Care funding guidance is essential for anyone navigating the often complex and costly care system in the UK. Care isn’t free, and unless your capital is below £23,250, you’ll likely need to contribute towards your care costs. Depending on your individual circumstances, some financial support may be available. Understanding your options is key to making informed decisions and accessing the right support at the right time.
If you have savings of more than £23,250 (called the upper capital limit or UCL) you are not currently eligible for local authority help with the cost of care, and you will have to cover it yourself. Should your capital fall below the limit, the council will conduct another review and reassess your contribution based on your income.
It's worth noting that a new cap of £86,000 on the amount anyone has to spend on their personal care over their lifetime was due to be introduced in October 2023, but this was scrapped.
If you're fortunate enough to have a significant amount of savings that you can draw on to cover your care fees, this is ideal. Not only are savings an easy, hassle-free way to pay for care, depending on the amount you have, but using them to pay for your home care could help you avoid taking out loans or selling property and can therefore offer you a degree more stability for the future.
If you have a substantial amount of private income, such as income generated from a rental property, shares or other investments, this could be used to fund your care.
Although a very simple approach to paying for care, it has its risks. The way you invest your money will impact how much you have and as such you may only be able to cover care fees using private income for a short time.
All investments carry an element of risk and it's therefore important to seek sound financial advice before considering investments as a means of funding your care.
If you think you own any high value items such as pieces of art, antiques or vintage collectibles, it may be worth getting them valued to see if they could contribute towards or potentially cover your care fees.
If you urgently need income to pay for either care at home or care in a residential home, an immediate needs annuity may be worth considering. An immediate needs annuity works by providing a lump sum investment upfront in return for a regular income. Income from such an annuity is tax free, can be paid directly to your care provider and can provide you with guaranteed income with which you can cover your care costs for life.
However, it's important to do your research when it comes to selecting an annuity provider, as you risk losing money if you opt for a provider with poor rates. A financial adviser should be able to guide you through the selection process.
An immediate needs annuity could be right for you if you:
It may not be right for you, if you:
Check whether your insurance policies could cover care costs.
Although long-term care policies are no longer sold, you may have life insurance with a cash-in value, or life assurance with critical illness or terminal illness policy that will cover the condition you have and can help fund your care.
You may even have an income protection policy that pays out a regular income if you're unable to work due to poor health. However, this income may stop upon retirement.
If your home is bigger than you need, it could be worth considering downsizing. Selling your existing home and buying a less expensive property could free up money to fund your care. You may find a smaller home better suits your needs now and further down the line.
Rather than using the money raised from downsizing your home to pay for your care fees directly, you may consider using it to buy an immediate needs annuity, make investments which you can then draw on to pay for your care, or to fund an equity release scheme.
Although a last resort for many, selling your home may be an option you're prepared to consider, if you're planning on moving into residential care. It's likely to be your biggest financial asset and as such best positioned to fund your long-term care.
If you want to avoid selling your home, there are other ways of self-funding care.
Use the 12 week property disregard
If you need to move into permanent residential care, the 12 week property disregard may give you some much needed breathing room to work out what longer-term options may be viable or how to pay for your care, before you have to sell your home.
During this 12 week period, the local authority will not include the value of your property in their financial assessment and will contribute to your care home fees.
To qualify for it your savings (capital excluding the value of your home) need to fall under the savings threshold, which is currently £23,250.
Deferred payment agreement
This is a legal arrangement with your local council that allows you to use up to 70% to 80 % of the value of your home to pay for your care home costs. It's essentially a long-term loan from your local council, only repayable if you sell your home or you pass away. Short term care home stays aren't covered under this arrangement.
Rent your home to generate additional income
If you want to keep your home and pass it on to beneficiaries upon your death, another option to help fund your care is renting out your home. Although the rental income may not cover all your long-term care fees, it can contribute to them.
Equity release
Equity release is a way of utilising the value of your home by accessing some of the money from it, without having to move out.
There are two main types of equity release schemes.
1. Lifetime mortgages
A lifetime mortgage is a lump sum loan secured against your house. It doesn't need to be repaid until the end of the mortgage term (when the property is sold, the borrower dies or moves into a care home.)
2. Home reversion plans
If you're looking to fund long-term care at home, you may want to explore home reversion plans. With this scheme, you can sell part or all of your home at less than its market value in return for a cash sum. You're then able to stay in the property as a tenant, paying no rent.
However home reversion plans are high risk and can have tax implications and affect benefits and inheritance, so it's worth investing in financial advice before opting for this or any other equity release scheme.
You may be eligible for government benefits such as attendance allowance, state pension payments, personal independence payments and pension credit, all of which can help to boost your income. It's worth double-checking your eligibility to ensure you're not missing out.
If your savings are between the lower capital limit of £14,250 and the upper capital limit of £23,250, your local council will help to pay for your care. To determine how much they will contribute and how much you will need to pay, you will be required to complete both a needs assessment and financial assessment.
If you feel you need help coping with everyday tasks, you can contact your local authority to request a needs assessment. These are free of charge, can be done face to face or over the phone, and usually last about an hour.
