What is the financial assessment?
If your local authority says you’re eligible for residential care following a needs assessment, it will then organise a financial assessment (also known as a ‘means test’). It looks at your capital (savings and assets) and income to determine how much you should contribute towards the cost of your care.
The means test threshold for the financial assessment
In England and Northern Ireland
For the financial year 2018–19, if your total capital is:
- Less than £14,250: you will be entitled to maximum support from the local authority. You won’t have to contribute from your capital, but you will be expected to contribute from your income.
- More than £14,250, but less than £23,250: you have to contribute towards the cost of your care: £1 for every £250 of savings between £14,250 and £23,250. This is known as ‘tariff income’.
- More than £23,250: you will have to pay the full cost of your care. If you have less than £23,250 in capital, but a weekly income that is considered to be high enough to cover the cost of your care, you will have to pay all of your fees.
If you’re being assessed for residential care and you own your own home, its value will be taken into account. There are exceptions, such as if your partner continues to live in your home. See our article on financial assessment calculations for residential care for more information.
Any income contributions shouldn’t take your income below the level of the weekly Personal Expenses Allowance (PEA), which is a minimum of £24.90 (2018–19). This money is for you to spend on personal items, such as toiletries, stationery and haircuts. Local authorities in England have discretionary powers to vary the PEA above this level in special circumstances, such as if a person has property-related expenses or is still supporting a spouse. It’s worth checking this with your local authority when you’re assessed.
If you’re being assessed for residential care and you own your own home, its value might be taken into account
If your total capital is:
- Less than £17,000: you will be entitled to maximum support from the local authority. You won’t have to contribute from your capital, but you will be expected to contribute from your income.
- More than £17,000, but less than £27,250: you have to contribute towards the cost of your care: £1 for every £250 of savings between £17,000 and £27,250. This is known as ‘tariff income’.
- More than £27,250: you will have to pay the full cost of your care. If you have less than £27,250 in capital, but a weekly income that is considered to be high enough to cover the cost of your care, you will have to pay all of your fees.
As for England and Northern Ireland, if you're a home owner, its value will be taken into consideration unless, for example, your partner still lives there.
In addition, if you’re aged 65 years or over and have been assessed as needing care in a care home, you can claim personal care payments and possibly also nursing care payments to contribute towards the cost of your care. For 2018–19 these are:
- £174 per week for personal care
- £79 per week for nursing care
- £253 per week for personal and nursing care.
If your total capital is:
- Less than £40,000: you will be entitled to maximum support from the local authority. You won’t have to contribute from your capital, but you will be expected to contribute from your income.
- More than £40,000: you will have to pay the full cost of your care. If you have less than £40,000 in capital, but a weekly income that is considered to be high enough to cover the cost of your care, you will have to pay all of your fees.
For care at home, the value of your home isn’t taken into consideration.
Any income contributions shouldn’t take your income below the level of the weekly Personal Expenses Allowance (PEA), which will be a minimum of £28.50 (2018–19). This money is for you to spend on personal items, such as toiletries, stationery and haircuts.
More detailed information
For a full understanding of the obligations set down for the local authorities in England and Wales, see the government’s Care and Support Statutory Guidance, especially Annexes B and C. Scotland has its own version of this guidance.
If you think you will receive financial support from the local authority
Local authorities only need to pay for personal and nursing care once they have assessed someone as requiring a care home placement. With this in mind, there are some important facts to note.
- If you decide to arrange your own care home placement prior to a financial assessment from the local council, you won’t receive any financial contribution from the authority until the assessment has been completed.
- If the outcome of the assessment is that you don’t require a care home placement, then you won’t receive any financial contribution from the local authority towards your care home costs.
- You might not be paid the PEA, NHS Continuing Healthcare or NHS-funded Nursing Care until the local authority has organised the contractual paperwork with the care home.
Rules for couples
A person being assessed for residential care should be treated as an individual. So if you’re married or living with a partner, only the income of the cared-for person can be taken into account in the financial assessment.
If you share a savings account with another person (partner, family member or friend), consider splitting it into separate accounts so it’s easier to see who has what for the purposes of the financial assessment and paying for care in general. Be warned, however, that there are rules about ‘giving away’ assets - see gifting assets and property.
If you have a private or occupational pension and have a partner still living at home, 50% of your pension will be disregarded from your income assessment.
Calculating capital and income for a care home
The financial assessment for residential care will look at your capital (savings and assets you own that have monetary value) and income (the regular money you have coming in).
What happens next?
After the financial assessment has been completed, you should be provided with written information from the local authority detailing how the charges are worked out, and what you’ll need to pay.
If you qualify for help with costs
The social services department of your local authority should offer you a choice of care homes that will meet your care needs and accept residents funded by a local authority.
If there are no care home places available to meet your assessed needs at the council’s standard rate, the local authority should pay the extra for you to move to a care home that meets all of your assessed needs.
For example, if you need to be in a care home in a particular area to be near to family and/or friends, but the only homes available in that area are more expensive, then the local authority where you’ve been assessed should pay the additional cost. It’s essential, though, that these needs are recorded up front in your care plan so you can prove that the care homes the council is offering you do not meet them.
If you want to live in a different care home that won’t accept the amount of money the local authority is able to pay, a relative or friend could volunteer to pay a ‘top-up fee’. This is the difference between what the care home of your choice charges a self-funder and the local authority’s available rate.
Read more about this subject in third-party top-up fees.
If you have been receiving Attendance Allowance, you will need to inform gov.uk once you move into a care home to let them know that the local authority is contributing to the cost of your care. Attendance Allowance will then cease. If you fail to inform gov.uk, you will have to repay what has been paid.
Gov.uk (Attendance Allowance)
An overiew of what Attendance Allowance is, what you'll get, eligibility and how to claim.
If you don’t have enough money to pay your fees and are finding it difficult to sell your home, you can ask for a long-term loan known as a deferred payment agreement (Northern Ireland excepted).
If you permanently move into a local authority-funded care home in England, Wales or Northern Ireland, have low income and own your own property, the council must ignore the value of the property for the first 12 weeks of your stay.
If you don’t qualify for help with costs
You’ll be looking to self-fund your residential care, in which case see our guidance on self-funding a care home.
If you are unhappy with the assessment
Find out how fees vary across the UK. There are also differences depending on the type of care home you are looking for ...
We explain options for paying for a care home, from local authority support to paying yourself, known as self-funding, ...
We explain how you can pay for your care, what happens if your money runs out and getting financial advice.