If you or a family member is moving into a care home, one question usually comes before all others: will the council help pay for it? Honestly, it mostly depends on how much you have in savings, assets and property.
In England, council funding for care home fees is decided through a financial assessment, also called a means test, which compares what you own against two fixed capital thresholds set by the government.
What are the thresholds for care home funding in 2026/27? How does the means test work in practice? What counts as your capital? And what’s really changed this year? All of these questions are answered in this complete guide.
All figures below reflect the Department of Health and Social Care’s local authority circular for 2026 to 2027, published in February 2026.
Key Takeaways
In England, the upper capital limit is £23,250, and the lower capital limit is £14,250.
If your capital amount is above £23,250, you are a self-funder and need to cover all your care home fees.
The council will cover the costs of your care home if your capital amount is below £14,250.
If your capital amount is between the two limits, you will pay a tariff income of £1 per week for every £250 of capital above £14,250.
Your home is usually disregarded for the first 12 weeks of permanent residential care.
NHS Continuing Healthcare is entirely separate from council funding and isn’t means-tested.
Use ComparedExperts to find a reputable live-in care provider that helps you with all your funding needs.
Do You Qualify For Council Funding For Care Home Fees?
There are two separate stages to qualifying for council support, and both must be met before any funding is agreed.
- Care Needs Assessment: Your local authority assesses your daily needs, deciding if you have ‘eligible needs’ for care and support under the Care Act 2014. It is not financially related, and it is free.
- Financial Assessment (Means Test): If you’re assessed as needing care, the council then looks at your income, savings, and, in most cases, your property to work out how much you can pay.
You can ask for both assessments yourself from your local council’s adult social care team, and they shouldn’t refuse a needs assessment because they assume you’ll be self-funding.
Want to learn the difference between care at home and a care home? Then read our guide to make an informed decision.
What Are The Capital Thresholds For Care Home Funding?
England uses two capital limits for 2026/27, and these remain the same as they were in the past financial year:
| Capital Held | What It Means |
|---|---|
|
More than £23,250 (Upper Capital Limit) |
You are classed as a self-funder and pay the full cost of your care home fees. |
|
Between £14,250 and £23,250 (Middle Band) |
The council contributes, but you also pay a tariff income from your capital, plus what you can afford from your weekly income. |
|
Under £14,250 (Lower Capital Limit) |
Your capital is disregarded entirely. You still contribute from income, but the council meets the rest of the cost. |
Example: Tariff Income Calculation:
The tariff income is £1 per week for each £250 (or part of £250) of capital you have between £14,250 and £23,250.
If, for instance, you have £20,000 in savings, that is £5,750 higher than the lower threshold. Divided by £250, that is 23 units, so you would pay roughly £23 in tariff income on top of your income-based contribution.
In conjunction with capital limits, the government also imposes a Personal Expenses Allowance (PEA), which is the amount of money that someone who qualifies for local authority funding must be left with each week to have some spending money. The PEA is £31.80 a week (an increase from £30.65) for the year 2026/27.
How Does The Financial Assessment (Means Test) Work?
The financial assessment considers both capital and income when calculating the contribution you will need to make.
What Counts As Capital:
- Savings and current account balances
- Investment accounts: stocks, shares, and ISAs
- Real estate, in most cases, when moving into ongoing care
- An investment property or other extra land
What’s Usually Excluded:
- Personal possessions, such as jewellery or a car
- Value of your primary residence, if you are just staying for a short time or temporarily
- Your residence, if a spouse or partner remains there.
- Uncashed life insurance policies.
On the income side, the benefits include pensions, benefits, and all forms of regular income, but only if your Personal Expenses Allowance or Minimum Income Guarantee (again, depending on which care setting you are in) is retained.
Property and The 12-Week Disregard
Your house is a major part of the means test, but that doesn’t mean the simple rule is that ‘the council takes your house’.
1. The First 12 Weeks: If you’re entering permanent residential care, your home is disregarded for the first 12 weeks, so there’s no immediate pressure to sell it.
2. Disregard Continues: If your spouse, civil partner, or certain relatives, such as a dependent or aged relative, still live in the property, you will continue to be excluded from the means test on an indefinite basis.
3. Deferred Payment Agreement (DPA): If the 12-week disregard has ended and your capital is in property, you can apply for a DPA. The council covers your care fees and recoups the money once the property is sold, meaning you won’t find yourself selling in a hurry. The interest rate for DPAs is an issue examined nationally and reviewed twice a year (January and July), currently at 4.75% as of 1 January 2026.
Council-Funded Vs Self-Funded Vs NHS Continuing Healthcare (CHC): Quick Comparison
These three routes are often confused, but they work in fundamentally different ways. Here is a quick comparison:
| Factor | Council-Funded | Self-Funded | NHS Continuing Healthcare |
|---|---|---|---|
|
Who It’s For |
Capital below £23,250 |
Capital above £23,250 |
Primary health need, at any capital level |
|
Means-Tested |
Yes |
No |
No |
|
Who Arranges Care |
Local Authority |
You or your family |
NHS, via a CHC assessment |
|
Covers Full Cost |
Partial or full, depending on the capital |
No, you cover the full cost |
Yes, in full if eligible |
NHS Continuing Healthcare is worth checking regardless of your financial position; the eligibility is based purely on the level and complexity of your health needs, assessed against a national framework, not on your savings.
Read our guide to learn more about NHS continuing support for dementia care.
