How care home fees are funded in the UK: a plain-English guide

By the Akinn team · Current as of 4 July 2026. Care funding rates and rules change over time — see the note at the end before you rely on any figure.

In short: care in a care home is not free like the NHS. It's means-tested. If your parent has assets above £23,250 in England, they'll usually pay the full cost themselves. Below that, the council contributes on a sliding scale. Some care is funded by the NHS instead — if health needs are high enough — and a few benefits and deferral options can ease the pressure. This guide explains who pays for what, in the order you'll actually need to know it.

Working out how to pay for care is often the moment the whole thing starts to feel overwhelming. That's normal. The rules are genuinely complicated, and they've changed recently. The good news is that the system, once you can see it laid out, is more navigable than it first appears. Here's how it works.

Start with the two assessments

Before any money changes hands, two separate assessments usually happen. Getting them in the right order saves a lot of confusion.

The first is the care needs assessment. Your local council carries this out, it's free, and anyone can request one regardless of income. It establishes what care is needed — residential, nursing, dementia support, and so on. Ask your council's adult social services team for one, or request it on GOV.UK.

The second is the financial assessment, also called the means test. This works out who pays for the care the first assessment identified. It looks at capital (savings, investments, and often property) and income (pensions and some benefits).

You can arrange and pay for care privately without involving the council at all. But it's usually worth having both assessments done anyway — they tell you where you stand, and the needs assessment is your evidence base if circumstances change.

The means test: the capital thresholds

In England, the means test turns on two figures, both frozen since April 2010 and confirmed unchanged in the Department of Health and Social Care's charging circular for 2026 to 2027:

Upper capital limit — £23,250. Above this, your parent is a "self-funder" and pays the full cost of their care.
Lower capital limit — £14,250. Below this, capital is left alone. Only income is assessed.
Between the two, they contribute what they can from income, plus a "tariff income" of £1 a week for every £250 of capital above £14,250.

These thresholds haven't risen with inflation in over 15 years, which means more families cross the upper limit each year than the figures might suggest. It's worth checking exactly where your parent sits rather than assuming.

What happens to income

Even when the council pays towards fees, your parent contributes most of their income — pensions and eligible benefits — towards the cost. They're allowed to keep a small amount for personal spending, called the Personal Expenses Allowance, set at £31.80 a week in England for 2026/27. It's theirs to spend as they choose, and it can't be swallowed up by the fees.

Does the house have to be sold?

Not necessarily, and not immediately. This is one of the most feared parts of the process, so it's worth being precise.

If your parent moves into a care home permanently, the value of their home is normally counted as capital in the means test. But it's disregarded — ignored entirely — if certain people still live there, including a spouse or partner, a relative aged 60 or over, a dependent child, or a relative who is disabled.

Even where the home is counted, there are protections:

The 12-week property disregard. For the first 12 weeks of a permanent stay, the property's value is ignored, giving families time to decide what to do without a fire sale.
A Deferred Payment Agreement (DPA). The council pays the fees and places a legal charge on the property; the debt is repaid later, usually when the home is eventually sold or from the estate. Interest is charged at a government-set "standard national rate" that is reviewed twice a year, and councils may add a modest administration fee. A DPA lets your parent keep their home — and even rent it out, with the council's agreement — rather than sell under pressure. Your council publishes its current DPA interest rate; ask for it in writing.

A word on giving assets away

It's natural to wonder whether gifting savings or signing over the house early might protect them. Be careful here. This is called deprivation of assets, and if a council decides the main reason for a transfer was to avoid care fees, it can treat the money or property as though your parent still owns it — a "notional capital" charge. There's no fixed time limit on how far back a council can look. Ordinary spending and normal gifts are fine; deliberate spend-downs linked to a foreseeable care need are not. Take regulated advice before moving any significant asset.

When the NHS pays instead

Some care is funded by the NHS, not the council, and this funding is not means-tested. There are two routes, and they're often confused.

NHS Continuing Healthcare (CHC) is a full package that covers 100% of care costs — including accommodation — for adults whose needs are primarily health-related rather than social. Eligibility rests on having a "primary health need", assessed through a screening Checklist, then a fuller Decision Support Tool covering 12 areas of need, with a Fast Track route for rapidly deteriorating or end-of-life situations. CHC is worth pursuing, and decisions can be appealed. It's genuinely valuable — and it has become harder to secure in recent years, so evidence matters. Care diaries, GP letters, and medication lists all help. Charities such as Age UK and Beacon offer free initial guidance.

NHS-funded Nursing Care (FNC) is narrower. If your parent lives in a nursing home and needs care from a registered nurse, but doesn't qualify for full CHC, the NHS pays a flat weekly contribution — £267.68 a week in England from 1 April 2026 — directly to the home for the nursing element. It's not means-tested, and it can't be paid in a residential home or in your parent's own home. Eligibility for CHC must always be considered before FNC.

