How to Pay for a Care Home
Care home fees in England are paid through a combination of self-funding, council support after a means test, NHS funding, and benefits many families never claim. If your assets exceed £23,250 you'll start as a self-funder, but that doesn't mean you pay everything. NHS Funded Nursing Care, Attendance Allowance, and deferred payment agreements can all reduce what you actually spend.
Last updated: September 2026
Scope and sources
This guide explains funding in England. Scotland, Wales and Northern Ireland have different arrangements. Rates and guidance checked on 19 September 2026.
- DHSC: care charging thresholds and personal expenses allowance, 2026/27
- GOV.UK: Attendance Allowance rates and eligibility
- DHSC: NHS-funded nursing care rates from April 2026
- NHS: funded nursing care eligibility and Continuing Healthcare
- Care and support statutory guidance: financial assessments and property
- CMA: care-home contracts and consumer rights
You've looked at the costs. You've seen the numbers. Now you're staring at weekly fees of £1,000 to £1,800 and thinking: how on earth do we actually pay for this?
You're not alone. It's the question every family ends up asking, and the system doesn't make it easy to find clear answers. There are multiple funding sources, different rules depending on your situation, and a financial assessment process that feels designed to confuse.
This guide walks you through every realistic option for paying for care, what you're entitled to, and how to make sure you're not paying more than you need to.
Start Here: The Financial Assessment
Before anything else, you need a financial assessment (also called a means test) from your local council. This determines how much you'll pay towards care.
The council looks at the person's income (pensions, benefits, any other regular income) and their capital (savings, investments, and in most cases, property).
The thresholds in England for 2026/27 are:
Over £23,250 in assets
You pay the full cost of care yourself. This is called self-funding.
Between £14,250 and £23,250
If you qualify for council support, your assessed contribution includes tariff income. This is £1 per week for every £250, or part of £250, of capital above £14,250. It is not the same as an optional care-home top-up. So if you have £20,000 in savings, you'd contribute £23 per week from your capital, plus most of your income.
Under £14,250
If you qualify for support, capital at or below £14,250 is ignored. You may still contribute from income, such as your pension. The financial assessment must leave at least £31.80 a week for personal expenses in 2026/27, and some income may also be disregarded.
Use our savings calculator to see exactly what you'd contribute →
Important: Request a financial assessment even if you think you'll be self-funding. The rules around what counts and what doesn't are more nuanced than most people realise, and you might be entitled to more help than you expect.
If You're Self-Funding
Most people who own a home and have some savings will start out as self-funders. That's a difficult pill to swallow, but there are ways to manage it.
Using Savings and Income
The most straightforward approach. Your pension income covers part of the weekly fee, and savings cover the rest. The maths isn't complicated. What's harder is watching the savings go down.
One thing to keep in mind: once your capital drops below £23,250, you may qualify for council support after care needs and financial assessments. Let the council know when you're approaching that threshold so they can reassess. Don't wait until the money has run out completely.
What Happens to the House
If the person going into care owns their home and nobody else lives there, it counts as an asset in the means test. For most families, this is the biggest stress point.
But the property is not counted if any of the following people still live there:
- ✓A spouse or partner
- ✓A relative aged 60 or over
- ✓A relative who is disabled or incapacitated
- ✓A dependent child under 18
Ask the council about the 12-week property disregard when someone first enters permanent care and their other capital is below £23,250. Where it applies, the property is temporarily excluded; income and other capital are still assessed, so it does not mean all care is free.
Deferred Payment Agreements
If the property is counted, ask about a deferred payment agreement. Councils must offer one where the relevant eligibility and security requirements are met, and can offer one in some other circumstances. It is not guaranteed just because you own a home.
This is essentially a loan from the council, secured against the property. The council pays the care fees (or the part the person can't cover from income), and the debt is repaid later, usually when the property is eventually sold, or from the estate.
The council may charge interest and administration fees. Request its current rates, repayment terms and an illustration of how the debt could grow before agreeing.
You have to apply for a deferred payment. It's not automatic. Ask the council about it during the financial assessment.
Renting Out the Property
Some families rent out the house to generate income towards the care fees. The rental income is counted in the financial assessment, but it can significantly reduce how quickly savings are depleted.
Get advice on the tax implications and check whether the deferred payment route might work out better financially. It depends on the property value, rental income, and likely length of stay.
Council-Funded Care
If the person's assets are below the upper threshold (or once they've spent down to it), the council takes over funding.
There are a few things to know about council-funded care:
The council sets its own rate
This is what it will pay per week to a care home. It's often less than what homes charge self-funders. This doesn't mean you'll get worse care, but it can limit the choice of homes.
Top-up fees
If the home you want costs more than the council rate, someone has to pay the difference. This is called a first-party top-up (if the person in care pays) or a third-party top-up (if a family member pays). The council should offer at least one home at the council rate with no top-up, but it might not be your first choice.
Choice of home
You have the right to choose which care home you go into, as long as it's suitable for the person's needs and the place is available. If it costs more than the council would normally pay, that's where top-ups come in.
NHS Funding: The Two Routes
There are two separate pots of NHS money that can help with care home fees. A lot of families don't know about either of them.