Regional Thresholds Comparison: England, Scotland, Wales, and Northern Ireland
The capital thresholds for care home funding aren’t the same across the UK. Each devolved nation sets its thresholds. Here is a quick overview:
| Nation | Lower Limit | Upper Limit | Notes |
|---|---|---|---|
|
England |
£14,250 |
£23,250 |
The tariff income is £1 for every £250 in the middle band |
|
Northern Ireland |
£14,250 |
£23,250 |
The tariff income is £1 for every £250 in the middle band |
|
Scotland |
£22,750 |
£36,750 |
Free personal care is also available regardless of means |
|
Wales |
£50,000 |
£50,000 |
Single threshold; capital below this amount is disregarded entirely |
If you or a relative is considering care across the UK, for instance, moving closer to a family in a different nation, it’s worth checking the local threshold before assuming your current entitlement carries over.
Note: England, Scotland, Wales and Northern Ireland figures are as of June 2026.
What Has Changed For 2026/27?
The £86,000 care cap and higher thresholds have been scrapped, not postponed
Under the previous government’s plans, the upper capital limit was due to rise from £23,250 to £100,000 and the lower limit from £14,250 to £20,000 from October 2025, alongside a lifetime cap of £86,000 on personal care costs.
The current government has confirmed these reforms will not go ahead. There is currently no cap on what you may need to spend on your care, and the capital thresholds remain at the pre-2025 levels.
Aside from the cancelled reforms, the confirmed changes for 2026/27 are smaller, inflation-linked adjustments:
- Capital Limits: Fixed at £14,250 and £23,250.
- Personal Expenses Allowance: Raised from £30.65 to £31.80 per week: 3.8% inflationary increase.
- Minimum Income Guarantee (MIG): For all categories, the figure remains in line with inflation.
- Savings Credit Disregard: Increased to a maximum of £7.30 per week for an individual and £11.00 for couples.
Campaigners highlighted that had the capital limits merely kept pace with inflation from 2010, the upper limit would be around £36,400 now, so the freeze continues to draw more people into self-funding every year.
Deprivation of Assets: What Council Looks For?
Some families deliberately give away savings or property to try to get under the means test limit so they can receive more assistance from councils. It is called intentional deprivation of assets, and local authorities are watchful for such cases.
Moreover, there is no 7-year rule for care fees (contrary to the inheritance tax). In principle, a council may trace back as far as it desires. In determining whether a gift or transfer constitutes deprivation, two primary questions are considered:
- Foreseeability: When you gave away the asset, were you aware, or could you reasonably expect, that you would need care and assistance?
- Intent: Was the transfer solely or mainly because of avoiding or reducing care and support charges?
A council can, if it believes deprivation took place, still treat you as the owner of the asset. We call this notional capital. This means your contribution will be reported as if you still own the money or property, even though you do not.
A mere reduction in assets doesn’t automatically lead to a presumption of deprivation. The only option written in the official statutory guidance is to conclude that you have a genuine, unrelated reason for doing so, such as gifting (in line with your normal gifting habits) or where spending patterns can be shown to demonstrate use of your usual lifestyle. If you disagree with what a council has decided, you can complain using their formal complaints process.
How To Apply For Council Funding For Care Home Fees?
Here is how you can apply for council funding for care home fees:
- Contact Your Local Council: Apply for a care needs assessment with your adult social care department (the assessment is either about you or a relative). This is free, no matter what your financial situation is.
- Complete the Needs Assessment: A social worker or assessor reviews your needs for daily living and determines whether you have eligible needs under the Care Act 2014.
- Undergo the Financial Assessment: The council conducts a means test against your savings, income, and property against the current capital thresholds to determine care eligibility.
- Receive Your Funding Decision: It will inform you whether you are fully council-funded, partially funded with a tariff influence on the amount, or required to pay for your treatment.
- Explore Additional Support if Self-Funding: Go through NHS Continuing Healthcare eligibility, attendance allowance, and whether a deferred payment agreement is right for you.
Assessments can take several weeks, so it’s best to start the process as early as possible, ideally as soon as a care need becomes apparent, rather than waiting until a crisis point.
Find The Top Live-In Care Providers With ComparedExperts
Understanding council funding and capital thresholds is just one part of the process. Whether you qualify for local authority funding or you are self-funding, choosing the right care provider matters just as much as understanding how you will pay for it.
ComparedExperts enables families around the UK to compare and contrast reputable live-in care providers head-to-head in a single package: comparing cost, quality, and availability simultaneously without having to ring multiple care agencies.
Fill in our quick quote form and compare top live-in care providers with ComparedExperts today!
FAQs
Contact your local council’s adult social care team to request a care needs assessment. If you are assessed as having eligible needs, a financial assessment follows to determine your funding status.
Yes, in some circumstances. If your home isn’t disregarded, for example, if no qualifying dependent lives there and the 12-week period has ended, its value will count towards your capital.
But if the opposite is true, it won’t count as your capital, and you may qualify for care home funding.
You fall in the middle band. The council contributes towards your care, but you also pay a tariff income of £1 per week for every £250 of capital above £14,250, plus a contribution from your income.
It is when someone deliberately reduces their savings, property, or income to qualify for more council support. Moreover, there is no time limit on how far back a council can investigate.
NHS Continuing Healthcare (CHC) funds care in full when a person’s primary need is health-related rather than a social care need. It is assessed against a national framework and isn’t means-tested, so your savings and property don’t affect eligibility.
