Deputyship vs Power of Attorney: UK Guide for 2026
Deputyship vs power of attorney in the UK for 2026: how each works, costs, who can use them, tax duties and the money decisions a deputy or attorney must handle.
Quick answer
A power of attorney lets a person, while they still have mental capacity, choose who will manage their money and welfare in future. Deputyship is the fallback when no power of attorney exists and capacity has already been lost: a relative or professional applies to the Court of Protection. Power of attorney is cheaper, faster and chosen freely; deputyship is slower, costlier and court-supervised.
What a power of attorney actually is
A lasting power of attorney (LPA) is a legal document made by a person -- the donor -- who still understands what they are doing. They appoint one or more attorneys to make decisions on their behalf if they later cannot. In England and Wales there are two types: property and financial affairs, and health and welfare. The financial LPA can be used while the donor still has capacity, if they consent; the health and welfare LPA only takes effect once capacity is lost.
The key feature is that the donor is in control of the choice. They decide who they trust, what powers to grant, and any restrictions. The document is registered with the Office of the Public Guardian (OPG) before it can be used. Scotland and Northern Ireland have their own equivalent regimes with different terminology, so the names and steps vary depending on where the person lives.
Ordinary versus lasting power of attorney
An ordinary power of attorney is a more limited tool, often used for short-term or specific situations -- for example, while someone is abroad. Crucially, it ends if the person loses mental capacity. That is the gap the lasting version is designed to fill: an LPA continues to operate precisely when it is most needed.
What deputyship is and when it applies
Deputyship is what happens when the planning did not happen. If a person loses mental capacity without a valid LPA in place, no one automatically has the right to manage their finances -- not even a spouse. Banks freeze accounts, and family members cannot legally pay bills from the person's funds.
The remedy is to apply to the Court of Protection to be appointed as a deputy. The court assesses the application, may require evidence of incapacity, and decides who is suitable. Once appointed, the deputy can manage the person's property and financial affairs within the scope the court allows. Deputies are supervised: they must keep records, submit annual reports and account for their decisions.
Deputyship vs power of attorney compared
The headline contrast is timing and control. A power of attorney is a proactive choice made while well; deputyship is a reactive court process imposed after the fact. One is chosen, the other is appointed.
| Feature | Power of attorney | Deputyship |
|---|---|---|
| When set up | Before capacity is lost | After capacity is lost |
| Who chooses | The person themselves | The Court of Protection |
| Relative speed | Faster | Slower (often months) |
| Relative cost | Lower | Higher |
| Ongoing supervision | Minimal | Annual reporting to the court |
| Flexibility | Donor sets the terms | Court sets the scope |
The cost difference is significant. A power of attorney has a one-off registration fee paid to the OPG, plus optional solicitor fees. Deputyship typically involves an application fee, a possible assessment fee, a security bond, annual supervision fees and frequently professional charges. Fee levels change over time, so always check gov.uk for the current figures rather than relying on older numbers.
The money decisions an attorney or deputy faces
Whether you act as attorney or deputy, you are managing someone else's finances in their best interests. That is a broad duty, and tax sits squarely within it. The money belongs to the person who lacks capacity, so it is taxed as theirs, using their allowances and bands -- not yours.
For the 2026/27 tax year that means the person's own Personal Allowance of GBP 12,570 applies, tapering away by GBP 1 for every GBP 2 of income above GBP 100,000 and reaching zero at GBP 125,140. The Income Tax bands -- basic rate 20% up to GBP 50,270 of gross income, higher rate 40% up to GBP 125,140, and additional rate 45% above that -- apply to them as they would to anyone. Scotland uses its own band structure.
Savings, dividends and investments
People who lack capacity often have savings and investments to manage. Several allowances are relevant for 2026/27:
| Allowance or limit (2026/27) | Amount |
|---|---|
| Personal Allowance | GBP 12,570 |
| Dividend allowance | GBP 500 |
| ISA allowance | GBP 20,000 |
| Capital Gains annual exempt amount | GBP 3,000 |
Interest and dividends are taxed in the person's name. The dividend allowance is GBP 500, with dividend rates above it of 10.75%, 35.75% and 39.35% depending on the band. If the deputyship or LPA permits, sheltering savings in an ISA -- with its GBP 20,000 annual allowance -- can be a sensible, tax-efficient step, though you must always act within your authority and the person's best interests.
To see how interest is taxed against the savings position, run the figures through a calculator before making decisions.
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Open Savings calculatorCapital gains and selling assets
If you sell investments or property on the person's behalf, capital gains tax may arise. For 2026/27 the annual exempt amount is GBP 3,000, with rates of 18% within the basic-rate band and 24% above it. Disposals of a former home and other significant assets are common in deputyship, especially when funding care, so the gain should be modelled before completion.
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Calculate Capital Gains Tax on property, shares and other assets for 2025/26.
Open Capital Gains Tax calculatorGifting and inheritance tax: tread carefully
Families often ask whether an attorney or deputy can make gifts -- perhaps for inheritance tax planning. The answer is: only within tight limits. Both attorneys and deputies can make modest gifts on customary occasions, such as birthdays or weddings, that are reasonable in light of the person's wealth. Anything larger, including deliberate IHT planning, generally needs Court of Protection approval. Unauthorised gifting is a serious breach of duty.
