Understanding the Care Home Financial Assessment (Means Test)
When you need to move into a care home, your local authority will conduct a financial assessment, commonly known as a means test, to determine who pays for your care. This process evaluates your capital (savings, investments, property) and income to see if you qualify for financial assistance. The central question for many is: how much savings are you allowed in a care home? The answer depends on where you live in the UK, as England, Scotland, Wales, and Northern Ireland have different rules and capital limits.
This assessment is designed to ensure that those who can afford to pay for their care do so, while providing a safety net for those with limited assets. It is a thorough review of all your financial resources.
What are Capital Limits?
Capital limits are the savings thresholds set by the government. There are typically two key figures:
- The Upper Capital Limit: If your savings and assets are above this amount, you will be considered a 'self-funder'. This means you are responsible for paying your care home fees in full until your capital drops below this limit.
- The Lower Capital Limit: If your savings are below this figure, you will not be expected to contribute to your care home fees from your capital. However, your income (like pensions) will still be assessed and may be used to contribute towards the cost.
If your capital falls between the upper and lower limits, you will be expected to contribute on a sliding scale. This is often called 'tariff income'. For every £250 (or part of £250) you have between the two limits, you'll be assessed as having an extra £1 of weekly income.
A Breakdown of Capital Limits by UK Nation
The thresholds are subject to change, usually on an annual basis. It is vital to check the current figures for your specific nation. Below is a general comparison, but always verify with your local authority.
| Nation | Upper Capital Limit | Lower Capital Limit | Notes |
|---|---|---|---|
| England | £23,250 | £14,250 | If you have over £23,250, you self-fund. |
| Scotland | £32,750 | £20,250 | These figures apply to residential care savings. |
| Wales | £50,000 | N/A | Wales has a single, more generous capital limit for residential care. |
| Northern Ireland | £23,250 | £14,250 | Similar rules to England. |
Note: These figures are for illustrative purposes and you should always seek the most current information from an official source like the government or your local council.
What Is Counted as Capital?
During the means test, the local authority will look at a wide range of assets. It's not just about the money in your bank account. Capital generally includes:
- Bank and building society accounts (current, savings, ISAs)
- Stocks and shares
- Premium Bonds
- Property and land (including your main home, although it is sometimes excluded)
- Trust funds from which you are entitled to capital
The Role of Your Property
For many people, their home is their largest asset. The value of your home is often included in the means test, but not always. It will typically be disregarded if certain relatives still live there, such as:
- Your spouse or partner.
- A relative who is over 60 or incapacitated.
- A child under the age of 18.
There is also a '12-week property disregard' in England, which means the value of your home isn't included for the first 12 weeks of your permanent stay in a care home. This gives you time to decide what to do with the property.
Deliberate Deprivation of Assets
It can be tempting to simply give away savings or property to relatives to fall below the capital limits. However, local authorities are wise to this. If they believe you have intentionally reduced your assets to avoid paying care home fees, they can assess you as if you still owned them. This is known as 'deliberate deprivation of assets'. Examples include:
- Giving away a lump sum of money as a gift.
- Transferring ownership of your property.
- Spending extravagantly on non-essential items like expensive holidays or cars.
There is no time limit on how far back a local authority can look, but they must prove that a significant motivation for the disposal of the asset was to avoid care fees.
Conclusion: Planning is Key
Understanding how much savings are you allowed in a care home is the foundation of planning for long-term care. The rules are complex and vary across the UK. It is crucial to get up-to-date, accurate advice tailored to your personal situation. Being a 'self-funder' isn't necessarily a bad thing, as it can give you a wider choice of care homes. However, knowing where you stand financially allows you to make informed, proactive decisions rather than reactive ones in a time of crisis. Always consult with your local authority and consider seeking independent financial advice to navigate this important life stage. Find out more on the official UK Government website.
