The Scrapped Lifetime Care Cap and Current Reality
While a lifetime cap on personal care costs of £86,000 in England was announced in 2021, it was ultimately scrapped in July 2024. Consequently, there is currently no upper limit to the total amount an individual may have to pay for care home fees across the UK. This makes financial planning for later life essential, as individual costs are determined by personal wealth, including savings, investments, and potentially property.
How the Local Authority Means Test Determines Your Contribution
Local authorities conduct a care needs assessment and a financial assessment (means test). This financial assessment is crucial for determining your contribution to care costs.
The Financial Assessment Process
The council reviews your capital (savings, investments, property) and income (pensions, benefits). Your eligibility for financial assistance depends on capital thresholds that vary by UK country. If your capital is above the upper limit, you typically fund your own care. If you receive council funding, you'll contribute most of your income, minus a Personal Expenses Allowance. Your home's value is usually included for long-term residential care, but exceptions exist, such as a spouse living in the property. Councils can also investigate deliberate deprivation of assets, treating individuals as if they still own assets they've given away to avoid fees.
Regional Capital Limits (2025/26)
Capital limits across the UK are as follows:
| Country | Upper Capital Limit | Lower Capital Limit |
|---|---|---|
| England | £23,250 | £14,250 |
| Scotland | £35,500 | £22,000 |
| Wales | £50,000 | £50,000 (one threshold) |
| Northern Ireland | £23,250 | £14,250 |
Self-Funding vs. Local Authority Funding
- Self-Funding: You pay the full cost, have freedom to choose any home (subject to availability), but may pay a higher rate than the council.
- Local Authority Funding: The council contributes, but choice might be restricted to homes with available council-funded places at their rate. A 'top-up' fee is needed for more expensive options.
A Comparison of Funding Methods
| Feature | Self-Funding | Local Authority Funding |
|---|---|---|
| Cost Covered | 100% until capital drops below the upper limit. | Partial or full council funding, with individual income contributions. |
| Choice of Home | Full choice. | Limited to council-rate homes unless a top-up is paid. |
| Fee Rate | Often a higher 'private' rate. | Council's pre-agreed contract rate. |
| Financial Assessment | Not initially required, but necessary if funds fall below the threshold. | Mandatory means test. |
| Management of Funds | Individual or lasting power of attorney. | Council can manage, or direct payments may be possible. |
Other Routes to Funding Care
NHS Continuing Healthcare (CHC)
For complex medical conditions, NHS CHC is a non-means-tested package covering all care costs, including accommodation.
NHS-Funded Nursing Care (FNC)
If you need nursing care but don't qualify for CHC, the NHS may contribute to the nursing costs directly to the care home.
Deferred Payment Agreements (DPA)
If you own property but can't sell it immediately for care fees, a DPA with the local authority allows deferring payment, often repaid later from the property sale. Interest and fees may apply. More information can be found on the Age UK website.
Conclusion
With no national maximum care home fee in the UK, understanding the financial assessment process is vital. Your contribution is determined by a means test, with different rules and thresholds in each UK country. Exploring NHS funding options like CHC or FNC and considering DPAs for property owners are crucial steps in planning for and funding care.
