The Scrapped Care Cap and Uncapped Costs
For many years, there was widespread discussion and anticipation around a proposed lifetime cap on the cost of care, with a figure of £86,000 widely reported for implementation in October 2025 in England. The goal was to protect individuals from excessive care costs. However, in July 2024, the Labour government announced its decision to scrap these plans, citing a multi-billion pound funding shortfall. This critical reversal means that for anyone in England requiring social care, there is currently no upper limit on the amount they might be required to pay over their lifetime.
This makes understanding the financial assessment process more important than ever. Rather than a fixed maximum, the total amount an individual contributes is dependent on their personal financial circumstances, which are evaluated through a means test conducted by their local council.
Understanding the Financial Assessment (Means Test)
When an individual requires residential care, the local council will first conduct a needs assessment to determine eligibility for care and support. If the individual is eligible, a separate financial assessment (or means test) will be carried out to determine their contribution towards the cost. The rules for this vary across the UK.
Rules for England (2024/25)
- Upper Capital Limit: If your capital (savings, investments, and in some cases, your home) exceeds £23,250, you are considered a 'self-funder' and must pay the full cost of your care until your capital falls below this amount.
- Lower Capital Limit: If your capital is below £14,250, you will not have to contribute from your savings. The local authority will help with costs, but you will be expected to contribute most of your weekly income.
- Capital in between: If your capital is between £14,250 and £23,250, you will have a 'tariff income' calculated. For every £250 (or part thereof) above £14,250, the council assumes you have an extra £1 a week of income. This is added to your other income to determine your contribution.
- Income: Even if you do not have to contribute from your capital, most of your weekly income (including state and private pensions) will be used to pay for your care, minus a Personal Expenses Allowance (PEA). For 2024/25, the PEA in England is £30.15 per week, which is the minimum amount of income you must be left with.
Rules for Scotland
In Scotland, personal and nursing care are free for those over 65 who have been assessed as needing it. However, you may still need to pay for accommodation costs, which are subject to a financial assessment. The key figures are different:
- Upper Capital Limit: £35,500.
- Lower Capital Limit: £22,000.
- Tariff Income: For every £250 (or part thereof) between the capital limits, an assumed £1 a week of income is used. The PEA is £35.25 per week.
Rules for Wales
Wales operates under its own rules for financial assessments:
- Upper Capital Limit: £50,000.
- Lower Capital Limit: £50,000 (meaning no lower capital limit applies).
- Tariff Income: The capital limit is £50,000. If your capital is at or below this amount, the council will contribute. If it is over, you pay the full amount. The Minimum Income Amount (MIA) is £44.65 per week.
The Role of Property in Care Home Fees
The value of your home is not always included in the financial assessment. It will typically be disregarded if certain people still live there, including a spouse, a relative over 60, or a child under 18. If none of these conditions apply and you are entering permanent residential care, your property's value may be included in the capital calculation after an initial 12-week disregard period. It's often at this point that some individuals consider selling their property to pay for care or entering into a 'Deferred Payment Agreement' with the council, where the council covers the cost and recoups it from the property's sale later.
What if Your Money Runs Out?
For those who are self-funding, a common and pressing question is what happens when your capital falls below the upper limit. When your assets deplete and you are no longer considered a full self-funder, you must inform the local council. They will conduct a financial assessment and begin to contribute towards the costs, based on the relevant capital limits for your country. It's crucial to plan this transition in advance to avoid any disruption to your care.
Deprivation of Assets and its Consequences
Local authorities have the power to investigate whether you have intentionally given away assets (known as 'deprivation of assets') to avoid paying for your care. Examples include gifting large sums of money, transferring property, or placing capital into a trust. If the council concludes you have deliberately deprived yourself of assets, they can still include the value of those assets in your financial assessment. This means you may be assessed as still having money you no longer possess, forcing you to pay more than you can realistically afford.
The Exception: NHS Continuing Healthcare
In certain circumstances, the NHS may be responsible for paying all of an individual's care home fees. This is called NHS Continuing Healthcare (CHC) and is not means-tested. Eligibility is based on a primary health need—meaning your main need for care is due to your health rather than social care. A full assessment will determine if you qualify. If you do, the NHS covers the full cost, regardless of your wealth.
Summary of Capital Limits (as of 2024/25)
| England | Scotland | Wales | |
|---|---|---|---|
| Upper Capital Limit | £23,250 | £35,500 | £50,000 |
| Lower Capital Limit | £14,250 | £22,000 | £50,000 |
| Tariff Income | £1 per £250 over LCL | £1 per £250 over LCL | N/A |
| Personal/Minimum Allowance | £30.15/week | £35.25/week | £44.65/week |
Conclusion: The Importance of Planning
Given that the anticipated lifetime cap on care costs has been abandoned, there is no maximum amount you have to pay for care home fees, and the risk of depleting your life savings is a significant concern for many. The costs are determined by a complex financial assessment process that varies depending on your location in the UK. Understanding the rules, particularly regarding how your income, savings, and property are treated, is essential for planning ahead. It is highly advisable to seek independent financial advice from a specialist who understands long-term care funding. For further information, resources are available from independent charities and professional bodies, such as the Society of Later Life Advisers. For more information, visit the Independent Age website.
