In England the care home means test turns on one number: £23,250. Hold a penny more and you pay the whole bill. At or below it the council steps in and your savings add no more than £36 a week. That limit is unchanged for 2026/27 and was the same in 2020/21, while the amount you keep rose from £24.90 a week to £31.80. Councils paid an average of £888 a week for a residential place in 2024/25: £46,176 a year.
This is not a guide to avoiding care fees but to how the assessment works, so you can tell a rule the council must follow from a decision it is free to make: capital limits and tariff income, the disregards that protect your home, why gifting backfires, top-ups, when the NHS pays, the cancelled cap, and the devolved thresholds.
The one number that decides everything
Start with what you are owed. Section 9 of the Care Act 2014 says the needs assessment duty “applies regardless of the authority’s view of … the level of the adult’s financial resources”. A council cannot refuse to assess someone because they look wealthy. It is free, and produces the care plan and personal budget everything else hangs off.
The financial assessment comes second. The Department of Health and Social Care’s circular for 2026 to 2027 confirms that “the capital limits remain at their current level (lower capital limit £14,250 and upper capital limit £23,250)”, and raises the personal expenses allowance — what a council-funded resident keeps — from £30.65 to £31.80 a week, in line with 3.8 per cent inflation. The limits create three zones:
- Capital above £23,250. You are a self-funder: the council contributes nothing, the £31.80 allowance does not apply, and you meet the bill under a contract with the home.
- Capital of £14,251 to £23,250. The council funds the placement; you contribute your assessed income, less the £31.80, plus “tariff income” on your capital.
- Capital of £14,250 or less. Capital is ignored entirely; you still contribute your assessed income, less the £31.80.
Tariff income, and why it stops at £36
Tariff income is a fiction with a statutory basis. Regulation 25 of the Care and Support (Charging and Assessment of Resources) Regulations 2014 treats capital above £14,250 as “a weekly income of £1 for each complete £250 in excess of £14,250 but not exceeding £23,250”, with any leftover part-£250 also counting as £1. It is not interest; nobody pays it to you.
The arithmetic is fixed. The gap between the limits is £9,000; divided by £250 that is 36, so tariff income can never exceed £36 a week, or £1,872 a year. At £20,000 of capital the excess is £5,750, or 23 lots of £250, so the tariff is £23.
Take someone with pension income of £250 a week — our assumption, not a published figure — in a home charging £888. Above £23,250 of capital they pay the full £888, funding the £638 shortfall from savings. Once capital reaches £23,250 the council takes over and their bill becomes £250 of income plus £36 tariff minus the £31.80 allowance: £254.20 a week. The council pays the other £633.80 — same room, same care.
What counts as capital, and what counts as income
Capital means savings, current accounts, ISAs, premium bonds, shares, investment bonds, second properties, land and, usually, your home. Personal possessions are ignored unless bought to cut assessed capital. The surrender value of a life policy is disregarded, as are personal injury payments held in trust.
Income is taken largely in full: State Pension, private and workplace pensions, most benefits, annuities. Pay at least half of an occupational pension to a spouse or civil partner outside the home and half is left out. And with Pension Credit Savings Credit, a disregard of up to £7.30 a week (£11.00 for a couple) applies on top of the allowance in 2026/27.
The mobility component of Personal Independence Payment or Disability Living Allowance is disregarded outright. Attendance Allowance is different: GOV.UK says you cannot usually get it once the council is paying for your care home, though a self-funder keeps it. Payment normally stops after 28 days of council funding — a real cash difference when capital crosses the limit. The £31.80 allowance is a floor, not a ceiling: councils may leave you more, for instance where you still have housing costs on a disregarded property. But that is discretion, and if they refuse the route is the council’s complaints procedure, then the Ombudsman.
Your home: when it counts and when it does not
For most families the house is the whole question. Schedule 2 to the charging regulations sets out when its value must be left out — duties, not favours.
The 12-week disregard
When someone moves permanently into a care home, the value of their main or only home is disregarded for 12 weeks “beginning with the day on which the adult first moves into accommodation in a care home”. The council contributes meanwhile, assessing you on income and other capital. It is not a discount: the property counts from week 13 unless another disregard applies. A second, discretionary 12-week disregard covers a sudden, unexpected change in finances.
The disregards that can last indefinitely
The property must be disregarded, for as long as the situation lasts, where it is the main or only home of a qualifying relative: a partner or civil partner; a family member or relative aged 60 or over; an incapacitated relative; or your child under 18. A further provision covers an estranged or divorced partner who is a lone parent still living there.
This is the most misunderstood part of the system. A spouse living in the family home is protected by law, and no council can require that house to be sold. Councils may disregard a property in other cases too — a long-term carer, say — but that is discretion, and must be argued for.
