Paying for residential care

Most people will be expected to pay at least part of the costs of their care home. Care homes are expensive, with many costing hundreds of pounds a week.

If you need to move to a care home, you will also be given a financial assessment to work out how much of the costs you need to pay yourself, and what your local authority will pay to make up the difference.

The rules about payment are complex, but it helps to understand issues around:

If you don't get any help with payments from your local authority, you might want information on:

Find out how the rules are different in Scotland


There is a national system for assessing whether you can have help with fees. The assessment will consider things like:

  • your weekly income
  • your savings and investments
  • whether you’re a home owner
  • whether you live with a partner

A man with multiple sclerosis signing a formIf you have more capital than the upper limit set by the government, you will be expected to pay the full costs of your care home. If you have between the lower and upper limit, you will be expected to pay part of the costs. Any income you have may also affect how much you will be expected to pay.

Our booklet 'Residential care and your options' has more information.

Before making any financial arrangements, it can help to seek advice from a financial adviser.

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Help from local authority

If you're eligible for local authority help with payments:

  • Local authorities set a rate that they will pay for residential care. If the home you want to move to costs more than the local authority is prepared to pay, you may still be able to move there. 
  • The local authority must show that the amount it would usually pay is enough to cover the level of service you require.
  • They can only refuse to pay more than their usual rate if they can prove that there is another home (within their rate) which meets all of your needs.
  • Your needs can include considerations such as location, and religious and cultural requirements.
  • If there is no other home that meets all your assessed needs, they must then agree to pay any extra cost to ensure you have the proper care you need.

Read more in our booklet 'Residential care and your options'.

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Top up payments

If the local authority can prove that there is another home that would meet your needs, and you have someone else who is willing to pay the difference, you could still move to the home of your choice. This is known as a ‘third party top-up’.

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NHS continuing healthcare

Continuing healthcare (sometimes known as fully funded NHS care) is care outside of hospital that is arranged and funded by the NHS. It is only available to people who have a complex medical condition and need a high level of care, which is primarily health care (rather than social care).

It can provide funding and services at home to help with personal care, such as dressing and bathing, or it can pay for you to live in a care home with nursing.

The rules on eligibility are quite complicated and change regularly. It is awarded to people who have ‘complex ongoing healthcare needs’, rather than social or personal needs. So it is worth seeking advice about your own situation.

In England, Wales and Scotland, applying for continuing healthcare involves a two-stage assessment process. In Northern Ireland, it will be part of your overall care assessment. The criteria for receiving continuing healthcare differ between the nations.

If you are eligible for continuing healthcare, the NHS will fund your accommodation and health care costs.

For full details about continuing healthcare, including how to apply, visit the  NHS Choices page on continuing healthcare.

As of April 2014, if you are receiving NHS continuing healthcare, you can ask for a personal health budget so that you can have more choice in how that care is provided.

Find out more about personal health budgets on NHS Choices.

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Giving away assets

Many people who think they will need to pay care fees in the future wonder whether it is worth giving away their assets, including their home, to reduce their capital. If the home is ultimately intended to go to children via inheritance for example, you may think, ‘Why not?’

Local authorities are sensitive to this strategy and will view it as ‘deprivation of assets’ – deliberately trying to avoid paying. If it decides this is what you have done, you would be means tested as if you still had those assets. Before making any such arrangements, you may wish to seek legal advice.

Deferred payment agreements

If you need to pay for care home costs, you can ask your local authority for a deferred payment agreement. If you are eligible, your local authority will pay any care home fees on your behalf, up to the value of your house. You can delay paying the money back until after your death, or until you choose to sell your home.

Find out more about deferred payment agreements


It can be helpful to review what benefits you and your family members or carers are receiving. If you are eligible for a benefit, the local authority will assume you are receiving it when they calculate how much you should pay toward your care, even if you do not actually claim it. So it is worth making sure that you are getting all the benefits you are eligible for.

Some benefits you may receive, such as the care component of Disability Living Allowance or Personal Independence Payment, will stop when you go into residential care.

Even if you think you are getting what you are entitled to, it may well be worth completing an annual check.

Find out more about benefits.

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Organising your finances

The biggest worry for many people needing to pay care home fees is not the weekly cost, but the uncertainty of not knowing how long the costs will need to be met.

There are a number of financial products that can help you cope with fees on an ongoing basis:

  • Immediate care annuity - You pay a single lump sum and in return a fixed sum of money is paid towards your care costs for the rest of your life
  • Equity release - refers to ways in which you can raise money against the value of your home. There’s information about equity release on the Money Advice Service website.
  • Investment plans – you put some money into a fund with the aim of making a profit. This money can then be used to pay for your care when it is needed.

It is strongly recommended that you seek expert advice about which products are best suited to you.

Our booklet 'Residential care and your options' has more information.

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In Scotland

If you are aged 65 or over, have personal care needs which need to be met in a care home, and are funding your own care, then your local council can pay toward your personal care needs.

You will be expected to cover the rest of the costs of the care home, which will be the accommodation fees. In order to work out whether you can afford to pay these, you will need to have a financial assessment carried out by your local council social work department.

If you have been assessed as being eligible for the highest band of help for nursing care costs, you may wish to check if you are entitled to further help under NHS continuing health care.

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Page last updated: 01 Apr 2015

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