Paying for Care: Your Options Explained
In England, if your total assessable capital (including your property, in most permanent care home situations) exceeds £23,250, you're classed as a self-funder and must pay the full cost yourself. Below £14,250, the council funds your care based on your income. These thresholds have been frozen since 2010 — in real terms, that means far fewer people now qualify for support than the rules originally intended.
Working out how care gets paid for is one of the most confusing parts of later-life planning — the system is heavily means-tested, and the rules differ depending on your assets, income, and where in the UK you live. This guide covers every realistic funding route.
The Means Test, Explained
Local authority care funding in England works on a sliding scale based on your capital:
Above £23,250 (the upper capital limit): you're a self-funder, responsible for the full cost of your care
Below £14,250 (the lower capital limit): the council funds your care, though you'll still contribute from your income
Between the two limits: you contribute a "tariff income" of £1 per week for every £250 of capital above £14,250, alongside a contribution from income
For permanent residential care, your property is generally included in this capital assessment, unless a spouse, partner, or certain qualifying relatives (aged 60+, incapacitated, or a dependent child) continue living in it.
Local Authority Funding Routes
If you fall below the upper capital limit, the council will typically fund care in one of two ways:
Direct provision or contracted care home placement, at a rate the council determines based on assessed need and local market rates
Direct payments, giving you the funding to arrange your own care package instead
If your preferred care home charges more than the council's standard rate, a family member can pay a "third-party top-up" to cover the difference — the person receiving care generally cannot pay this themselves from their own income or savings, except in specific circumstances like a temporary placement.
Self-Funding Routes
If you're a self-funder, several ways exist to actually cover the ongoing cost:
Savings and investments — the most straightforward route if sufficient assets exist
Selling your home — often necessary for residential care self-funders, sometimes deferred using the option below
Deferred Payment Agreements — the council pays your care fees on your behalf, secured against your property, recovering the cost (plus interest, typically 2-3%, lower than commercial borrowing) after your death or when the property is eventually sold
Equity release — read our dedicated guide on using equity release for care fees specifically, including the benefits interactions to watch for
Benefits Worth Claiming Regardless of Funding Route
Some support isn't means-tested and is often overlooked before people turn to self-funding solutions:
Attendance Allowance — worth £72.65 or £108.55 weekly (2026 rates), available regardless of income or savings, for those needing help with personal care due to illness or disability
NHS Continuing Healthcare — full NHS funding for care, available if your primary need is assessed as a health need rather than a social care need — worth investigating specifically if health conditions are complex
Getting the Right Advice
Care funding decisions are rarely simple, and mistakes can be expensive and hard to reverse. A specialist care fees adviser — distinct from a general financial adviser — can assess your specific situation against all available routes, including whether a Deferred Payment Agreement, equity release, or another option genuinely fits best.
See our related guides on using equity release for care fees and setting up Power of Attorney, since managing care funding decisions often requires this authority in place beforehand.
Related Reading
Not sure which option fits your circumstances?