Deferred payment agreements
If the home counts and you do not want to sell, a deferred payment agreement lets the council pay the fees against a legal charge on the property. Where you qualify it is not discretionary: regulation 2 of the Care and Support (Deferred Payment) Regulations 2014 requires a council to enter into one where needs are met in a care home, the person has an interest in their main or only home, other capital does not exceed £23,250, and they accept the terms.
It is a loan, priced like one. MoneyHelper explains that councils may charge interest, reviewed each January and July, and may recover set-up costs such as Land Registry fees, valuations and legal work. There is a ceiling on the equity you can defer, and the debt falls due when the property is sold or, on death, within 90 days. Renting it out during the deferral is usually possible.
Deprivation of assets: why giving the house away backfires
People are told, often by someone selling something, that transferring the house to the children seven years before you need care puts it out of reach. That is inheritance tax law, and it has nothing to do with social care charging.
Age UK’s factsheet on deprivation of assets, updated September 2026, is blunt: “Inheritance Tax gifting rules do not apply to social care. Any past disposal of assets can be considered as possible deprivation.” There is no seven-year rule and no time limit at all — a council can look at a transfer made two decades ago.
It must establish motive and foreseeability: that avoiding care charges was a significant reason for the disposal, and that you could reasonably have expected to need care. Someone fit and well at 62 who downsizes to help a child with a deposit is in a very different position from someone transferring the deeds a month after a dementia diagnosis. If deprivation is found, the council treats you as still owning the asset — “notional capital” — and bills you accordingly, though that falls over time. It can also pursue whoever received the gift.
The practical consequence: a bill you must pay from money you no longer have. The gift may also create a capital gains problem for the recipient, expose the property to their divorce or bankruptcy and — if you carry on living there rent-free — be a gift with reservation of benefit. Our guides to gifting money to family and inheritance tax planning cover those interactions. Treat any firm cold-calling about “asset protection trusts” with suspicion: a trust does not automatically defeat the means test, and the fees run to thousands up front.
Top-up fees: what a council must offer
Once the council is funding, it sets a personal budget. If the family wants a dearer home, someone must fund the gap — a third-party top-up. The rule to know is about choice: the care and support statutory guidance says a council “must ensure that at least one option is available that is affordable within a person’s personal budget”, and must arrange a dearer setting if none is. As Age UK sets out, you generally cannot top up your own fees; the exceptions are the 12-week property disregard, a deferred payment agreement, and section 117 after-care. If a relative agrees to a top-up, get it in writing and ask what happens when the home raises its fees — one that collapses in two years forces a move.
When the NHS pays instead
None of the above applies if the care is health care. NHS Continuing Healthcare is “a package of ongoing care that is arranged and funded solely by the National Health Service”, free and not means-tested. Eligibility turns on a “primary health need”, judged on the nature, intensity, complexity and unpredictability of your needs: a checklist, then a multidisciplinary assessment across 12 care domains, with a fast-track route where a condition is deteriorating rapidly. A refusal goes to the integrated care board, then to NHS England.
The narrower award is NHS-funded nursing care, a flat contribution towards the nursing element of a nursing home place, paid whoever funds the rest. The Department of Health and Social Care confirmed on 9 March 2026 that the standard rate rises “from £254.06 to £267.68 from 1 April 2026”, and the higher rate from £349.50 to £368.24. At the standard rate that is £13,919.36 a year off a nursing home bill. If you are self-funding and nobody has mentioned it, ask.
The self-funder premium
Self-funders often pay more than the council for an identical room. The Competition and Markets Authority’s care homes market study of 30 November 2017 found that “self-pay fees are now, on average, 41% higher than those paid by LAs” — a differential of £236 a week, over £12,000 a year. No official body has measured the premium since. LaingBuisson’s market report (36th edition, April 2026) is reported to put the gap nearer 25 per cent, but that is a paid report we have not read.
What is current is the council side. The government’s provider fee reporting for 2024 to 2025 puts the average fee councils paid for over-65s at £888 a week for residential care and £1,027 for care with nursing, on provisional figures excluding NHS-funded nursing care. Ask any home what it charges a self-funder, what it charges the council, and what happens if your capital falls below £23,250: some keep you at the council rate, others require a top-up. Get that in writing.
Working out how long the money lasts?
Take the weekly fee, subtract the resident’s income, and count how many weeks the capital covers before it reaches £23,250 — usually fewer than families expect.
Open the savings goal calculator →The cap on care costs: cancelled, not delayed
Many people still plan around a cap that does not exist. The scheme revived in 2021 would have set an £86,000 lifetime cap on personal care spending and raised the capital limits to £100,000 and £20,000. It was due to start in October 2023, then October 2025.
