Paying for Care Home fees: A guide for families

When you or a loved one need care in a care home, working out how to pay for care can feel overwhelming. You're not alone—most families find the funding system confusing. We've put together this guide to walk you through your options, what help you might qualify for, and what it all actually means for you.

Before making any decisions, read our care home funding guide — it covers the means test, self-funding thresholds, deferred payment agreements, and NHS funding options in full.

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Quick Summary: What You Need to Know

The average care home costs around £1,406 per week for residential care and £1,558 per week for nursing care—that's approximately £73,000 to £81,000 per year. Whether you'll need to pay for your own care depends on your savings, assets, and care needs.

Key thresholds for 2025/26:

• Above £23,250 in assets: You pay for your own care (self-funding)
• Between £14,250-£23,250: You pay towards your care with council support
• Below £14,250: Your local council pays most care costs

Understanding Care Home Costs

Care home fees vary significantly depending on location, the kind of care needed, and facility standards. Here's what typically affects the cost of care:

Type of care:

• Residential care: Basic personal care and accommodation (£1,406/week average) - learn more about the benefits of residential care
• Nursing care: 24/7 registered nurse support plus personal and nursing care (£1,558/week average)
• Dementia care: Specialist support (usually more expensive) - explore our dementia care services

What's usually included:

• Accommodation and meals
• Personal care (washing, dressing, medication)
• Care and support activities
• Basic healthcare monitoring

Additional costs:

• Hairdressing and beauty treatments
• Private therapies
• Social outings and entertainment
• Specialist equipment

Who Pays for Your Care? Understanding the Financial Assessment

Whether you need to pay for your care home fees depends on a financial assessment conducted by your local authority. This means test examines your income and capital to determine what financial help is available.

When Does Your Home Count?

The value of your home is usually included in the financial assessment if you move to a care home, BUT it's excluded if:

• Your spouse or partner lives there
• A relative aged 60+ lives there
• A dependent child lives there
• A relative who is disabled lives there

For more detailed guidance on this topic, see our comprehensive guide on protecting your home and assets as a spouse.

How the Assessment Works

Your local authority will assess your total assets including savings, investments, property (in some cases), and income to work out how much you'll need to pay.

The council will carry out two separate assessments:

1. Care Needs Assessment

To get a care needs assessment, contact social care services at your local council. This needs assessment determines what level of care and support you need and what types of care are appropriate. You'll be assessed as needing a certain level of support based on your daily living requirements.

2. Financial Assessment

This evaluates your ability to pay for care. The council examines:

• Savings accounts and investments
• Property ownership (subject to exemptions)
• Pensions and other income
• Benefits you receive

The 2025/26 Funding Thresholds Explained

The current capital limits remain at £23,250 for the upper capital limit and £14,250 for the lower capital limit. Here's what this means for you:

Self-Funding (Assets Above £23,250)

If your assets exceed £23,250, you're expected to pay the full cost of your care yourself. This is called self-funding or paying for their own care.

Advantages:

• Greater choice of care home
• More flexibility in care arrangements
• Can often secure a place more quickly

Considerations:

• Can deplete savings rapidly
• May affect inheritance plans
• Need to plan for when funds run low

Partial Council Support (Assets £14,250-£23,250)

With assets between the thresholds, you pay towards your care costs plus £1 per week for every £250 of capital between the limits. The council pays the remainder.

Full Council Support (Assets Below £14,250)

If assets fall below £14,250, you only pay what you can afford from your income. The local authority is responsible for paying the majority of your care home costs.

Important Note: Proposed 2025 Reforms Cancelled

New rules were due in October 2025 that would have raised the upper threshold to £100,000 and introduced an £86,000 lifetime care cap. These reforms have been scrapped by the current government. The current thresholds detailed above remain in place.

Your Funding Options: A Complete Breakdown

1. Local Authority Funding

If you're eligible for funding from your local council, they will arrange and pay for your care home place. However, there are important limitations:

What the council provides:

• The council must offer at least one suitable care home within their fee rates
• They council provides funding based on standard rates for your area
• You must be allowed to keep a personal expenses allowance (£30.65/week from April 2025) if you live in a care home

The "top-up fee" challenge:

If you prefer an expensive care home that charges more than the council is prepared to pay, someone (usually a relative, called a third party) must agree to pay a top-up fee to cover the difference. You can either arrange and pay for care yourself, or ask your local council to arrange it and bill you.

Important: Family members are not legally obliged to pay top-ups. This is a voluntary arrangement, but once agreed becomes legally binding.

2. NHS Continuing Healthcare

NHS Continuing Healthcare is a package of care arranged and funded solely by the NHS for people with significant ongoing healthcare needs. This covers the FULL cost of care including accommodation—there's no means test.

Who qualifies?

