Deprivation of assets and care fees, explained

Written by the Fairchild Oldfield team · Last reviewed: August 2026

Deprivation of assets is when a person deliberately reduces the money or property they own, by giving it away, transferring it or spending it in an unusual way, in order to avoid or lower what they pay towards care fees. If a local authority decides this has happened, it can carry out the financial assessment as though the person still owned the asset, a rule known as notional capital, and charge them on that basis.

The rules sit within the means test that councils in England use to decide who pays for care. That means test has two capital thresholds. When someone has capital above the upper limit of £23,250, the council does not contribute and the person is treated as a self-funder; below the lower limit of £14,250, capital is ignored and only income is assessed (gov.uk, charging for care and support 2026 to 2027, subject to change). Because those thresholds have stayed the same for years, many people look at their savings and their home and wonder whether passing assets on early would help. That is the point at which the deprivation rules become relevant.

What "deprivation of assets" actually means

The term comes from the Care Act 2014 and the statutory guidance that supports it. A council can treat a person as still holding money, property or income they have given away when it looks as though a significant reason for the disposal was to reduce a care charge. The guidance is clear that people are free to spend their own money and to plan their affairs, and that deprivation is not assumed simply because an asset has been given away (gov.uk, Care and Support Statutory Guidance under the Care Act 2014, subject to change).

What matters is intention and timing together. A gift made years earlier, when a person was fit and had no reason to expect a care need, sits very differently from a transfer made shortly after a diagnosis or an assessment. There is no single cut-off date that makes a gift "safe", which is one of the most common misunderstandings about this area.

The two questions a council asks

When a financial assessment is carried out and an asset is missing, the local authority weighs up two things drawn straight from the statutory guidance. Neither is decided by a fixed formula; the council looks at the individual facts.

Source: gov.uk, Care and Support Statutory Guidance under the Care Act 2014, as at August 2026, subject to change.

The council considers	What it is weighing up
Motivation and timing	Whether avoiding the care and support charge was a significant reason behind the timing of giving the asset away.
Reasonable expectation	Whether, at the point the asset was disposed of, the person had a reasonable expectation that they would need care and support, and that they would need to pay for it.

Avoiding fees does not have to be the only motive, only a significant one. Equally, a person in good health with no foreseeable care need who makes an ordinary gift is in a very different position from someone giving away a house weeks before moving into a care home.

Notional capital and what follows a finding

If a council decides deprivation has occurred, it does not undo the gift. Instead it records the value of the asset as "notional capital" and assesses the person as though the money were still theirs. That can leave someone charged as a self-funder while no longer holding the funds to pay. In some cases the council can also seek to recover charges from the person who received the asset. There is no strict time limit that automatically rules a past disposal out of consideration, which is why the timing and circumstances of any transfer carry so much weight.

What might count as deprivation, and what usually does not

The guidance does not publish a fixed list, because context decides each case. The table below sets out the kinds of actions councils commonly scrutinise, alongside everyday choices that are far less likely to raise concern when a care need was not foreseeable.

More likely to be questioned	Less likely to be questioned
Transferring the family home to children shortly before or after a care assessment	Modest, regular gifts made over many years while in good health
Large lump-sum gifts made once a care need is apparent	Ordinary living costs, holidays and home improvements before any care need arose
Putting the home into a trust when care is already on the horizon	Paying off a genuine debt or a family loan
Suddenly spending or gifting savings that reduces capital below a threshold	Spending in line with how the person has always managed money

Reducing capital just below the £23,250 upper limit, and doing so close to the point of needing care, is exactly the pattern a financial assessment is designed to notice (gov.uk, charging for care and support 2026 to 2027, subject to change).

The "7-year rule" myth

A frequent source of confusion is the belief that a gift becomes safe from care fees after seven years. That seven-year period belongs to inheritance tax, where a gift can fall outside the estate if the person survives seven years (gov.uk, Inheritance Tax on gifts, as at August 2026, subject to change). It has no equivalent in the care means test. For care charging there is no set number of years after which a council must ignore a past gift. The two systems are separate, and a plan that works for one does not automatically work for the other. If you want the wider inheritance tax picture, our guide to inheritance tax sets out the gift allowances and the seven-year rule in full.

People also sometimes assume that appointing an attorney allows unlimited gifting. It does not: an attorney acting under a registered lasting power of attorney can only make limited gifts on someone's behalf, and larger gifts generally need the Court of Protection. Gifting through an attorney to reduce care charges can raise both deprivation and attorney-duty concerns at the same time.

Different rules across the UK

The £23,250 and £14,250 figures above apply to England. Fairchild Oldfield works across England and Wales, and it is worth being aware that Wales sets its own capital limit for residential care, which is higher and decided by the Welsh Government. Scotland operates a different system that includes free personal and nursing care, and Northern Ireland has its own arrangements. Anyone assessed outside England should check the limits published by the relevant national body, as they change independently of the English figures. Our care home fees guide covers the England means test in more detail, and the estate planning hub links the wider picture together.

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