Neither role changes the inheritance tax rules. On death, the estate is assessed against the nil-rate band of GBP 325,000, plus the residence nil-rate band of GBP 175,000 where it applies, with 40% charged on the excess (or 36% if at least 10% of the estate is left to charity). What an attorney or deputy does with authorised gifts and allowances can affect the eventual estate value, so meticulous record-keeping is essential.
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Open Inheritance Tax calculatorPractical steps if you are deciding now
If the person still has capacity, the clear recommendation is to put a lasting power of attorney in place without delay. It is cheaper, quicker and keeps the choice in their hands. Consider both the financial and the health and welfare types, since they cover different decisions.
If capacity has already been lost, deputyship is the route, and it pays to start early because the court process takes time. In the meantime, essential payments can stall, which is exactly the disruption advance planning avoids.
In either case, build a clear picture of the person's tax position. Their income, savings and any property all carry tax consequences that fall on them, not on you. A quick income tax calculation is a sensible starting point for budgeting their affairs.
Income Tax Calculator
Work out how much income tax you owe using the latest 2025/26 UK tax bands.
Open Income Tax calculatorThe bottom line
Power of attorney and deputyship answer the same question -- who manages the money when someone cannot -- but from opposite ends. One is a calm, low-cost decision made in advance; the other is a court-supervised remedy after the moment for planning has passed. For most people the lesson is simple: arrange a lasting power of attorney while you can. If you are already in the deputyship situation, focus on acting within your authority, keeping immaculate records, and getting the person's tax right using their own 2026/27 allowances and bands. When in doubt on gifting, IHT or major disposals, take legal advice before you act.
Frequently asked questions
What is the main difference between deputyship and power of attorney?
A power of attorney is set up by a person while they still have mental capacity, choosing who will act for them in future. Deputyship is the fallback: if someone loses capacity without a valid power of attorney in place, a relative or professional must apply to the Court of Protection to be appointed deputy. Power of attorney is cheaper, faster and gives the person choice; deputyship is slower, more expensive and supervised by the court.
Can I set up a power of attorney for someone who has already lost capacity?
No. A lasting power of attorney can only be created by a person who still has the mental capacity to understand and make the decision. Once capacity is lost, that route closes permanently. The only remaining option is to apply to the Court of Protection for a deputyship order. This is exactly why advisers urge people to put a power of attorney in place early, well before any decline.
Do attorneys and deputies have to deal with tax?
Yes. Both must manage the person's tax affairs as part of acting in their best interests. That can include filing Self Assessment returns, paying Income Tax and Capital Gains Tax, claiming reliefs and allowances, and keeping records. Deputies must also account to the Court of Protection. Neither role makes the tax disappear -- the person's normal allowances and bands still apply, so accurate calculations matter.
How much does deputyship cost compared with power of attorney?
Power of attorney involves a one-off registration fee paid to the Office of the Public Guardian, with optional solicitor fees on top. Deputyship is markedly more expensive: there is an application fee, often an assessment fee, a security bond, annual supervision fees and frequently professional fees because the process is complex. Exact figures change, so check gov.uk before applying. The cost gap is one of the strongest arguments for arranging power of attorney early.
Are there different types of power of attorney?
Yes. In England and Wales the two lasting power of attorney types are property and financial affairs, and health and welfare. The financial one can be used while the person still has capacity if they agree; the health one only activates after capacity is lost. There is also a more limited ordinary power of attorney for short-term situations. Scotland and Northern Ireland have their own equivalent regimes with different names and rules.
Does a deputy or attorney pay tax on money they manage?
No. The money belongs to the person who lacks capacity, so it is taxed as theirs using their allowances and bands -- not the attorney's or deputy's. For 2026/27 that means their Personal Allowance of GBP 12,570, the savings and dividend allowances, and the relevant Income Tax bands all apply to them. Attorneys and deputies are managing someone else's money, not receiving income, so they are not personally taxed on it.
Can an attorney or deputy make gifts from the person's money?
Only within strict limits. Both can make modest gifts on customary occasions, such as birthdays, that are reasonable given the person's circumstances. Larger gifts -- including inheritance tax planning -- generally need Court of Protection approval. Making unauthorised gifts is a serious breach. If you are weighing up gifting and its effect on a future estate, model the figures with an inheritance tax calculator and take legal advice first.
What happens if there is no power of attorney and no deputy?
Then no one has legal authority to manage the person's finances. Banks will freeze accounts, bills may go unpaid, and family cannot legally access funds even to pay for care. The only remedy is to apply for deputyship, which can take months. During that gap, essential payments can stall. This is the costly, stressful scenario that arranging a lasting power of attorney in advance is designed to prevent.
Does deputyship or power of attorney affect inheritance tax?
Neither changes the inheritance tax rules themselves. The person's estate is still assessed on death against the GBP 325,000 nil-rate band plus the GBP 175,000 residence nil-rate band where it applies, with 40% on the excess. What an attorney or deputy does -- such as authorised gifting or using allowances -- can affect the eventual estate value, so good record-keeping matters. Use an inheritance tax calculator to see the likely position.
Can I act as both attorney and later become a deputy?
These are separate roles for different situations, so you would not normally hold both for the same person at the same time. If a valid power of attorney exists and covers the decisions needed, deputyship is usually unnecessary. Deputyship is only required where no suitable power of attorney is in place. In rare cases a deputy might be appointed for decisions the existing power of attorney does not cover, but that is unusual.
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