Eligibility is based on having a "primary health need" assessed across nature, complexity, intensity, and unpredictability of care needs. You may be eligible if you have:

• Complex medical conditions requiring constant supervision
• Severe dementia with significant health complications
• Terminal illness
• Unstable or unpredictable health conditions
• Multiple severe health problems

The assessment process:

1. Initial screening: A checklist assessment by a healthcare professional
2. Full assessment: If you pass the checklist, a multidisciplinary team evaluates your needs using the Decision Support Tool
3. Decision: If you have at least 1 priority need, or severe needs in at least 2 areas, you can usually expect to be eligible
4. Review: Regular reviews to ensure you still qualify

Key point: You have the right to ask for a personal budget, which gives more control over services, though it can't be used to pay for care home fees.

3. NHS-Funded Nursing Care

If you live in a care home and need registered nursing care but don't qualify for full NHS Continuing Healthcare, you may receive NHS-funded nursing care. From April 2025, this contribution is £254.06 per week paid directly to the nursing home to cover the cost of the nursing care element only.

This is NOT means-tested and is available to anyone in a nursing home regardless of who pays for their accommodation and personal care.

4. Personal Budget

If you're eligible for local authority funding, you may receive a personal budget—the amount the council allocates for your care. This gives you more control over how care is provided.

How it works:

• You can receive it as a direct payment
• The council can manage it and pay providers directly
• Or use a combination of both approaches

The personal budget allows flexibility in choosing services that meet your assessed needs while staying within the budget allocated.

5. Self-Funding Options

If you need to pay for your own care, several approaches can help:

Using savings and income:

• Personal savings and investments
• Pension income
• Investment returns
• Sale of assets

Equity release products:

• Lifetime mortgages
• Home reversion plans
• Allows you to access the value of your home without selling

Deferred Payment Agreements:

A deferred payment agreement (DPA) allows you to use the value of your home to pay for care without selling immediately. The council pays your residential home fees and the amount is repaid when your property is eventually sold.

Eligibility for DPA:

• Your home must be worth more than the equity you wish to release
• Your savings must be below £23,250 (excluding your home)
• No one else lives in the property who is excluded from the financial assessment

How it works:

• The local authority places a legal charge on your property
• They pay your care fees to the home
• Interest accrues on the loan (usually low rates)
• Repaid from the home sale or your estate

6. Attendance Allowance

Attendance Allowance is a non means-tested benefit for people over 65 who need help with care due to physical or mental disability.

Rates:

• Lower rate: For day or night care needs
• Higher rate: For day and night care needs

Key benefits:

• Can be claimed regardless of savings
• Doesn't affect other benefits
• Can be used flexibly toward care costs
• Can be claimed even if no one actually provides care

Important: If you move to a care home and receive local authority funding, Attendance Allowance stops after 28 days.

Comparing Funding Options: Quick Reference Table

Funding SourceWho QualifiesWhat It CoversMeans-Tested?Covers Full Fees?Self-fundingAssets above £23,250All care home costsNoYes - you pay allLocal authorityAssets below £23,250Care home place at standard ratesYesPartial/Full (depending on assets)NHS Continuing HealthcarePrimary health need assessedFull care home costs including accommodationNoYes - NHS pays allNHS-funded nursing careNeed registered nursing in care homeNursing element only (£254.06/week)NoNo - just nursing costsDeferred Payment AgreementProperty owner with low savingsFull care home fees temporarilyYesYes - repaid from property saleAttendance AllowanceOver 65 needing careContribution towards the cost of careNoNo - supplementary benefitPersonal budgetEligible for funding from councilAllocated care costs within budgetYesDepends on assessment

Regional Differences: Wales and Northern Ireland

Wales

Wales has more generous thresholds with an upper capital limit of £50,000 for care home funding (increased from £40,000 in 2019) and £24,000 for home care, with no lower threshold.

Northern Ireland

In Northern Ireland, thresholds mirror England at £23,250 upper and £14,250 lower limits. Health and Social Care (HSC) Trusts administer funding.

Step-by-Step: How to Get Financial Help

Step 1: Get a care needs assessment

Contact your local council's social care department to request a care needs assessment. This determines what level of care in a care home or other setting you require. The council must provide this assessment free of charge.

Step 2: Complete the financial assessment

The local authority will carry out a financial assessment to determine your contribution. Be prepared to provide:

• Bank statements (last 12 months)
• Property deeds or rental agreements
• Pension statements
• Investment portfolios
• Details of any debts

Step 3: Understand your contribution

Based on the assessment, you'll learn:

• How much you'll need to pay weekly
• Whether the council pays any portion
• If you're eligible for funding
• What benefits you might be able to get

Step 4: Find a care home

To find a care home, you can:

• Use your council's list of approved homes
• Search online directories
• Visit homes personally - our guide on what to look for and ask on your care home visit can help you prepare
• Consider whether they accept council funding if relevant

The local council must provide information about suitable care home options within their funding rates.

