How the financial assessment works
Before a local authority can contribute to the cost of your care, they conduct a financial assessment, often called a means test. This test determines how much you must pay based on your income and capital. Your capital includes savings, investments, and, in some cases, the value of your home.
Capital thresholds in England
As of recent rules, there are key capital thresholds that affect how much you contribute to care costs in England:
- Upper limit: If your capital exceeds £23,250, you are generally expected to pay for your care home fees in full as a 'self-funder'.
- Lower limit: If your capital is below £14,250, you will receive maximum financial support from the local authority, though you may still have to contribute some income.
- Sliding scale: If your capital falls between these two figures, your local council will contribute, but you will also pay a tariff from your capital towards your care, in addition to contributing from your income.
When your home's value is counted
Your property is not automatically included in the financial assessment. The rules depend heavily on the type of care you need and your living situation.
- Care at home: If you receive care in your own home, the value of your property is completely disregarded from the means test. The council will only consider your income and other capital.
- Temporary residential care: If you move into a care home for a temporary period, for example, for respite care or for rehabilitation, the value of your home is also ignored.
- Permanent residential care: This is the scenario where your property's value is most likely to be included in the financial assessment. However, there are crucial exceptions known as 'property disregards'.
Property disregards: who is protected?
Your home's value will be disregarded from the financial assessment, even if you are moving into a care home permanently, if one of the following people still lives there:
- Your spouse, partner, or civil partner.
- A close relative over the age of 60.
- A disabled or incapacitated relative.
- A dependent child.
If one of these situations applies, your home is not counted as part of your capital, and the council cannot force its sale. They may, however, consider the rental value of the property if it is let out.
Deferred Payment Agreements (DPAs): A key alternative
A Deferred Payment Agreement (DPA) is an arrangement with your local council that allows you to delay paying your care home costs. Instead of selling your property to fund your care, the council pays the fees on your behalf. The amount is then recovered from your estate after your death or when the property is eventually sold. This provides a crucial option for those who want to avoid a rushed sale.
Key aspects of a DPA
- Loan basis: A DPA is essentially a loan from the council, secured against your property.
- Interest and fees: The council can charge interest on the deferred amount and may also charge an administration fee.
- Eligibility: You must own your own home (unless a disregard applies), have capital below the upper limit, and be deemed in need of residential care.
Protecting your assets: The 'Deprivation of Assets' rule
Many people consider giving away their home to a family member to avoid having its value included in the financial assessment. However, local councils are vigilant about what they term 'deliberate deprivation of assets'.
What is it and what are the consequences?
If a local authority concludes that you have intentionally reduced your assets to avoid care fees, they can act as if you still own the asset and include its value in the means test. This could leave you in the position of being a self-funder without the actual capital to pay for it. Seeking legal and financial advice before making any major decisions about transferring property is highly recommended.
Comparison: Funding for Care at Home vs. Residential Care
| Feature | Care in Your Own Home | Permanent Residential Care |
|---|---|---|
| Property in Assessment | The value of your home is never included in the means test. | The value of your home may be included in the means test, unless a property disregard applies. |
| Deliberate Deprivation | The rules still apply if you give away assets to avoid paying for home care costs, which are assessed on income and savings. | These rules are particularly relevant and scrutinised for residential care. |
| Key Funding Options | Personal income, savings, Attendance Allowance, and support from the local authority based on income and capital (excluding the home). | Personal income, savings, property value (if not disregarded), Deferred Payment Agreements, and local authority support based on means test. |
| Family's Position | Family can continue living in the home without impacting your care funding assessment. | Family may protect the property from the means test if they fit specific criteria (e.g., spouse, dependent). |
The 12-week property disregard
If you move into permanent residential care and your property's value is not disregarded, the local authority must ignore the value of your home for the first 12 weeks. This gives you time to decide how to proceed, such as selling the property or arranging a DPA. You will still need to contribute from your income and any other capital during this period.
Final guidance: What to do next
The question of whether Can the UK government take your house to pay for care? has a complex answer that requires careful planning. While your home is not automatically 'taken', its value is a critical factor in permanent residential care funding. The key is to understand your options, including property disregards and Deferred Payment Agreements, and seek expert advice. Engaging with your local council's financial assessment team early can clarify your specific circumstances and available routes forward.
Visit the official gov.uk page for more information on paying for a care home.
