Care Home Fees Means Test Explained

What is the care home means test?

The means test is a financial assessment run by your local council to work out your contribution towards residential care. It looks at your capital, such as savings and property, and your income, then compares your capital against set limits. Where your capital sits above the upper limit you are generally treated as a self-funder; below it, the council may help, subject to your income.

The capital limits in England

Two capital limits frame the England means test. Above the upper capital limit of £23,250 a person usually pays the full cost of their care. Below the lower capital limit of £14,250 their capital is not counted, though income is still assessed. Between the two, a "tariff income" is added of £1 a week for every £250 of capital in that band (gov.uk, as at July 2026, subject to change).

Capital band (England)	How it is treated
Above £23,250 (upper limit)	Generally pays full care fees as a self-funder
£14,250 to £23,250	Council may contribute; tariff income of £1/week per £250 applies
Below £14,250 (lower limit)	Capital not counted; income still assessed

Capital band (England)

How it is treated

Above £23,250 (upper limit)

Generally pays full care fees as a self-funder

£14,250 to £23,250

Council may contribute; tariff income of £1/week per £250 applies

Below £14,250 (lower limit)

Capital not counted; income still assessed

Source: gov.uk, social care charging 2026 to 2027, as at July 2026, subject to change. Limits differ in Scotland, Wales and Northern Ireland.

What counts in the assessment

Capital broadly means savings, investments and, in many cases, property. Income means pensions and certain benefits. A resident who moves into a care home permanently is generally left with a Personal Expenses Allowance of £31.80 a week that the council cannot require them to spend on fees (gov.uk, as at July 2026, subject to change).

Some income is left out or partly protected, and Attendance Allowance, which helps with the extra costs of a disability for those over State Pension age, is not itself means-tested, though it can interact with a care assessment (gov.uk, as at July 2026, subject to change). The detail is complex, so many people choose to ask the council or a qualified adviser to explain how a particular income is treated.

See our guide to Care Home Fees for how a completed assessment feeds into the weekly bill.

When is your home included?

The family home is often the largest asset in a means test, but it is not always counted. When someone moves permanently into a care home, the value of their main home is disregarded for the first 12 weeks (Age UK, as at July 2026, subject to change). It is also generally left out for as long as a spouse, partner, or a relative who is aged 60 or over or disabled, continues to live there.

Where the home is counted and would otherwise have to be sold, a deferred payment agreement can let the council meet the fees for now and be repaid later from the property, often after a sale. It works like a bridging arrangement rather than a way of avoiding the charge (NHS, as at July 2026, subject to change). How a home is treated can turn on fine detail, so it is one area many people discuss with the council or a qualified professional. Our note on care fees and your home looks at this in more depth.

A worked example (illustration only). A widow moves permanently into a care home with savings of £30,000 and no partner at home. Because her savings sit above the upper capital limit of £23,250, she is generally treated as a self-funder and expected to meet the full cost for now (gov.uk, as at July 2026, subject to change). As her savings fall and pass below £23,250, a tariff income of £1 a week for every £250 between the limits would apply, and once below £14,250 her capital would no longer count, with income still assessed. Every case differs and figures change, so this is general information rather than a calculation for any real situation.

Can you give assets away to reduce care fees?

This is where care planning has to be handled carefully. Councils can look at whether someone has deliberately reduced their assets to avoid or lower a care contribution, under what are known as the deprivation of assets rules. Where they decide capital was given away for that purpose, they can treat the person as still holding it, as "notional capital", when working out the means test (gov.uk, as at July 2026, subject to change).

There is no fixed time limit on how far back a council can look, and timing and motive both matter. For that reason, deliberately transferring a home or savings to sidestep care fees can be challenged and may not achieve what people hope. Legitimate later-life planning is about understanding the rules and limiting the impact of care costs within them, not engineering a particular result. It can be worth discussing your circumstances with a solicitor or a suitably qualified adviser before acting.

Notional capital. Assets given away to avoid fees may still be counted as if you held them.

No fixed lookback. There is no set cut-off; motive and timing are both weighed.

Wider effects. Gifts can also raise inheritance tax, capital gains and family-law questions.

When care can be free of charge

Not all care is means-tested. Where someone has complex, ongoing health needs, they may qualify for NHS continuing healthcare, which is arranged and funded by the NHS and is free of charge, based on assessed health needs rather than income or savings (NHS, as at July 2026, subject to change). Eligibility depends on needs, not on any single diagnosis. Our note on NHS continuing healthcare explains how the assessment works and who it may cover.

Scotland, Wales and Northern Ireland

The capital limits above apply to England. The other UK nations run their own systems with different thresholds and rules. Scotland has higher capital limits and provides some personal and nursing care without charge for those assessed as needing it. Wales uses a single, higher capital limit for residential care and caps non-residential charges. Northern Ireland operates broadly similar limits to England. Because the figures and rules differ, anyone with care needs in those nations can check their own government's guidance or take local advice.

Frequently asked questions

How much savings can you have before paying for care?

In England, someone with capital above the upper limit of £23,250 is generally expected to pay the full cost of their care, while below the lower limit of £14,250 their capital is not counted, though income is still assessed (gov.uk, as at July 2026, subject to change). Different limits apply in Scotland, Wales and Northern Ireland.

Is your house included in the care home means test?

It can be, but not always. When someone moves permanently into a care home, the value of their main home is disregarded for the first 12 weeks, and it is generally left out for as long as a spouse, partner or a relative aged 60 or over or disabled still lives there (Age UK, as at July 2026, subject to change). The detail depends on your circumstances.

Does income count in the care means test?

Yes. Alongside capital, most income such as pensions is assessed towards care fees, though a permanent resident in England is generally left with a Personal Expenses Allowance of £31.80 a week for their own use (gov.uk, as at July 2026, subject to change). Some income is disregarded or partly protected, depending on the circumstances.

Can you give money away to avoid care fees?

Councils can review whether assets were deliberately given away to reduce a care contribution, under the deprivation of assets rules, and may treat that capital as if it were still held (gov.uk, as at July 2026, subject to change). There is no fixed lookback period, so deliberately transferring assets to avoid fees can be challenged. Many people discuss any planning with a qualified professional first.

Is NHS continuing healthcare means-tested?

No. NHS continuing healthcare is arranged and funded by the NHS and is free of charge, based on a person's assessed health needs rather than their income or savings (NHS, as at July 2026, subject to change). It is separate from the local-authority means test and depends on assessed needs, not on any particular diagnosis or condition.

What is a deferred payment agreement?

It is an arrangement where the council meets care home fees for now and is repaid later, usually from the value of your home, often once it is sold (NHS, as at July 2026, subject to change). It can act like a bridging arrangement so a property need not be sold immediately. Eligibility and any interest or charges depend on the council and your circumstances.

About Fairchild Oldfield

The Fairchild Oldfield team brings together estate planning, tax, independent financial advice and client care, working with families across England and Wales.

Fairchild Oldfield are estate planning specialists and will writers, not a firm of solicitors. This article is general information based on practical experience, not legal, tax or financial advice.

Important: This article is general information only and is not legal, tax or financial advice. Reading it does not create a professional relationship. It is based on the law of England and Wales, and other UK jurisdictions may differ. Figures and rules are current as at July 2026 and are subject to change. Before acting, many people choose to seek advice from a suitably qualified professional, such as a solicitor, a STEP practitioner, an accountant, or an FCA-authorised financial adviser, who can consider your individual circumstances.

The Care Home Fees Means Test Explained