NHS Funded Nursing Care (FNC)
In England, NHS Funded Nursing Care may apply when someone lives in a nursing home, needs registered nursing care and is not eligible for NHS Continuing Healthcare. The standard 2026/27 rate is £267.68 per week, paid directly to the home.
It's not means-tested. Eligibility depends on assessed nursing needs, not savings or income.
CHC eligibility should be considered first. Ask the home or local Integrated Care Board (ICB) about an assessment and a written funding decision. Ask the home to explain how FNC is treated in your contract and quoted fees.
Do not assume the quoted fee will fall by the full FNC rate: it may already exclude the NHS contribution. Get a clear written breakdown before agreeing to the fees.
NHS Continuing Healthcare (CHC)
If someone is assessed as having a primary health need, CHC funds an agreed package of assessed health and social care needs. Where that package is provided in a care home, it includes accommodation. CHC is not means-tested.
The assessment considers the nature, intensity, complexity and unpredictability of needs, including how they interact. A multidisciplinary team uses the Decision Support Tool to support its recommendation. Eligibility is based on assessed needs, rather than a particular diagnosis.
Signs that someone might qualify:
- • Unpredictable or rapidly changing health needs
- • Complex conditions requiring specialist clinical input
- • Nursing interventions needed throughout the day and night
- • Severe challenging behaviour from cognitive impairment
- • Palliative or end-of-life care
- • Multiple conditions that interact and need constant clinical management
Ask for a written eligibility decision and the reasons behind it. If you disagree, ask the ICB how to request a review. Funding depends on the assessed needs and agreed care package, so there is no fixed saving that applies to every family.
Benefits and Allowances
Several benefits can help towards care costs, and many families don't claim everything they're entitled to.
Attendance Allowance
This is a big one that people miss. Attendance Allowance is worth up to £114.60 per week (higher rate) for people over State Pension age who need help with personal care. It's not means-tested, so your savings and income don't matter.
The catch: Attendance Allowance stops 28 days after someone moves into a care home where the council is paying. But if you're self-funding, you keep it, and it can help towards the fees.
Even before a care home move, claiming Attendance Allowance can help pay for home care and delay the point at which residential care becomes necessary.
Pension Credit
If the person has a low income, they might qualify for Pension Credit, which tops up their weekly income. This is worth checking because it can also unlock other benefits.
Benefits in a Care Home
Once someone is in a care home, their benefits change. Some stop, some continue, and some new ones might apply. The rules depend on whether the person is self-funding or council-funded. This is worth going through carefully with the council or a benefits adviser.
Practical Steps to Reduce Costs
Beyond the formal funding routes, there are practical things you can do:
Negotiate the fees
Care homes set their own prices and there's often room for negotiation, particularly if occupancy is low. Ask what the council rate is for your area, since some homes charge self-funders significantly more.
Check the contract carefully
Some homes include extras (hairdressing, chiropody, outings) in the weekly fee. Others charge separately. Make sure you know what you're paying for.
Review fees annually
Care homes typically increase fees each year. You're entitled to challenge increases, especially if they're above inflation. Check what the contract says about fee reviews.
Don't dismiss homes rated Requires Improvement
A home with one identified issue in documentation might offer better care and lower fees than a polished home charging top rates. Read the full CQC report, not just the headline rating.
Get a second financial assessment
If the person's circumstances change (savings decrease, health worsens, a spouse moves out of the property), request a reassessment. What you pay should reflect the current situation, not when you moved in.
Get Professional Advice
Care fees planning is a specialist area. A generic financial adviser or solicitor may not know the details. Look for:
SOLLA-registered adviser
Financial advisers who specialise in funding long-term care. Ask about their qualifications, services and charges before agreeing to advice.
societyoflaterlifeadvisers.co.uk
Age UK Adviser
Free advice on care funding. Available by phone or at your local Age UK branch.
0800 678 1602
Citizens Advice
Free help understanding benefits, financial assessments, and your rights.
Beacon (CHC Appeals)
Formerly the CHC Appeal Service. Can help with NHS Continuing Healthcare assessments and appeals.
The earlier you get advice, the more options you have. Families who plan ahead almost always end up in a better position than those who have to figure it out in a crisis.
What happened to the proposed care-cost cap?
The proposed £86,000 cap on eligible personal care costs in England did not come into force.
The government announced in July 2024 that the charging reforms planned for October 2025 would not be taken forward. Read the government update on the cancelled reforms.
Plan using the current funding rules, rather than assuming a cap will cover future fees.
What to Do Next
If you're trying to figure out how to pay for a care home, here's where to start:
Could the NHS pay for your relative's care home fees?
NHS Continuing Healthcare is free care home funding with no means test and no savings limit. Many families don't know about it. The CHC Family Guide explains exactly how to claim it.
Find out in the CHC Family Guide (£37)Have a question this guide didn't answer?
Ask in our Community Forum and get a real answer from someone who's been through it.
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Could the NHS pay for your relative's care home fees?
NHS Continuing Healthcare is free care home funding with no means test and no savings limit. Many families don't know about it. The CHC Family Guide explains exactly how to claim it.
Find out in the CHC Family Guide (£37)