Self-Funding a Care Home: What to Do as Savings Run Low, and What You Can Still Claim

If you're paying privately for care and watching your savings fall, the situation feels urgent but it is manageable. The rules change once you get close to certain thresholds, and several benefits stay available to you throughout, whether or not the council is involved yet.

Where Do Things Stand Right Now?

Still self-funding comfortably, well above £23,250You have time, but some benefits are worth claiming now rather than later. See what to claim below.

Getting close to the thresholdYour savings are approaching £23,250, or already sitting between £14,250 and £23,250. See what to do next below.

Already below £23,250, or you need council support nowSee the steps to take immediately below.

How the Means Test Works

In England, the local authority means-tests your capital, which includes savings, investments, and property, to decide what you contribute to care costs. The thresholds for 2025/26 are:

• Above £23,250: you pay the full cost of care yourself
• Between £14,250 and £23,250: you contribute from capital on a sliding scale (£1 per week for every £250 above £14,250), with the council covering the rest
• Below £14,250: savings are disregarded; you contribute only from income

These thresholds have been frozen since 2010 and were confirmed at the same level for 2025/26 by the Department of Health and Social Care. The proposed £86,000 lifetime cap on care costs has been scrapped by the current government. See our guide to the financial assessment and care home funding guide for the full process, or the NHS overview for the national rules.

Average fees in 2026 run to around £1,300 a week for residential care and £1,512 a week for nursing care, roughly £67,600 and £78,600 a year. Most homes raise fees by 5 to 10 percent annually, and care needs (and costs) often increase over time for conditions like dementia, so savings can run out faster than people plan for. Someone entering residential care with £100,000 could cross the upper threshold in under two years before fee increases are even factored in.

Approaching the Threshold

Don't wait until the money has actually run out. Two things need requesting from your local authority's adult social care team, and you can ask for both before you cross the threshold:

1. A care needs assessment. This establishes what support is required and is the formal starting point for council funding.
2. A financial assessment (means test). This looks at savings, investments, property, pensions, and income to work out what you'll be expected to contribute.

While you wait for these, claim Attendance Allowance or PIP if you haven't already (see below). Both are non-means-tested and unaffected by how close you are to the threshold, but Attendance Allowance is suspended after four weeks of council-funded care, so there's a real advantage to having it in payment before that starts.

You Need Council Support Now

If the council is now contributing, or about to, three things typically come into play.

Top-Up Fees

A top-up fee is the difference between what the council pays and what your current home actually charges. No one is legally obliged to pay it unless they've signed a contract agreeing to. Once signed, that agreement is legally binding. Key points:

• A family member or third party can agree to pay voluntarily
• If payments become unaffordable, a move to a fully council-funded home may be needed
• Think about whether the payment is sustainable long term before agreeing, not just affordable right now

Our guide to care home top-up fees covers this in full detail.

Deferred Payment Agreements

If most of your capital is tied up in property, a Deferred Payment Agreement (DPA) lets the council pay your fees on your behalf, secured against your home. You repay when the property is sold, typically after death.

• You don't have to sell your home during your lifetime
• Interest is charged, currently around 1.75 percent above the Bank of England base rate, plus admin fees
• Interest accumulates over longer stays, so it isn't asset protection, the full amount plus interest is still owed

See our full guide to Deferred Payment Agreements for how to apply.

Moving to a Council-Funded Home

If there's no top-up in place and your current home charges above the council rate, a move may be necessary. The council is legally required to offer at least one suitable option within their funding rate. Raising this early, with both the home and the council, gives you the best chance of minimising disruption.

NHS Funding Routes

Two NHS routes exist alongside council funding, and both are worth checking regardless of your financial position.

NHS Continuing Healthcare (CHC)

Full NHS funding for anyone whose primary need is health-related rather than social care. It is not means-tested, and if you qualify, the NHS covers all costs, including accommodation, with no capital assessment at all.

Eligibility is assessed by an Integrated Care Board using the NHS Decision Support Tool, which scores twelve domains including behaviour, cognition, nutrition, and continence. Around one in seven people assessed are found eligible. Self-funders who are later found eligible get a refund of fees paid from the date of application, so it's worth requesting an assessment whenever health needs are significant, not just once you're struggling financially. See our guide to NHS Continuing Healthcare for care home residents or the NHS overview for the assessment process.

NHS-Funded Nursing Care (FNC)

For people in a nursing home who don't qualify for full CHC, FNC is a weekly NHS contribution toward the nursing element of fees, paid directly to the home. It applies regardless of financial circumstances, to anyone receiving care from a registered nurse.

From 1 April 2026, the standard rate is £267.68 a week, up from £254.06. The enhanced rate (a small number of long-standing claimants only) is £368.24 a week. Everyone should be assessed for CHC first, since FNC is the fallback if CHC doesn't apply. See our guide to navigating NHS nursing care funding for more detail.

Benefits You Can Claim While Self-Funding

Paying privately doesn't shut you out of support. Several benefits are non-means-tested and continue in full regardless of savings, property, or income.

Attendance Allowance

For people over State Pension age who need help with personal care. Not means-tested, not affected by savings or self-funding status. This is the benefit most self-funders miss, because they assume paying privately means they're not entitled to anything.

