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Financing care
Learn about funding options for home care, home adaptations and care homes, together with Attendance Allowance, gifting assets and Power of Attorney.
Housing options
Consider your options and learn about sheltered housing, retirement villages and care homes.
End of life
Guidance on the practical and emotional aspects at the end of life, from planning end of life care to arranging a funeral and coping with bereavement.

What is a personal budget in social care?

A personal budget is the amount of money that a local authority allocates for your care if they are supporting you. It allows you to make choices about your own care and is part of a move towards more personalised social care provision.

If you’ve been assessed as needing non-urgent help and support, you’ll be allocated a sum of money based on your care plan. You can then decide how the money is spent, and this enables you to have greater choice and control over the services you use, rather than taking a council’s ‘one-size-fits-all’ prescription.

How is a personal budget worked out?

The sum of money you will be allocated is worked out by the local council who will look at:

If your needs change in the future, your personal budget amount may change.

Direct payments during the coronavirus outbreak

During the coronavirus outbreak, there may be unavoidable changes to your usual care arrangements. In recognition of this, the government has issued temporary guidelines to allow direct payments to be used as flexibly as possible. This can include making changes to your agreed care and support plan. Ideally, you will have agreed this with your usual contact person at your local authority, but this may not be possible every time, which is OK.

Find out more about the guidelines on Gov.uk.

Personal budget payment options 

There are different ways you can choose to take the personal budget:

  • as a direct payment, paid straight into your bank account
  • in an account managed by the local authority, but to be spent as you wish
  • paid directly to a care service provider or other organisation, as directed by you
  • in an Independent Living Trust, held on your behalf by a family member, friend or another trusted party.

You can also choose to combine two or more of these options. You don’t have to take responsibility for your entire budget. You could choose to arrange some of the care yourself using a direct payment, and ask the council to arrange other aspects of your care.

Personal budgets in England, Scotland, Wales and Northern Ireland

In England and Scotland, it’s mandatory for local councils to offer a personal budget as an option to all people who have been assessed as needing care services and who qualify for local authority funding. In Scotland, the system is called self-directed support.

In Northern Ireland, direct payments (see below) are widely available, but personal budgets managed by the local authority are at an early stage of roll out and aren’t yet available in all areas.

In Wales, personal budgets are not used, but direct payments (also known as self-directed support) are available. 

Use our calculator to find out how much you might pay a home care agency in your area and what financial support is available.

What are direct payments?

Once a local authority has decided on your personal budget, you can choose to receive some or all of this money in the form of direct payments. The money will be transferred directly to you so that you can arrange and pay for the support you need, instead of having the services organised by the local authority.

Alternatively, you can choose to let the local authority take responsibility for your care arrangements and not take the direct payment. The decision is yours.

Most authorities make the direct payment straight into your bank account every four weeks.

If someone isn’t able to manage their own finances – for example, if they lack mental capacity – it’s possible for someone else to be appointed to manage direct payments on their behalf. This ‘suitable person’ will need to be approved by the local authority. To find out more, contact the relevant social services department via the local authority website.

Direct payments are paid specifically for people to buy the services or equipment they need. They are not a form of income so don’t affect benefit entitlement or income tax.

Can I opt in or out of direct payments?

If you accept direct payments, but then change your mind, you can stop them at any time. Equally, you can switch to direct payments at any time instead of having the local authority arrange your services.

If you decide to move from local authority arrangements to organising your own, the local authority has a duty of care to ensure the current services remain in place until you have organised your own.

What can direct payments be spent on?

You can only spend the money on care that has been agreed in your care plan and you must keep records to show exactly how the money has been spent. The local authority remains responsible for monitoring your needs and checking that they are still being met.

Direct payments can be used to:

Checklist (ticks)
  • Purchase most community services, such as personal care, provision of meals or visits to a day centre.
  • Pay for home help services. For example, if your care plan says that you need a home help or a gardener, you could use direct payments to employ a neighbour to help with these tasks. For instance, if you have mobility problems, you could use direct payments to pay someone to help you get out and about – such as to appointments, places of worships or meeting friends. 
  • Buy equipment or pay for home adaptations to help you stay independent. 

Direct payments can't be used to: 

Checklist (crosses)
  • pay anyone else living in the same household, unless that person is specifically employed as a live-in carer (except in Wales)

  • pay for permanent residential care (except in Wales).

In Wales, direct payments can be used to pay a relative in the same household who provides care or helps with managing direct payments, and they can also be used to pay for residential care in Wales.

What are the pros and cons of direct payments?

Receiving direct payments gives you more flexibility. You are able to choose who delivers the care services that you need, and when. This might be useful if you have a particular provider in mind – maybe one recommended by a friend – or if you aren’t happy with the choice of provider offered by the local authority.

However, if you use direct payments to pay a personal assistant, care worker, gardener or cleaner, for example, you legally become an employer. This could make you liable for PAYE tax and National Insurance. You might also have to think about things such as wages and contracts. See our information on employing private carers for more guidance:

Bear in mind that if you use direct payments, you’ll need to keep track of how the money is spent, which will include keeping receipts and invoices and managing your budget carefully.

In Wales, local authorities provide support with legal issues around being an employer, such as recruitment and understanding the payroll.

I’ve heard the term ‘broker’ used. What are these?

A service broker can help to arrange the support you need and assist with recruitment and employment issues. Your local authority might be able to recommend a broker in your area.

If you receive funding from your local authority, you shouldn’t have to pay to use a brokerage service. The local authority should provide this, although they may charge self-funders to use the service.

In Wales, service brokers aren’t available.

Further reading

Paying for care at home

We explain the options for paying for care at home, from local authority support to paying for it yourself.

Home care fees

Home care fees can vary according to where you live in the UK and the type of care you need.

Last updated: 23 May 2021