Direct Payments for Care Explained

What are direct payments for care?

Direct payments are money paid to you by your local council so you can arrange your own care instead of the council commissioning it. They give more choice over who provides support and when, for example employing a personal assistant or buying equipment. They follow an assessment that finds you have eligible needs, and they are a legal option under the Care Act 2014 where the conditions are met (legislation.gov.uk, Care Act 2014 s31, as at July 2026).

Who can get direct payments?

Direct payments are open to people who have been assessed by social services as needing care and support, including disabled adults aged 16 or over, some carers, and older people with community care needs (gov.uk, as at July 2026, subject to change). The council must be satisfied that the person, or a nominated person, can manage the payments alone or with help, and that direct payments are an appropriate way to meet the needs (legislation.gov.uk, Care Act 2014 s31, as at July 2026).

What can direct payments be spent on?

Direct payments can be spent flexibly, as long as the spending meets the assessed needs set out in your care and support plan. Common uses include employing a carer or personal assistant, respite, or equipment. Some limits apply: they generally cannot be used to buy services from the council itself as a matter of course, and there are restrictions on paying certain close relatives or on permanent care home places (gov.uk, as at July 2026, subject to change).

Often allowed	Usually restricted
Employing a personal assistant or carer	Paying a close relative living in the same household, unless the council agrees
Care agency support in your own home	A permanent care home place, unless the council agrees in specific cases
Respite and short breaks	NHS services or NHS-funded health equipment
Equipment that meets an assessed need	Anything unlawful, or outside the care and support plan

Often allowed

Usually restricted

Employing a personal assistant or carer

Paying a close relative living in the same household, unless the council agrees

Care agency support in your own home

A permanent care home place, unless the council agrees in specific cases

Respite and short breaks

NHS services or NHS-funded health equipment

Equipment that meets an assessed need

Anything unlawful, or outside the care and support plan

Source: gov.uk, apply for direct payments, as at July 2026, subject to change. Councils apply their own detailed rules, so what is allowed can vary locally.

How does the financial assessment affect direct payments?

A direct payment covers care the council would fund, so it follows the same means test as council-arranged care. After a needs assessment, a financial assessment looks at your income and capital to decide how much you contribute (gov.uk, as at July 2026, subject to change). In England the upper capital limit is £23,250 and the lower limit is £14,250 for 2026 to 2027 (gov.uk, 2026 to 2027 charging circular, as at July 2026, subject to change).

How savings affect what you get

The financial assessment sets what you pay towards care, whether it arrives as a direct payment or as council-arranged services. With capital above £23,250 you are generally treated as meeting the full cost yourself. With capital between £14,250 and £23,250 you pay a contribution from income plus a tariff of £1 per week for every £250 of capital between those limits. Below £14,250 your capital is not counted, though your income still is (gov.uk, 2026 to 2027, as at July 2026, subject to change).

For how these limits apply to a residential placement, see our guide to Care Home Fees.

Managing a direct payment

Direct payments come with responsibilities. Where you employ a carer directly, you can take on duties similar to an employer, such as contracts, pay and insurance, and councils often expect records of how the money is spent. If you would rather not manage the money yourself, a nominated or authorised person, or a managed account service, can often do so on your behalf (gov.uk, as at July 2026, subject to change). Many people weigh the extra choice against the admin before deciding.

Direct payments, care fees and giving assets away

Because direct payments follow the same means test as other council-funded care, savings and capital affect how much support you receive. Some people ask whether reducing their capital would help. Councils can apply the deprivation of assets rules: where they decide someone has deliberately given away money or property to reduce a care contribution, they may treat that person as still holding it (gov.uk, as at July 2026, subject to change). Deliberately giving away assets to avoid care fees can be challenged, so this is not a route to plan around the charge.

Sensible later-life planning focuses on limiting and mitigating the impact of care fees within the rules, not on structures designed to sidestep them. Because care, tax, benefits and family issues interact, one option some people consider is discussing their position with a qualified professional before acting. It can be worth speaking to a solicitor, a STEP practitioner, or an FCA-authorised financial adviser, and starting from a care needs assessment.

Direct payments in Scotland and Northern Ireland

This guide describes England, where direct payments sit under the Care Act 2014 and the capital limits above apply (gov.uk, as at July 2026, subject to change). The other UK nations run their own systems. Wales offers direct payments under its own social care law, and Scotland provides self-directed support with its own rules and charging framework, while Northern Ireland operates its own health and social care arrangements. The means-test figures and detail differ, so it can be worth checking the rules for the nation where care is provided.

Frequently asked questions

Are direct payments means-tested?

The care itself is means-tested, and a direct payment simply delivers the council-funded part as cash. After a financial assessment, capital above £23,250 generally means meeting the full cost yourself, while capital between £14,250 and £23,250 brings a tariff contribution (gov.uk, 2026 to 2027, as at July 2026, subject to change). Rules can vary by nation.

Can I pay a family member with a direct payment?

Sometimes, but not usually a close relative living in the same household. Councils generally restrict paying a close family member you live with, though they may agree in specific circumstances where it is necessary (gov.uk, as at July 2026, subject to change). The detail varies between councils, so many people check their own council's policy before arranging this.

Can direct payments pay for a care home?

Direct payments are generally aimed at care in the community rather than a permanent care home place, though a council may agree to short periods in some cases (gov.uk, as at July 2026, subject to change). For how residential fees and the means test work together, our guide to Care Home Fees covers the position in more detail.

Do direct payments affect my benefits?

Direct payments are provided to meet assessed care needs and are generally not treated as income in the way earnings are, so they usually do not reduce means-tested benefits. Because benefit rules are detailed and can change, and interact with the care financial assessment, many people confirm their own position with their council or a benefits adviser rather than assuming a general rule applies.

How do I apply for direct payments?

You start by asking your local council for a needs assessment, and if you have eligible needs a financial assessment follows (gov.uk, apply for direct payments, as at July 2026, subject to change). Where the Care Act conditions are met, you can request that your personal budget is paid as direct payments. Starting from a care needs assessment is the usual first step.

Can giving away savings help me qualify for a direct payment?

Deliberately reducing capital to increase council-funded care can be treated as deprivation of assets, and the council may then assess you as if you still held the money (gov.uk, as at July 2026, subject to change). Giving assets away to avoid care fees can be challenged. Planning that limits the impact of care fees within the rules is different, and many people take advice before acting.

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.