Funding Care: A Complete Guide to Paying for Care in the UK

Understanding how to pay for care is often one of the most stressful aspects of arranging support for a loved one. This comprehensive guide explains all your options, from self-funding to government support, helping you navigate the complex world of care funding.

Understanding Care Costs in the UK

Before exploring funding options, it's important to understand what care actually costs.

Typical Care Costs (2026)

Note: Costs vary significantly by region, with London and the South East typically 20-40% higher than the national average.

What's Included (and What's Not)

Usually Included:

• Accommodation and meals
• Personal care (washing, dressing, toileting)
• Laundry services
• Social activities and entertainment
• Basic medical support

Often Extra:

• Hairdressing and chiropody
• Telephone and internet
• Newspapers and magazines
• Outings and trips
• Premium room upgrades
• Continence products (in some homes)

Who Pays for Care?

In the UK, care is not free at the point of use like the NHS. Funding comes from several sources:

The Financial Assessment

Local authorities use a means test to determine how much you should contribute. This looks at:

Income Assessment:

• State Pension
• Private/occupational pensions
• Benefits (some are included, some aren't)
• Income from savings and investments

Capital Assessment:

• Savings and investments
• Property (with some exceptions)
• Valuable possessions

The Key Financial Thresholds (England 2026)

Important: These thresholds are set to change with proposed care reforms. Check gov.uk for the latest figures.

Local Authority Funding

If you qualify for council support, here's what you need to know:

Eligibility Criteria

To receive local authority funding, you must:

1. Be assessed as having eligible needs - The council will conduct a care needs assessment
2. Meet financial criteria - Your assets must be below the threshold
3. Be ordinarily resident - You must live in the council's area

The Assessment Process

Step 1: Request an Assessment Contact your local council's adult social services department. They must carry out an assessment for anyone who appears to need care.

Step 2: Needs Assessment A social worker will assess what care and support is needed, considering:

• Physical needs
• Mental health needs
• Risk of falls or harm
• Ability to manage daily activities
• Wellbeing and quality of life

Step 3: Financial Assessment If you're eligible for support, you'll have a financial assessment to determine how much you should contribute.

Step 4: Care Plan If eligible, you'll receive a care plan outlining the support you'll receive.

What If You Disagree?

You have the right to:

• Request a review of the assessment
• Make a formal complaint
• Seek independent advocacy

NHS Continuing Healthcare (CHC)

NHS Continuing Healthcare is a funding package for people with significant ongoing health needs.

Who Qualifies?

You might qualify if you have:

• A primary health need (not just social care needs)
• Complex or unpredictable health conditions
• Rapidly deteriorating health
• Need for ongoing nursing care

The CHC Assessment Process

1. Initial Screening (Checklist Assessment)

   • Usually done by a nurse or social worker
   • Determines if a full assessment is needed

2. Full Assessment (Decision Support Tool)

   • Conducted by a multi-disciplinary team
   • Looks at 12 care domains (behaviour, cognition, mobility, etc.)
   • Each domain scored as no needs, low, moderate, high, severe, or priority

3. Panel Decision

   • Local Clinical Commissioning Group reviews the assessment
   • Makes the final funding decision

What CHC Covers

If you qualify for full CHC:

• 100% of care costs are covered by the NHS
• This includes care home fees or home care
• There's no means test - it's based entirely on health needs
• You can choose your care provider (within reason)

NHS-Funded Nursing Care

If you don't qualify for full CHC but live in a nursing home:

• The NHS pays a contribution toward nursing costs
• Currently around £219.71 per week (2025/26)
• This reduces the amount you pay

Benefits That Can Help

Several benefits can contribute to care costs:

Attendance Allowance

Who's Eligible:

• Aged 65 or over
• Need help with personal care or supervision
• Have needed help for at least 6 months

Current Rates:

• Lower rate: £72.65 per week (daytime OR nighttime needs)
• Higher rate: £108.55 per week (day AND night needs)

Key Points:

• Not means-tested (income and savings don't matter)
• Tax-free
• Not affected by going into a care home for the first 28 days

Personal Independence Payment (PIP)

Who's Eligible:

• Aged 16 to State Pension age
• Have a long-term health condition or disability
• Difficulty with daily living or mobility

Carer's Allowance

For Family Carers:

• If you care for someone 35+ hours per week
• Currently £81.90 per week
• May affect other benefits

Self-Funding Strategies

If you're funding care yourself, consider these options:

Immediate Needs Annuities

A specialist financial product for care:

• Pay a lump sum upfront
• Receive guaranteed income for life to cover care
• Provides certainty about costs
• Income is tax-free when paid directly to care provider

Example: A 85-year-old might pay £100,000 for an annuity providing £12,000 per year. If they live for 10+ years, the annuity pays out more than it cost.

Deferred Payment Agreements

If your main asset is your home:

• The council pays your care fees
• This is recovered from your estate (usually from house sale) later
• Interest is charged on the deferred amount
• Prevents forced house sale during your lifetime

Equity Release

Options for using property wealth:

• Lifetime mortgages: Borrow against your home
• Home reversion plans: Sell part of your home
• Let-to-buy: Rent out your home to fund care

Warning: Seek independent financial advice before any equity release. These products can significantly reduce the inheritance you leave.

Investment Strategies

If you have substantial savings:

• Consider tax-efficient wrappers (ISAs, pensions)
• Balance accessibility with growth
• Plan for care costs increasing over time
• Consider inflation protection

Protecting Your Home

Many people worry about losing their home to care costs.

When Your Home IS Counted

Your home is included in the financial assessment if:

• It's not occupied by a qualifying person
• You permanently move into a care home

When Your Home is NOT Counted

Your home is excluded if occupied by a:

• Spouse, partner, or civil partner
• Relative who is over 60
• Relative who is disabled
• Dependent child under 18
• Former carer who gave up their own home

The 12-Week Property Disregard

When you first enter care:

• Your home is ignored for 12 weeks
• This gives time to make decisions about the property
• The council may provide temporary funding

Planning Ahead: Top Tips

1. Start Early

• Investigate options before you need care
• Understand what help is available
• Get professional financial advice

2. Keep Good Records

• Document all assets and income
• Keep receipts for care-related expenses
• Maintain a copy of all assessments

3. Know Your Rights

• You're entitled to free assessments
• You can challenge decisions
• You can choose your care provider

4. Seek Expert Help

• Care fees advisors (regulated by FCA)
• Solicitors specialising in elderly care
• Citizens Advice for benefits

5. Review Regularly

• Rules change frequently
• Reassess if needs change
• Update your care plan annually

Getting Help with Funding

Free Resources

• Age UK: Free information and advice
• Citizens Advice: Benefits and rights support
• Money Helper: Government-backed financial guidance
• Local council: Care needs and financial assessments

Professional Advice

• SOLLA (Society of Later Life Advisers): Find specialist advisors
• Care funding specialists: Help navigate complex options
• Solicitors: For legal matters like Power of Attorney

Frequently Asked Questions

Q: Do I have to sell my house to pay for care? A: Not necessarily. Your home is excluded while certain people live there, and deferred payment agreements can prevent a forced sale.

Q: What happens if I run out of money? A: If your capital falls below the threshold, the local authority should step in to help fund your care.

Q: Can I give away money to avoid care fees? A: Deliberate deprivation of assets is illegal. The council can assess you as if you still had the assets.

Q: Are care costs tax-deductible? A: No, but some income received specifically for care (like Immediate Needs Annuities) is tax-free.

Conclusion

Navigating care funding can feel overwhelming, but you're not alone. Take time to understand your options, seek professional advice where needed, and remember that help is available. The key is to plan ahead where possible and to know your rights every step of the way.

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Need help understanding your care options? Use our care cost calculator or speak to our team for personalised guidance. Visit our Care Advice Hub for more helpful guides.