How to Pay for Care
How Much Does a Care Home Cost?
Care home costs vary across the UK, with London and South East England being the most expensive regions.
- Residential Care: On average, self-funders pay £1,160 per week (£4,640 monthly, £60,320 annually).
- Nursing Care: Costs around £1,410 per week (£5,640 monthly, £73,320 annually).
- Specialist Care: Care homes offering specialist care, such as dementia care, typically charge higher fees, with residential dementia care averaging £1,205 per week and nursing dementia care costing about £1,447 per week.
Is There a Cap on Care Home Costs?
Currently, there is no cap on care home fees in the UK. However, from October 2025, a cap of £86,000 will be introduced in England, limiting the lifetime amount an individual will need to pay for care. Once this cap is reached, ongoing care costs will be covered by the local authority. Note that this cap does not include daily living costs like accommodation, food, and energy bills.
How to Fund Your Care
The amount you pay towards your care depends on your assets, which include property, savings, and investments. Funding thresholds vary by region:
- England & Northern Ireland: Pay full costs if assets exceed £23,250; partial costs if assets are between £14,250 and £23,250.
- Scotland: Full costs if assets exceed £35,000; partial costs if assets are between £21,500 and £35,000.
- Wales: Full costs if assets exceed £50,000.
If your savings fall below these thresholds, local authorities will start to contribute to your care costs. Regular reviews ensure continued support if your financial situation changes.
Plan Your Budget for Care Home Fees
For self-funders, it’s essential to:
- Determine annual care costs.
- Identify entitled benefits.
- Plan income generation from assets.
- Understand what is included in care home fees to avoid unexpected expenses.
- Establish clear contracts with care homes regarding obligations and fee changes.
How to Work Out the Value of Your Assets
Assets are calculated by adding investments, savings, and property equity. Property is excluded if certain relatives live there. Jointly held capital is split 50%, and some benefits and personal possessions are excluded from the means test. During the first 12 weeks in a care home, your property is disregarded in the means test if other assets are low.
Ways You Can Pay for a Care Home
There are various ways to fund your care home fees, each with its advantages and disadvantages:
Selling Your Home
- High Interest Bank Account: Deposit proceeds for accessible care payments.
- Invest to Generate Income: Use cash bonds, equities, or shares for lower-risk investments.
- Care Fee Annuity: Provides tax-free income directly to the care provider, ensuring lifelong care coverage. However, it is irreversible and depends on your health and age.
Keep Your Home
- Rent Your Home Out: Use rental income for care costs, though it is taxable.
- Deferred Payment Scheme: Local authorities cover care costs, reclaiming through property sale after death. Applicable in England, Scotland, and Wales. Arrangement fees and interest may apply.
- Equity Release: Mortgaging property to access funds, though it involves high interest.
What Benefits Can Self-Funders Claim?
Self-funders may still claim several benefits:
- Attendance Allowance: For those over 65 needing daily support (£72.65 – £108.55 per week, tax-free).
- Personal Independence Payment (PIP): For those under 65 with daily living and mobility components.
- Funded Nursing Care (FNC): NHS contribution for nursing home residents (£235.88 – £324.50 per week).
- State Pension and Other Benefits: State Pension, Pension Credit, and other allowances.
Some Care and Support Must Be Free of Charge
These include:
- Intermediate Care and Reablement: Up to six weeks.
- Aids and Minor Adaptations: Costing less than £1,000.
- After-Care Under the Mental Health Act: For those assessed or treated under the Act.
State Funded Care
Care Needs and Financial Assessments
- Care Needs Assessment: Identifies required support.
- Financial Assessment: Determines payment contribution based on national guidelines.
- Personal Budget: Covers total care costs, including contributions and local authority payments.
How to Pay Top-Up Fees If you prefer a more expensive care home, a third party can pay the difference (top-up fee). This must be arranged through a contract with the local authority.
Personal Expenses Allowance (PEA)
Allows state-funded residents to retain a small income for personal items:
- England: £30.15 per week.
- Scotland: £34.50 per week.
- Wales and Northern Ireland: Rates pending update.
By planning carefully and understanding your options, you can effectively manage the costs of care home living. For more information and resources, visit CareDirectory.org.uk.