• Lower rate: £76.70 a week, for help or supervision during the day
• Higher rate: £114.60 a week, for help during both day and night, or if terminally ill
• Continues in full while self-funding, but suspended after the first four weeks of council-funded care, so claim early
• No need for someone already providing care, eligibility is based on need
• Normally requires six months of needing that level of care first, unless terminally ill, in which case Special Rules fast-track the higher rate
• Can unlock further Pension Credit entitlement (see below)

Personal Independence Payment (PIP)

For people aged 16 to State Pension age with long-term health conditions or disabilities. Also non-means-tested and unaffected by self-funding status. Applies only if you're under State Pension age at first claim; if you're already past that age with no existing award, claim Attendance Allowance instead.

• Daily Living: £76.70 (standard) or £114.60 (enhanced) a week
• Mobility: £30.30 (standard) or £80.00 (enhanced) a week
• Maximum combined award: £194.60 a week, over £10,000 a year
• Existing DLA claimants moving into a care home should notify the DWP of the address change, but the award isn't automatically reviewed or reduced

Pension Credit

Means-tested, for people over State Pension age with weekly income below a set threshold. Relevant mainly to self-funders with modest income rather than substantial pensions or investments.

• Single person: £227.10 a week
• Couple: £346.60 a week
• The Severe Disability Addition, worth around £82.90 a week, can become accessible once Attendance Allowance is awarded, even for people previously assessed as ineligible on income grounds. This gateway effect is widely under-claimed.
• Also opens the door to Council Tax Reduction and some housing-related support

Council Tax Exemption or Discount

If a resident's home is left empty because they've moved permanently into a care home, it may qualify for a full Council Tax exemption (Class E in England). If someone remains living there, a 25 percent single-person discount usually applies instead. This is managed by the local council, not the DWP, and the application process varies by area, so contact the relevant council directly. Self-funders apply the same way as council-funded residents. If you're managing this under a Lasting Power of Attorney, see our guide to power of attorney and care home fees.

Disability Living Allowance (Legacy Claimants)

DLA is being phased out for new working-age claims in favour of PIP, but existing long-term claimants keep their award on moving into a care home, as long as circumstances are reported accurately and they haven't yet been invited to transition to PIP. The care component follows the same four-week rule as Attendance Allowance once council funding begins.

"The families who manage this transition most smoothly are the ones who contact us and the council well before the money actually runs out. Once you're in crisis, your choices narrow considerably." — Ashberry Care Homes

"Attendance Allowance is the benefit we most commonly see self-funding families fail to claim. Many assume that because they're paying privately they're not entitled to anything. In practice, it's based on care need alone, and it can meaningfully reduce the real cost of self-funding over time." — Ashberry Care Homes

Planning Ahead

A regular financial review beats a single conversation. Work out monthly costs, all income sources, how fast assets are depleting, and roughly when you'll cross the threshold. That gives you time to act rather than react.

• Claim Attendance Allowance or PIP as early as possible, particularly if council funding might start later
• Request a CHC assessment from your Integrated Care Board wherever health needs are complex or worsening
• Check Pension Credit eligibility once Attendance Allowance is in payment
• If nursing care is involved, request an FNC assessment without delay, backdated payments are sometimes available
• Apply for Council Tax exemption or discount, it isn't automatic
• An independent benefits adviser, through Age UK, Citizens Advice, or a specialist, can review your full entitlement picture in one conversation

Frequently Asked Questions

What happens when my money runs out while paying care home fees?Contact your local council and request a care needs assessment and a financial assessment. If eligible, the council starts contributing, and depending on what your home charges, a top-up arrangement or a move may follow.

Do I need to sell my home to pay for care?Not necessarily. A Deferred Payment Agreement lets the council fund care while placing a legal charge against the property, repaid on sale. The home is also disregarded from the means test if a spouse, dependent child, or relative aged 60 or over still lives there.

Are family members legally obliged to pay top-up fees?No, unless they've voluntarily signed a contract agreeing to. That agreement then becomes legally binding.

Does Attendance Allowance stop when you move into a care home?Not while self-funding. It's only suspended after the first four weeks once council funding begins, which is why claiming early matters.

Can I claim PIP and Attendance Allowance at the same time?No. PIP is for those under State Pension age, Attendance Allowance for those who've reached it. If you reach State Pension age while already receiving PIP, you keep your PIP award rather than switching.

How is FNC different from CHC?FNC is a flat weekly NHS contribution toward the nursing element of fees. CHC is full NHS funding of all care costs for those whose primary need is a health need. Both are assessed by the Integrated Care Board, and CHC should be considered first.

Can missed benefits be backdated?Attendance Allowance can usually be backdated up to three months. CHC can be backdated to the date of application if eligibility is confirmed. FNC can sometimes be backdated where an assessment was delayed. Claiming early is always better than waiting.

Rates confirmed from the DWP Benefit and Pension Rates 2026 to 2027 document and the GOV.UK announcement on NHS Funded Nursing Care rates, both effective 6 April 2026. Rates are reviewed annually. This article isn't financial or benefits advice, a qualified adviser can assess your specific entitlements.

If you'd like to talk through funding or benefits for a loved one at one of our homes, make an enquiry with the Ashberry team.

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