Who pays for care homes in England?: A Comprehensive Guide

Oct 20, 2025 3 min read •

Elderly Care senior care Financial Planning

With nearly half of all care home residents in the UK paying for their own care, understanding the complex funding system is crucial for senior care planning. This guide breaks down who pays for care homes in England, detailing the different routes to financial support.

Quick Summary

Payment for care homes in England is determined by a financial assessment of your capital and income, primarily falling into three categories: self-funding, local authority assistance based on means-testing, and non-means-tested NHS funding for complex health needs. The route to funding depends on your financial situation and the nature of your health and social care needs.

Key Points

Three Main Funding Routes: Payment for care homes in England can come from self-funding, your local council (means-tested), or the NHS (non-means-tested for health needs).
The Means Test is Crucial: Your local council will conduct a financial assessment to determine how much you contribute based on your income and assets, with different capital thresholds in England.
The NHS Funds Complex Needs: NHS Continuing Healthcare (CHC) provides full funding for those with a primary health need, while NHS-Funded Nursing Care (FNC) covers the nursing element for eligible nursing home residents.
Your Home's Value is Key: The value of your property is often included in the financial assessment for permanent care, though there are important exceptions, such as if a partner still lives there.
Plan Ahead for Self-Funders: If you pay for your own care and your savings start to run out, you must contact your local council in advance to get reassessed for financial assistance.
Third Parties Can 'Top-Up': If you prefer a more expensive care home than the council funds, a family member or friend can pay the difference via a 'top-up' fee.

The Three Primary Funding Routes

When considering care home options in England, payment typically comes from three main sources: the individual (self-funding), the local authority (council), or the National Health Service (NHS). The specific route depends on a means test of your finances and a needs assessment of your health and care requirements. It's a complex system, and most people will encounter a mix of different funding options throughout their care journey.

Self-Funding

If your total capital and savings exceed the upper threshold in England—currently £23,250—you are expected to pay the full cost of your care. This includes savings, investments, and potentially the value of your property if you are moving into permanent residential care and no one else is living there. [1.2, 3.4]

Local Authority (Council) Funding

If a financial assessment by your local council determines that your capital is below the upper threshold, you may be eligible for financial assistance. [2] The council will perform a means test to determine how much you should contribute based on your income and assets. [3]

The Financial Assessment

This assessment looks at your income (including pensions and benefits) and capital (savings, investments, and in some cases, your home). If your capital is between £14,250 and £23,250, you'll have a 'tariff income' contribution. [3]

Deferred Payment Agreements

If your property is considered in the assessment but you don't want to sell immediately, a Deferred Payment Agreement (DPA) might be possible. The council pays your fees, which are repaid later from your property or estate. [1]

'Top-Up' Fees

If your preferred care home costs more than the council's standard rate for your needs, a third party can pay the difference as a 'top-up' fee. You usually cannot pay this yourself if receiving council funding. [1, 2]

NHS Funding

In certain circumstances, the NHS funds care home fees regardless of finances. [2]

NHS Continuing Healthcare (CHC)

For individuals with a severe or complex 'primary health need', the NHS provides fully funded care covering personal care and accommodation. Eligibility is non-means-tested based on a needs assessment. [1, 2]

NHS-Funded Nursing Care (FNC)

If you don't qualify for CHC but are in a nursing home with registered nurses, the NHS pays a weekly, non-means-tested contribution for the nursing care element. [1, 2]

What Happens When Your Money Runs Out?

If you initially self-fund and your capital approaches the £23,250 threshold, contact your local council in advance to request a financial assessment for potential funding. [1, 2]

Comparison of Funding Routes


Feature	Self-Funding	Local Authority Funding	NHS Continuing Healthcare (CHC)
Who Pays?	The individual	Shared between individual (from income and tariff) and council	The NHS pays full fees
Eligibility	Capital and savings over £23,250	Capital between £14,250 and £23,250	Assessed as having a 'primary health need'
Means-Tested?	Not applicable	Yes	No
Accommodation?	Yes, covered by individual	Contribution towards accommodation costs (means-tested)	Yes, fully covered
Personal Care?	Yes, covered by individual	Contribution towards personal care costs (means-tested)	Yes, fully covered
Nursing Care?	Covered, potentially offset by NHS FNC	Contribution towards nursing care costs (partially offset by FNC)	Yes, fully covered

How to Plan for Care Home Costs

Planning for the cost of care is a vital part of later-life financial planning. Taking action early can help secure the best options and minimise financial stress.

Seek Professional Advice

An independent financial adviser specialising in later-life planning can provide tailored advice. For information on finding a qualified adviser, visit Age UK, a leading charity for older people in the UK.
Paying for residential care - Age UK

Get a Needs Assessment

Even if self-funding, a free needs assessment from your local council is recommended to clarify care needs and suitable home types. [1]

Understand Your Rights

Under the Care Act 2014, local authorities must support people with eligible care needs. Understand your rights regarding assessments, choice of home, and financial considerations. [2]

Conclusion: Navigating Care Home Funding

Determining who pays for care homes in England depends on individual finances and assessed needs. Options range from self-funding and means-tested council support to non-means-tested NHS continuing healthcare. Understanding these routes, seeking advice, and engaging with your local authority early are key to informed decisions. [1, 2, 3]

Frequently Asked Questions

As of the current rules, if your capital is over £23,250, you are generally expected to pay your care home fees in full. If your capital falls below this amount, your local council may provide financial support.

Not necessarily. The value of your home is typically included in the financial assessment for permanent residential care, but it is disregarded in certain situations, such as if a spouse, partner, or other dependent relative still lives there. In other cases, a Deferred Payment Agreement might be an option. [1, 2]

A Deferred Payment Agreement (DPA) is an arrangement with your local council that allows you to delay paying your care home fees. The council pays on your behalf, and the amount is repaid later, usually from the sale of your property after your death. [1]

NHS Continuing Healthcare (CHC) is for people with a 'primary health need' arising from complex medical conditions. Eligibility is determined by a specific assessment conducted by healthcare professionals and is not based on your financial situation. Your GP or a social worker can help with the initial screening. [1, 2]

If you are self-funding and your capital is dropping below the £23,250 threshold, you should contact your local council several months in advance. They will conduct a financial assessment to determine your eligibility for financial assistance. [1, 2]

A top-up fee is an extra amount paid by a third party, like a family member or friend, to cover the difference if you choose a care home that is more expensive than the amount your local council is willing to pay. You cannot usually pay your own top-up fee if you are receiving council funding. [1, 2]

No, next of kin are not legally obliged to pay a resident's care home fees. However, they may choose to pay a 'top-up' fee to secure a more expensive care home. It's crucial for any family member agreeing to pay a top-up to sign a clear contract with the council.

References

Medical Disclaimer

This content is for informational purposes only and should not replace professional medical advice. Always consult a qualified healthcare provider regarding personal health decisions.