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: March 2026
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 2025/26 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
The council contributes, but you pay a weekly top-up. The formula is £1 per week for every £250 of capital above £14,250. 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
The council pays for your care. You'll still hand over most of your income (pension etc.), keeping only a small amount for personal expenses (currently £28.25 per week, called the Personal Expenses Allowance).
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 become eligible for council support. 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
If the house is counted, you still don't have to sell it straight away. There's a 12-week property disregard when someone first moves into permanent care — during those 12 weeks, the home is excluded from the assessment. This gives you breathing room to sort out finances.
Deferred Payment Agreements
After those 12 weeks, if the property is still counted, the council must offer a deferred payment agreement.
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.
Interest is charged (currently around 2-3%, but check with your council), and there's usually an admin fee. But it means the house doesn't need to be sold while the person is alive, which matters to a lot of families.
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)
If the person is in a nursing home (not a residential care home), they should be receiving NHS Funded Nursing Care. This is a flat payment of £219.71 per week that goes directly to the home to cover the cost of nursing care.
It's not means-tested. Everyone in a nursing home who needs nursing care is entitled to it, regardless of savings or income.
This should be set up automatically when someone moves into a nursing home, but it often falls through the cracks — especially for self-funders. If you're paying full fees and haven't been told about FNC, ask the home and chase it up with the local Integrated Care Board (ICB).
Over a three-year stay, FNC adds up to over £34,000. It's not a small amount.
NHS Continuing Healthcare (CHC)
This is the big one. If the person's primary need is a health need rather than a social care need, the NHS pays for the entire care home placement. No means test. No personal contribution. Everything covered.
Getting CHC is notoriously difficult. The assessment uses a framework called the Decision Support Tool that scores needs across 12 different areas. You need to demonstrate that the person's main reason for being in care is health-related.
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
A lot of people get turned down on the first attempt. There's a formal appeals process, and it's worth pursuing — over a three-year nursing home stay, CHC could save £150,000 or more.
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 £108.55 per week (higher rate) for people over State Pension age who need help with personal care. It's not means-tested — 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 — 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. A consultation typically costs £200–£500 but can save thousands.
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.
The Upcoming Cap on Care Costs
The government has been talking about capping care costs at £86,000 for years. The idea is that once you've spent that amount on care, the state picks up the rest.
It's been delayed multiple times. Even when it does arrive, it only covers the “personal care” element — not accommodation and food. So the actual amount you'd spend before the cap kicks in would be well over £86,000.
Don't plan your finances around the cap until it's actually law.
What to Do Next
If you're trying to figure out how to pay for a care home, here's where to start: