Understanding the Welsh Capital Limit
In Wales, the rules for paying for residential care are different from the rest of the UK. The most significant difference is the capital limit, the amount of savings, investments, and assets you can have before being required to pay the full cost of your care. For 2024/25 and into 2025/26, the capital limit in Wales is £50,000.
Self-Funders vs. Local Authority Support
- Above £50,000: If your capital is more than £50,000, you are considered a 'self-funder' and are expected to pay the full cost of your residential care home fees yourself.
- At or Below £50,000: If your capital is £50,000 or less, the local authority will help pay for your care. You will still be assessed to make a contribution from your income, but your capital below this threshold will be completely disregarded.
The Financial Assessment Process
When you move into a care home, your local authority will conduct a financial assessment (means test) to determine your contribution. This considers your income and capital, but there are important rules about what is included and excluded.
What is Assessed?
The financial assessment considers various forms of capital and income:
- Capital: This includes cash savings in bank or building society accounts, stocks, shares, Premium Bonds, and investments.
- Income: This covers regular payments like your State Pension, private pensions, and most benefits, including Attendance Allowance and Pension Credit.
- Joint Assets: If you have jointly held savings, they are generally assumed to be split equally between you and your partner, unless there is clear evidence to the contrary.
What is Excluded?
Certain assets are not included in the financial assessment:
- Personal possessions such as jewellery and furniture are disregarded.
- Some benefits, like the mobility component of Disability Living Allowance or Personal Independence Payment, are ignored.
Your Home: Will It Count Towards Your Capital?
For many, their home is their most significant asset. The value of your property is usually included in the financial assessment if you are moving into a care home permanently. However, there are significant exceptions where its value is disregarded entirely:
- Qualifying Relative: If your husband, wife, civil partner, or a qualifying relative continues to live in the home. A qualifying relative can be a close relative over 60, a dependent child, or a disabled relative.
- 12-Week Property Disregard: The value of your home is disregarded for the first 12 weeks of permanent care. This provides time to arrange its sale or explore other options.
Deferred Payment Agreements (DPAs)
If your home is not disregarded and its value puts you over the £50,000 capital limit, you may be eligible for a Deferred Payment Agreement (DPA). A DPA is essentially a loan from the local authority, using your home as security, to cover your care fees. This means you don't have to sell your property immediately. The loan is then repaid when the property is eventually sold, or from your estate after your death. To be eligible for a DPA in Wales, your capital outside of your home's value must be less than £50,000.
The Minimum Income Amount (MIA)
Even if you are contributing towards your care, you must be left with a certain amount of money each week for your personal use. In Wales, this is called the Minimum Income Amount (MIA). For 2025/26, the MIA for residential care is £44.65 per week. This money comes from your assessed income and is yours to spend as you wish, for items like newspapers, toiletries, or clothing. Local authorities cannot require you to spend your MIA on anything specific.
Comparison of Care Funding Rules in the UK
This table highlights the difference between Wales and other UK nations regarding financial thresholds for care home funding.
| Feature | Wales (2025/26) | England (2025/26) | Scotland (2025/26) |
|---|---|---|---|
| Capital Limit | £50,000 | £23,250 (upper) | £35,500 (upper) |
| Personal Allowance | £44.65/week (MIA) | £30.65/week (PEA) | £35.90/week (PEA) |
| Income Contribution | Assessed from income | Assessed from income + 'tariff' | Assessed from income |
| Self-Funder Threshold | Over £50,000 capital | Over £23,250 capital | Over £35,500 capital |
Conclusion: Making Informed Decisions
Understanding the financial assessment process in Wales is crucial for anyone considering residential care. The generous £50,000 capital limit and the guaranteed Minimum Income Amount offer important protections. However, the assessment is complex and depends heavily on individual circumstances, particularly concerning property ownership. Seeking independent financial advice and engaging early with your local authority is highly recommended to ensure you can retain as much of your assets as possible. For authoritative information on paying for social care in Wales, visit the GOV.WALES website.
