3 Calculating your relative's capital and income
The financial assessment for care at home will look at your relative’s capital (savings and assets they own that have monetary value) and income (the regular money they have coming in). The assessment is governed by strict guidelines, some of which are complex, so here we only give an overview of the most important elements. On this page we cover:
1. What is included in the financial assessment?
2. What isn't included in the financial assessment?
3. Rules for couples
4. Personal Expenses Allowance (PEA)
What is included in the financial assessment?
- All income – from property rental (buildings and land), investments and pensions that are in your relative’s name
- Bank and building society accounts
- National Savings Certificates and Ulster Savings Certificates
- Premium Bonds
- Stocks and shares
- Shares in a family business
- Trust funds
- Regular savings and investments, including ISAs.
Benefits are also taken into consideration in a financial assessment, including the following:
- Attendance allowance, constant attendance allowance and exceptionally severe disablement allowance
- Carer's allowance
- Personal independence payments (PIP) (including disability living allowance)
- Pension credit
- State pension
- Universal credit
- Bereavement allowance.
What isn’t included in the financial assessment?
Capital assets that must not be included in a financial assessment include:
- The value of any property that your relative owns, unless their partner or certain others are still living there
- Personal possessions, although see also Gifting assets and property
- Surrender value of life insurance policies, annuities
- Investment bonds with a life assurance element
- Payment derived from certain trusts.
The following forms of income that must be disregarded from the financial assessment include:
- Christmas bonus
- Earnings from employment, including self-employment
- Gallantry awards
- Personal independence payment (mobility component) and mobility supplement (including disability living allowance)
- Social Fund payments, including winter fuel payments.
Your relative should seek advice from an independent financial adviser (IFA) if they have complex financial arrangements such as money in trust, certain bonds or compensation payments, or shares in a family business. The Society of Later Life Advisers (SOLLA) provides specialist advice to older people looking to fund care.
For more detailed information in England and Wales, see the government's Care and Support Statutory Guidance, especially Annexes B and C. England and Wales, Scotland and Northern Ireland each have their own versions of this guide. The principles are generally the same and the guidance covers:
- who should pay for residential care
- how much local authorities should pay.
Rules for couples
A person being assessed for care at home should be treated as an individual. If they are married or living with a partner, only the income of the cared-for person can be taken into account in the financial assessment of what they can afford to pay for their care and support. So, if your relative receives income as one of a couple, that income will be treated equally between them.
If your relative has a private or occupational pension, which is helping to support a married or civil partner who does not live in the same care home, then 50% of their pension will be disregarded when calculating income.
If your relative shares earnings from rental income, assets or savings with another person (a married partner, family member or friend), it might be a good idea to split any joint accounts into separate accounts so it is easier to see who has what for the purposes of the financial assessment and paying for care in general. Be warned that there are rules about ‘giving away’ assets – see Gifting assets and property.
Personal Expenses Allowance
When calculating income, your relative is allowed to keep a personal expenses allowance (PEA) to cover personal items such as toiletries, stationery and birthday cards and presents. In 2016-17 the weekly PEA is as follows:
- In England and Northern Ireland: £24.90
- In Scotland: £25.05
- In Wales: £26.50
This amount will NOT be calculated as part of your relative’s income during the financial assessment. For example, if your relative (living in England) had an income of £100 per week, only £74.45 would be taken into account by the local authority when calculating how much your relative should contribute towards their care.
Local authorities have a discretionary power to vary the personal expenses allowance (PEA) above this level in special circumstances (Northern Ireland excepted): if a person has property-related expenses or is still supporting a spouse, for example.