pension Credit, which can help with care costs.
You can check benefit entitlement using the government’s benefits calculator.
What Happened to the Care Cap and Funding Reforms?
You may have heard about proposed reforms to care funding that were due to come into effect in October 2025. These included raising the upper capital threshold from £23,250 to £100,000 and introducing an £86,000 lifetime cap on personal care costs.
In July 2024, the government announced these reforms were being cancelled. The current system remains in place, with the £23,250 upper threshold and £14,250 lower threshold unchanged.
This means more people will continue to self-fund care, and there’s no cap on lifetime care costs. This makes advance planning and understanding your options even more important.
Planning Ahead
Given the costs involved and the complexity of the funding system, planning ahead is crucial. Consider:
When to Seek Advice
Don’t wait until care is urgently needed to understand your options. Financial advisers specialising in later-life planning can help you understand how care might be funded and what steps you can take now to prepare.
Protecting Your Interests
Be aware that deliberately depriving yourself of assets (giving away money or property, putting your house in trust, etc.) to avoid care fees can be investigated by local authorities. If they determine you’ve intentionally reduced your capital to qualify for funding, they can assess you as still owning those assets.
Keeping Records
If you’re self-funding and approaching the threshold where you might qualify for local authority help, keep clear records of care home payments. You’ll need to demonstrate how your capital has been spent.
Different Rules Across the UK
This guide focuses on England, where the upper threshold is £23,250 and lower threshold is £14,250. The systems in Scotland, Wales, and Northern Ireland differ.
Scotland has an upper threshold of £35,000 and lower threshold of £21,500. Wales has an upper threshold of £50,000 for care home fees with no lower threshold. Northern Ireland uses the same thresholds as England.
If you’re considering care in a different UK nation, check the specific rules for that area.
Getting Help With Funding Decisions
Navigating care funding can feel overwhelming, but support is available. Organisations like Age UK provide free, impartial advice on paying for care. Citizens Advice can also help with understanding your entitlements and options.
Your local council should provide information and advice about care funding, even if you’re not eligible for their financial support. Independent financial advisers specialising in care fees can provide personalised guidance, though they will charge for this service.
How Blissful Care Homes Can Help
At Blissful Care Homes, we understand that funding care is a significant concern for families. Our homes welcome both self-funded residents and those receiving local authority support, and we’re experienced in working with families through the funding process.
We provide clear, transparent information about our fees and what’s included, and we’re happy to discuss how different funding arrangements work in practice. Whether you’re self-funding, have local authority support, or are exploring options like Deferred Payment Agreements, we can explain what this means for accessing care with us.
If you’d like to discuss care home fees, explore funding options, or simply understand what’s available to you, please get in touch. We’re here to provide honest, helpful information to support your decision-making.
