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Lots of people worry about paying for care for themselves or for a loved one. Most people will be expected to pay something towards the costs.

On this page you will find the following information:

What are the main steps of the process?

If your care is being organised by the local authority, then the main steps of the process are:

  1. Your local authority does a care needs assessment to identify what help you need.
  2. They make recommendations about your needs and whether or not you need residential care – this is called a Care Plan.
  3. They work out a budget to ensure you get what care you need – this is called a Personal Budget.
  4. They do a means test, also called a financial assessment, to work out how much you should pay towards your care home fees and how much they will cover.

Is your care arranged by the NHS or social services? You may not need to pay for some or all of the care.

What does the means test look at?

The means test will look at your income and capital, such as your savings and property. Whether you have to pay, and if so, how much, depends on how much income or capital you have. In certain situations, the local authority may assume that your capital generates an income which can be used towards pay your care home fees.

If you and someone else jointly hold capital, such as a savings account, it’ll be treated as divided equally between the two of you.

In some circumstances your home won’t be included in the means test, for example, if your partner still lives there.

Find out more about how your home might be included in the means test

What if I give away some of my money?

You may think about giving away some of your savings, income or property to avoid higher care costs, and to give something to your relatives or charity, for example. If the council thinks that you have done this to avoid paying care fees they may still assess you as if you still had the money or property that you have given away. This is referred to as deprivation of assets.

How will my capital be treated in the means test?

Your capital is the phrase used to describe the total amount of your savings, any property you own and any shares you might have.

Amount of your capital
How it will be treated
Over £23,250 You must pay full fees (self-funding)
Between £14,250 and £23,250 The local authority will assume that this generates an income and this will be taken into account for your care home fee contributions.
Less than £14,250 This will be ignored and won't be included in the means test

How will my income be treated in the means test?

Your income can be taken into account in the means test. This can include pensions and welfare benefits.

As noted above, in some cases, the local authority may also assume that your capital generates an income, which will also be taken into account for your care home fees.

How much will I have to pay?

After the means test the local authority should give you a written record of their decision of what you will have to pay and what they will pay, and how they calculated it.

You should not be left with less than £24.90 a week after any contribution to your fees. This is known as your Personal Expenses Allowance.

What if I prefer a more expensive care home than the local authority will pay for?

If you'd prefer to live in a care home that costs more than the local authority would usually expect to pay, it can arrange this, provided that someone else is willing to meet the difference in cost. This is usually known as a top-up or third-party payment.

Top ups should only be paid voluntarily and with the consent of families, and older people have the right to be offered at least one residential care placement which is available and affordable within the funding the council has allotted to them.

Top ups are an arrangement between the council and the older person and their family. If an older person and their family choose a care home that requires a top up payment the idea is that this is agreed with and paid to the council, which then passes the extra amount to the care home.

You could also choose a care home in another area to be closer to family or friends.

You always have a choice over where to live

How do I pay my part of the fees?

Generally the local authority pay the full amount to the home and collect from you the amount you need to pay. This may be different if you are paying a ‘top-up’ fee.

What if I run out of money?

If you are paying fees yourself (called self-funding) and your capital goes down to less than £23,250, the local authority may assist with funding. You should request an assessment a few months before that happens. They should arrange one as soon as possible so you don’t have to use up your capital below that amount.

If you need any help understanding the residential care system, speak to your local Age UK

For more detail on paying for permanent residential care, please see our free resources

Paying for permanent residential care (PDF 258 KB)

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Further information


Our Information guides are short and easy to digest, giving a comprehensive overview of the relevant topic. Factsheets are longer with more detail, and are aimed at professionals.

You can download other guides in our series from publications

For more information: Call Age UK Advice: 0800 678 1174

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