Benefits that can help

Attendance Allowance is a tax-free, non-means-tested benefit for people over State Pension age who need help or supervision because of a health condition. For 2026/27 it's £76.70 a week (help needed by day or night) or £114.60 a week (help needed both day and night, or under the rules for terminal illness). Savings and income make no difference to entitlement.

One catch worth knowing: if the council or NHS is paying towards a care home place, Attendance Allowance usually stops after 28 days. If your parent is self-funding, or paying under a Deferred Payment Agreement, it continues. (In Scotland, Attendance Allowance is being replaced by Pension Age Disability Payment, at the same rates.)

Top-up fees

If the council agrees to fund a placement but the home your family prefers costs more than the council's rate, someone else — usually a family member — can pay the difference. This is a third-party top-up. It's a genuine, ongoing commitment, so agree it in writing and be sure it's affordable long-term. In limited situations (during the 12-week disregard, or under a DPA) the person receiving care can pay a first-party top-up themselves. Always ask the home for both its self-funder weekly fee and the council-commissioned rate, in writing, before signing anything.

How much does care actually cost?

Fees vary widely by region, provider, and level of need. As a broad guide, recent sector data puts the UK average at roughly £1,300 a week for residential care and £1,500 or more for nursing care, with specialist dementia care typically higher. The South East and London run well above average; parts of the North and Northern Ireland run below. Self-funders often pay more than the council's negotiated rate for the same room — a long-standing feature of the market known as cross-subsidy. Treat any average as a starting point, and get the specific home's fees in writing.

How funding differs across the UK

The rules above apply to England. The other UK nations differ in important ways:

Scotland provides free personal and nursing care regardless of assets, though you still pay accommodation costs. Its capital thresholds are more generous than England's.
Wales uses a single, more generous capital limit for residential care (£50,000), and caps non-residential (home) care charges.
Northern Ireland uses the same residential capital limits as England, but health and social care trusts generally don't charge for care at home.

Always check the current rules for the relevant nation with its official body before making decisions.

What about the £86,000 care cap?

You may have read about a lifetime cap on care costs. It's important to be clear: the £86,000 cap, and the more generous means test that was to accompany it, were scrapped in July 2024. They were not delayed — they are not currently going ahead. Longer-term reform of adult social care in England is under independent review, but for now you should plan around the rules as they stand today.

Where to get help

You don't have to work this out alone, and you shouldn't rely on any single figure without checking it. For personalised guidance:

Your local council's adult social services team — for both assessments.
Age UK, Independent Age, and Carers UK — free, trusted advice.
MoneyHelper (government-backed) — for the money side.
A regulated financial adviser with a specialist later-life qualification (look for SOLLA membership) — before any major financial decision. Care funding decisions can be significant and irreversible, so independent, regulated advice is worth the cost.

Frequently asked questions

Is care in a care home free in the UK? No. Unlike the NHS, adult social care is means-tested. In England, people with capital above £23,250 pay the full cost themselves. Only care with a primary health need is fully NHS-funded, through NHS Continuing Healthcare.

Will my parent have to sell their home to pay for care? Not always. The home is disregarded if a spouse, partner, relative aged 60 or over, dependent child, or disabled relative still lives there. Even where it counts, the first 12 weeks are ignored, and a Deferred Payment Agreement lets the council recover the cost later instead of forcing a sale.

What's the difference between CHC and FNC? NHS Continuing Healthcare covers 100% of care costs for those with a primary health need, and isn't means-tested. NHS-funded Nursing Care is a smaller flat contribution (£267.68 a week in England, 2026/27) paid towards the registered-nurse element of a nursing home place, for people who don't qualify for full CHC.

Can I give money away to reduce care fees? It's risky. If a council decides assets were transferred mainly to avoid care fees, it can charge as though they were never given away. There's no time limit on how far back it can look. Take regulated advice first.

Does Attendance Allowance stop in a care home? If the council or NHS pays towards the placement, it usually stops after 28 days. If your parent self-funds, or pays under a Deferred Payment Agreement, it continues.

Sources

Department of Health and Social Care — Social care: charging for care and support 2026 to 2027 (local authority circular), GOV.UK.
NHS — NHS-funded nursing care and NHS Continuing Healthcare, nhs.uk.
GOV.UK — Better community care thanks to nursing funding boost (FNC rate from 1 April 2026).
Department for Work and Pensions — Benefit and pension rates 2026 to 2027, GOV.UK; Age UK benefit rates 2026/27.
MoneyHelper — Deferred payment agreements for long-term care.
Independent Age — Paying for care: a care home.
Age UK — Paying for permanent residential care and NHS Continuing Healthcare and NHS-funded nursing care factsheet.
House of Commons Library — Paying for adult social care in England and Introducing a cap on care costs.

Information in this guide was researched on 4 July 2026. This guide is for general information and does not constitute financial or legal advice. Rules and rates change; figures should be verified against the official sources above before you act.