A social worker or occupational therapist will ask you how you're coping with day to day activities and may also ask you to describe how you do certain things. Based upon this assessment your care needs will be determined.
If it is decided that you do require some support with your care, a financial assessment will be conducted to work out how much you need to pay and how much (if any) the council will contribute. In addition to your regular income (including pensions, benefits and earnings,) your capital (savings, investments, property and any business assets) will be reviewed.
Will my home be included in the financial assessment?
Your home will not be included in the financial assessment if
You'll receive council funding through a personal budget, which is the overall cost of care the local authority arranges for you. It makes clear how much you will need to pay towards the overall cost and the remaining amount to be paid by the local authority.
Your personal budget can be made available to you in several ways.
The frequency of direct payments will usually align with your care provider's invoicing schedule: weekly, fortnightly or monthly. Most councils will ask for evidence of how your direct payments have been spent every few months.
Attendance Allowance is a benefit designed to help older people with extra needs related to illness or disability. It can go towards funding care costs, giving you more flexibility in how you arrange support at home or elsewhere. The first step is to check if you’re entitled based on your age, needs, and health circumstances.
Your State Pension is a key source of income in later life and may help cover care-related expenses. While it won’t replace direct care funding, understanding how much help it offers can make a difference when planning for long-term needs. The amount you receive may vary depending on your National Insurance record and when you reached pension age. Ensuring you claim your full entitlement can make it easier to afford additional support if needed.
Pension Credit provides extra income for those on a lower State Pension, helping you manage essential costs more comfortably. If you qualify, the council pays additional support through Housing Benefit or Council Tax reduction, easing financial pressure. This payment can supplement your income, making care arrangements more accessible and manageable. It’s worth checking eligibility, as many people who are entitled to this support aren’t currently claiming it.
Personal Independence Payments are aimed at people under State Pension age with long-term disabilities or health conditions. They provide financial support to help with daily living and mobility needs, making it easier to arrange person-centred care. Payments can be used flexibly, whether that’s for equipment, home help, or transport for appointments. Ensuring you apply with detailed evidence increases your chances of receiving the correct rate and improving your quality of life.
If you live with a long-term, complex health need you may qualify for social care which is arranged and funded by the NHS. NHS continuing healthcare can be provided in settings outside the hospital including your own home.
It's worth noting that the NHS continuing care funding is NOT means tested and can cover up to 100% of your costs. To find out if you're eligible for NHS continuing healthcare funding, you will need to be assessed by a multidisciplinary team of healthcare professionals. They will relate your care needs to:
Your eligibility will not depend on any diagnosed condition, but on your needs as assessed by the NHS. If this changes, so too could your eligibility for support and funding. A decision about eligibility should be made within 28 days of the assessment.
For further information about NHS continuing healthcare call Beacon on 0345 548 0300
In addition to NHS and council supported care, charities can also be a source of care funding. Charities such as the RAF Benevolent Fund (supporting RAF servicemen and their families) can either provide some financial assistance to people struggling with care costs, or signpost them to it.
The CSIS charity fund, works with and gives grants to partner organisations that support civil and public servants and their families through challenging periods in their life. Some of these organisations include:
To find more charities that might be able to help visit The Charity Commission Website.
Working out how to pay for care can be a stressful and difficult process.
If you're not sure whether you are eligible for financial support and feel you'd benefit from some independent advice, it may be worth talking to a financial advisor. They can also help you figure out how to use the money you have in a way that is both cost effective and meets your needs.
The following organisations may also be able to provide you with more general advice:
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Chris is an experienced healthcare professional with prior experience as a management consultant and financier. He was inspired to start the business after he began searching for care for his mother, who in turn spent many years caring for his father at home. As a result, he's been immersed in the world of care for his entire life and understands how hard it can be to find the right care provider, especially if you have a rare disease like his parents.
There are several options for funding care costs in the UK, including local authority support, NHS continuing healthcare, and paying as a self-funder. You may also explore care funding guidance from specialists to better understand what financial help is available. In some cases, families choose to pay a top-up fee if they want services beyond what the local authority will cover. Planning ahead can make it easier to balance affordability with quality care.
To qualify for NHS continuing healthcare funding, you must have a complex medical condition requiring ongoing care. The eligibility process focuses on your health needs rather than financial circumstances. If you’re moving into a nursing home or arranging care at home, a full assessment will determine whether you meet the criteria. Professional advice can help you prepare for this process and improve your chances of approval.
A financial advisor can help you understand your options and make informed decisions about paying for care. They can guide you through care funding guidance resources, explain how to protect assets, and help you plan long-term care payments. Advisors can also provide advice on home adaptations or other costs associated with remaining at home. This ensures you access the right support without unnecessary financial strain.
Yes, you may still be eligible for local authority funding even if you own your own home. However, the value of your property will be considered when determining how much you need to contribute. Some people also choose to pay a top-up fee if they want services beyond what their funding covers. Speaking with care providers or a financial advisor can help you explore all available options.
Get in touch with Tiggo Care today to see how we can help you or your loved one.
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