UK Long-Term Care Funding: A Complete Guide for 2026/27
Care home fees can run into tens of thousands of pounds a year, and who pays depends on a means test that can include the value of your home. This guide explains how the means test works, NHS Continuing Healthcare, deferred payment agreements, and self-funding.
After a Care Act needs assessment confirms you need care, the local authority carries out a financial means test covering your capital (savings and, in some circumstances, property) and income. Above the upper capital limit you are generally expected to self-fund; below the lower limit the council contributes more; between the two limits you contribute on a tapered basis. The specific capital limits are reviewed periodically — always check the current figures on gov.uk rather than relying on an old number.
When Your Home Counts as an Asset
If you move permanently into a care home, your main home's value is usually included in the means test unless a qualifying relative — such as a partner, or in some cases a relative over 60 or one who is disabled — continues to live there, in which case it is disregarded. If you instead receive care at home, your property is never counted in the means test.
Deferred Payment Agreements
A deferred payment agreement lets you delay paying some care home fees using your home's value as security, so you are not forced to sell it immediately. Interest and administration charges usually apply, and the deferred amount is normally repaid when the home is eventually sold, often after death.
NHS Continuing Healthcare
NHS Continuing Healthcare is a fully NHS-funded package of care for people with a primary health need arising from disability, accident or illness. Where eligible, it covers the full cost of care regardless of savings or income, unlike local authority care, which is means-tested. Eligibility is assessed against a national framework and the threshold is set deliberately high, so decisions are sometimes disputed and appealed.
Home Care vs Care Home
Home care never counts your property in the means test, since you are not giving up your home to receive it, while residential care normally does count it (subject to the qualifying-relative disregard above). This is one reason families sometimes prefer, or are advised to consider, home care for longer where it is practical to meet someone's needs safely.
Deliberate Deprivation of Assets
Local authorities can treat giving away money, property or other assets specifically to avoid or reduce care costs as "deliberate deprivation of assets" and assess you as if you still had them. There is no fixed time limit after which a gift becomes automatically safe from this rule, so significant asset transfers made with care funding in mind carry real risk of challenge.
Scotland and Wales
Scotland provides free personal care regardless of means for those assessed as needing it, alongside separate accommodation charges in a care home. Wales operates its own capital limits and means test rules, distinct from England's. Always check the specific rules for the nation you live in.
How does the local authority decide whether I have to pay for my own care?
After a Care Act needs assessment confirms you need care, the council carries out a financial means test looking at your capital (savings and, in some circumstances, property) and income. If your capital is above the upper capital limit, you are generally expected to pay the full cost yourself (self-funding); below the lower limit, the council contributes more; between the two limits, you contribute on a tapered basis.
Does my home count towards the means test?
If you move permanently into a care home, the value of your main home is usually included in the means test, unless a qualifying relative (such as a partner, or in some cases a relative over 60 or one who is disabled) still lives there, in which case it is disregarded. If you receive care at home rather than in a residential setting, your home is not counted in the means test at all.
What is a deferred payment agreement?
A deferred payment agreement lets you delay paying some of your care home fees using the value of your home as security, so you are not forced to sell it immediately while receiving care. Interest and administration charges usually apply, and the deferred amount (plus interest) is normally repaid when the home is eventually sold, often after death.
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What is NHS Continuing Healthcare?
NHS Continuing Healthcare is a fully NHS-funded package of care for people with a primary health need arising from disability, accident or illness, and where eligible, it covers the full cost of care regardless of your savings or income — unlike local authority-arranged care, which is means-tested. Eligibility is assessed using a national framework and can be a source of confusion and appeals, since the threshold for qualifying is set deliberately high.
Are there different rules for home care versus a care home?
Yes. Home care (help with daily tasks in your own home) never counts your property in the means test, since you are not giving up your home to receive it. Residential care in a care home does normally count your property, unless a qualifying relative continues to live there, which is one reason people sometimes prefer, or are advised to consider, home care for longer where practical.
Can I give away my assets to avoid paying for care?
Local authorities can treat this as "deliberate deprivation of assets" if they believe you gave away money, property or other assets specifically to avoid or reduce care costs, and can assess you as if you still had those assets. There is no fixed time limit after which a gift becomes automatically safe from this rule, so significant asset transfers made with care funding in mind carry real risk of being challenged.
Do the rules differ in Scotland and Wales?
Yes. Scotland provides free personal care regardless of means for those assessed as needing it, alongside separate charges for accommodation costs in a care home. Wales has its own capital limits and means test rules, which differ from those in England, so always check the specific rules for the nation you live in rather than assuming England's figures apply UK-wide.
What is the "cap on care costs" reform and has it been introduced?
A cap on lifetime personal care costs (so that no one pays more than a set amount towards their own personal care over their lifetime) has been proposed and repeatedly delayed in England; check the current gov.uk guidance for the latest position, as implementation dates have moved several times and should not be assumed to be in force without checking.
Disclaimer: Care funding rules, capital limits and thresholds change and vary by nation; always check current gov.uk guidance and your local authority for your specific circumstances. This guide is general information, not financial, legal or care advice. Always seek independent professional advice for your specific situation.