Step 5: Understand ongoing obligations

Remember:

• If paying for residential care yourself, you need to pay fees promptly
• People paying with council support must notify the council of any financial changes
• The home may require advance payment or deposits
• Your care system arrangements will be reviewed regularly

What Happens at Different Asset Levels

Scenario 1: Assets Above £23,250

You're self-funding and responsible for paying all care home fees. The council might still conduct a needs assessment to determine what care you need, but won't contribute financially. You have broader choice of care home options.

Scenario 2: Assets Between £14,250-£23,250

The council will help with care costs. You'll pay towards fees from your income plus a contribution from your assets. The contribution is calculated as £1 per week for every £250 of capital between the limits. The council pays the remainder, but you're limited to homes within their fee structure unless someone agrees to pay a top-up fee.

Scenario 3: Assets Below £14,250

Your local authority will arrange and pay for your care home accommodation. You only pay towards costs from your income, keeping the personal expenses allowance of £30.65 per week for personal items.

Important Warnings and Considerations

Deprivation of Assets

Don't give away assets to qualify for funding. Councils can investigate transfers made to avoid care fees and treat you as still owning them. This applies regardless of when the transfer occurred—there's no "7-year rule" for care costs. Read our detailed explanation of deprivation of assets rules to understand what's allowed and what isn't.

Top-Up Fee Sustainability

Before a family member agrees to pay a top-up fee for an expensive care home, ensure it's affordable long-term. The proportion of people paying for their own care has increased significantly, from 41% to 65% between 2021 and 2024. Learn more about how top-up fees work and who's responsible for paying them.

Contract Terms

Before signing, understand:

• What happens if you become eligible for council funding
• Whether the home accepts local authority rates
• Notice periods required
• What's included in fees and what costs extra

Getting Help and Advice

Free Support Services

Age UK:Provides free guidance through their advice line and local branches on paying care options and navigating the care system.

Citizens Advice:Offers free, impartial advice on benefits, funding, and financial help from your local council.

Social Care and Support Guide:The NHS provides a comprehensive social care and support guide at nhs.uk explaining all aspects of needing care in a care home.

Professional Advisers

Financial advisers:Specialists in later-life planning can advise on funding strategies, equity release, and investment planning to pay for a care home.

Solicitors:Can help with property transfers, deferred payment agreements, and ensuring you don't fall foul of deprivation of assets rules.

Independent care advisers:Can help you find a care home, understand contracts, and navigate the assessment process.

Planning Ahead

The earlier you plan for potential care home costs, the more options you'll have:

In your 50s-60s:

• Review long-term care insurance options
• Consider property and asset structures
• Understand what your pension and capital will provide
• Research typical home costs in your area

When care becomes likely:

• Request needs assessment early
• Get professional financial advice
• Understand your choice of care home within budget
• Don't make hasty property decisions

When entering care:

• Understand whether you need full care home placement - explore the differences between residential care and nursing care
• Know exactly what the person's care package includes
• Keep detailed financial records
• Plan for when assets may fall below thresholds

Summary: Key Takeaways

1. Know the thresholds: Above £23,250 you pay for care yourself; below £14,250 the council pays most costs
2. Get assessments early: Contact your local authority for both care needs and financial assessments
3. Explore all options: Don't assume you need to pay everything—check NHS continuing healthcare eligibility
4. Property usually excluded: If your spouse lives there, the value of your home won't count in the financial assessment for care
5. No one is forced to pay top-ups: Family aren't legally obliged to pay unless they voluntarily sign a contract
6. The council must help: Your local council must provide information and support to find a care home
7. Plan ahead: The care provided and how it's funded works best when planned early
8. Wales is different: Wales and Northern Ireland have different thresholds—check your region
9. Benefits continue: Some benefits like NHS-funded nursing care continue regardless of who pays for accommodation
10. Regular reviews: All funding arrangements, whether local authority, NHS, or self-funded, are reviewed regularly

How Ashberry Care Homes Can Help

At Ashberry Care Homes, we understand that funding care home fees can feel overwhelming. Our experienced team supports families through:

• Clear explanations of all funding options available for care in a care home
• Assistance with council and NHS assessment processes
• Transparent fee structures showing exactly what you'll need to pay
• Help with care funding applications and paperwork
• Connections to trusted financial advisers
• Regular reviews of funding arrangements as circumstances change

We work with families whether they're self-funding, receiving local authority support, or have NHS continuing healthcare. Our priority is ensuring your loved one receives excellent care and support with funding arrangements that work for your family.

Explore our care homes across Herefordshire, Wales, Wolverhampton, and Cheshire, or learn more about life at our homes.

Contact us today for a confidential discussion about care home fees and funding options. We're here to help you navigate the care system with confidence and find the right home placement for your loved one.

This guide reflects funding rules as of 2025/26. Rules and thresholds are subject to change. Always check current rates with your local authority and seek professional advice for your specific circumstances.

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