Planning for Care Home Fees in 2026/27: Means-Testing and Protecting Your Money
How care home fees are means-tested in 2026/27, the capital thresholds, deprivation of assets rules and legitimate ways to plan ahead and protect your money.
Quick answer
In 2026/27 England means-tests care using an upper capital limit of 23,250 GBP and a lower limit of 14,250 GBP. Above the upper limit you pay your own fees in full; in between you pay a tariff income of 1 GBP per week per 250 GBP of capital. Your home is usually counted for residential care unless a qualifying person still lives there, and councils can challenge any gift or transfer made to avoid charges.
How the means test works
When you need residential care, your council carries out a financial assessment of your capital and income. Capital means savings, investments, property and certain other assets. The thresholds in England for 2026/27 are an upper capital limit of 23,250 GBP and a lower limit of 14,250 GBP.
- Above 23,250 GBP: you are a self-funder and pay the full fee.
- Between 14,250 GBP and 23,250 GBP: you pay a "tariff income" of 1 GBP per week for every 250 GBP (or part) above the lower limit.
- Below 14,250 GBP: capital is disregarded and only your income is assessed.
Income such as pensions and most benefits is largely taken towards fees, but you keep a Personal Expenses Allowance. The New State Pension is around 241.30 GBP per week, and that income counts in the assessment.
Is your home counted?
For permanent residential care your home is normally treated as capital. However, it must be disregarded if any of these people still live there: your spouse or civil partner, a relative aged 60 or over, a relative who is incapacitated, or a dependent child. The value is also subject to a mandatory 12-week property disregard at the start of permanent care, giving families breathing space.
If care is provided in your own home, the property is never counted. Where the home would otherwise force a sale, a Deferred Payment Agreement lets the council effectively lend you the fees secured against the property, repaid later from your estate, so you need not sell during your lifetime.
Deprivation of assets: why gifting rarely works
Many families ask whether they can give away the house or savings to protect an inheritance. The "deprivation of assets" rules are designed to stop exactly this. A council can decide you deliberately deprived yourself of an asset if avoiding care charges was a significant reason for the transfer, and if care was reasonably foreseeable at the time.
There is no fixed seven-year cut-off as there is for inheritance tax - a gift made many years ago can still be challenged. If deprivation is found, the council treats you as still owning "notional capital" and charges you as though the asset were never given away. Where the money has gone, family members who received it can be pursued.
NHS funding you might be missing
Before assuming you must pay, check whether care should be free. NHS Continuing Healthcare (CHC) funds the full cost of care - including accommodation - for people with a "primary health need", and it is not means-tested. Eligibility is assessed first with a checklist, then a full Decision Support Tool by a multidisciplinary team. NHS-funded Nursing Care is a separate weekly contribution towards nursing in a care home. Many self-funders are never offered an assessment, so request one if there is significant ill health.
Legitimate planning that does work
You cannot lawfully hide assets, but you can plan sensibly:
- Power of attorney: set up a Lasting Power of Attorney for finance and for health while you have capacity, so decisions can be made smoothly later.
- Use a Deferred Payment Agreement to keep the home rather than sell in a hurry.
- Consider an immediate needs annuity (a care fees plan) to convert capital into a guaranteed income for life that pays the provider directly, capping the cost.
- Keep your will up to date and understand the inheritance tax position. Paying for care reduces your estate and can lower IHT: the nil-rate band is 325,000 GBP and the residence nil-rate band is 175,000 GBP, with IHT at 40% above the bands (36% if 10%+ goes to charity). The residence band can be lost if the home is sold, though a downsizing addition may preserve it.
Care fees are one of the largest costs many households face, so model the numbers early. To understand the pension and savings income that will be assessed, our
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Means-testing is rules-based, not random: know the 23,250 GBP and 14,250 GBP thresholds, the property disregards and the deprivation rules. The safe route is legitimate planning - powers of attorney, deferred payments, care annuities and sound estate planning - rather than risky last-minute gifting that councils can unwind. Where there is a health need, pursue NHS Continuing Healthcare first.
Frequently asked questions
What is the upper capital limit for care home funding in 2026/27?
In England the upper capital limit remains 23,250 GBP. If your assessable capital (savings, investments and sometimes your home) exceeds this you must pay your own fees as a self-funder. Below the lower limit of 14,250 GBP your capital is ignored and only income is assessed. Between the two figures you pay a 'tariff income' of 1 GBP per week for every 250 GBP of capital. Wales, Scotland and Northern Ireland set different thresholds, so check your own nation.
Is my home counted in the care means test?
For permanent residential care your home is usually counted as capital, but there are important disregards. It is ignored if a spouse, civil partner, a relative aged 60 or over, a disabled relative or a dependent child still lives there. There is also a mandatory 12-week property disregard at the start of permanent care. For care in your own home the property is never counted. A Deferred Payment Agreement can loan fees against the home so it need not be sold immediately.
What is deprivation of assets?
Deprivation of assets means deliberately reducing your wealth, by gifting money, transferring your home or buying exempt items, to avoid or reduce care fees. The council assesses whether avoiding charges was a significant motivation and whether care was reasonably foreseeable when you acted. There is no fixed time limit, so even old gifts can be challenged. If deprivation is found, the council treats you as still owning that 'notional capital' and charges you accordingly, which can leave family liable.
Does NHS Continuing Healthcare cover the fees?
NHS Continuing Healthcare (CHC) is fully funded NHS care for people with a 'primary health need', and crucially it is not means-tested. If you qualify the NHS pays the entire cost of your care, including accommodation in a care home, regardless of your capital or income. Eligibility is decided by a multidisciplinary assessment using a checklist then a full Decision Support Tool. Many people are wrongly self-funding when they may qualify, so it is always worth requesting an assessment.
How much income am I left with after paying care fees?
If the council funds your residential care and you contribute most of your income, you must be left with a Personal Expenses Allowance for personal items. In Wales there is also a maximum weekly charge cap for non-residential (home) care. Your assessable income includes most pensions and benefits, though the mobility component of certain benefits and a portion of any private pension passed to a spouse may be disregarded. The New State Pension is around 241.30 GBP per week.
Can I give my house to my children to avoid care fees?
Gifting your home to avoid care fees is risky and rarely works. Councils can treat it as deliberate deprivation and charge you as if you still owned it, with no time limit on challenges. The gift also stays in your estate for inheritance tax for seven years (the gift with reservation of benefit rules mean it may never leave your estate if you keep living there rent-free). You also lose control and security. Take regulated advice before any transfer.
Does putting my home in a trust protect it from care fees?
So-called 'asset protection trusts' marketed to shield homes from care fees are frequently mis-sold and often fail. If you set one up when care was foreseeable, the council can treat it as deprivation and ignore the trust entirely. Trusts can also trigger inheritance tax charges (the 325,000 GBP nil-rate band, periodic and exit charges) and capital gains tax issues, and you lose flexibility. Genuine estate planning may use trusts, but never solely to dodge legitimate care costs.
How does paying for care affect inheritance tax?
Paying care fees reduces your estate, which can lower or remove inheritance tax. The nil-rate band is 325,000 GBP and the residence nil-rate band is 175,000 GBP (the latter tapers away above a 2 million GBP estate and may be lost if the home is sold to fund care, though a downsizing addition can preserve it). Above the bands inheritance tax is 40%, or 36% if at least 10% of the net estate goes to charity. Legitimate care spending is never deprivation.
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