It was scrapped. The House of Commons Library briefing on introducing a cap on care costs records the Chancellor saying on 29 July 2024 that “it will not be possible to take forward those charging reforms”. There is no cap, no higher capital limit and no replacement timetable: anyone telling you care costs are capped at £86,000 is working from an out-of-date briefing.
What exists instead is a review. The terms of reference for the independent commission into adult social care, chaired by Baroness Casey, say phase 1 “should report in 2026” and phase 2 by 2028, and require its recommendations to “remain affordable, operating within the fiscal constraints of Spending Review settlements”. As at 4 September 2026 no phase 1 report has been published: the commission’s site lists nothing since its August newsletter, and the government’s June 2026 letter to Baroness Casey still looks forward to it “later this year”. Plan on the rules that exist today.
Scotland, Wales and Northern Ireland
Everything above is England. Social care is devolved and the thresholds diverge sharply: Wales is far more generous on capital, and Scotland pays for personal and nursing care whatever your means.
| Care home means test | England | Scotland | Wales | Northern Ireland |
|---|---|---|---|---|
| Upper capital limit | £23,250 | £36,750 | £50,000 | £23,250 |
| Lower capital limit | £14,250 | £22,750 | None | £14,250 |
| Tariff income | £1/wk per £250 or part | £1/wk per £250 or part | None | £1/wk per £250 |
| Maximum tariff income | £36/wk | £56/wk | — | £36/wk |
| Minimum you keep | £31.80/wk | £37.65/wk | £46.35/wk | £34.10/wk (2025/26) |
| Savings disregard (single) | up to £7.30/wk | up to £8.95/wk | — | up to £5.75/wk (2025/26) |
| Free personal care | No | Yes — £260.30/wk personal, £117.10/wk nursing | No | No |
| NHS-funded nursing care | £267.68/wk standard | Covered by the nursing care payment | Set separately | Set separately |
In Scotland the limits are £22,750 and £36,750 from 6 April 2026, with the same £1-per-£250 tariff. Separately, regardless of means, mygov.scot gives £260.30 a week for personal care and £117.10 for nursing care from 1 April 2026 — up to £377.40 a week towards a nursing placement before any means test bites.
In Wales, GOV.WALES says that “if you have capital over £50,000 you may have to pay the full cost of your residential care” and that councils “must ensure you are left with at least £46.35 a week”; non-residential care is capped at £100 a week. Below £50,000 capital is disregarded outright: no lower limit, no tariff income. The page gives no year, but Age Cymru (May 2026) dates both figures to 2026/27, and the £100 cap has stood since 2020.
Northern Ireland uses England’s £23,250 and £14,250 limits and the same tariff rule, leaves residents £34.10 a week and disregards up to £5.75 of savings credit. nidirect gives no year; those are the rates in the Department of Health’s circular HSC (CHU) 1/2025, effective 7 April 2025. A 2026/27 circular followed in March 2026 which we could not read, so treat both as 2025/26 rates that may have risen.
What to actually do
- Ask for a needs assessment first, whatever the savings. It is free and a legal duty.
- Get the financial assessment in writing and check the tariff against the £1-per-£250 rule.
- Say at once if a partner, a relative aged 60 or over, an incapacitated relative or a child under 18 lives in the property. That disregard is mandatory, and councils do not always ask.
- Do not gift the house. There is no seven-year rule in social care, and notional capital is a bill you cannot pay.
- Diary the 12-week disregard from the date the placement became permanent.
- Raise NHS Continuing Healthcare before agreeing to fund anything, and in a nursing home check NHS-funded nursing care is in payment.
- Put a lasting power of attorney in place while capacity is clear. Our guide to wills, powers of attorney and probate covers it.
Age UK and Citizens Advice give free, independent help with financial assessments and challenges, and sell nothing. If a firm offers to protect your home from care fees, stop and take independent advice.
Frequently asked questions
What is the savings limit for care home fees in England in 2026?
The upper capital limit is £23,250 and the lower limit £14,250 for 2026/27, both unchanged. Above £23,250 you pay the full fee. Between the limits you contribute your income plus tariff income of £1 a week for every £250 above £14,250, capped at £36. Below £14,250 capital is ignored.
Will I have to sell my house to pay for care?
Not if a qualifying relative lives there. The value must be disregarded where the property is the main or only home of your partner, a relative aged 60 or over, an incapacitated relative, or your child under 18. Otherwise it is disregarded for the first 12 weeks of a permanent placement, after which you can ask for a deferred payment agreement instead.
Can I give my house to my children to avoid care fees?
You can, but it usually does not work. There is no seven-year rule in social care: inheritance tax gifting rules do not apply and any past disposal can be examined. If the council finds you deprived yourself of the asset to avoid charges, it treats you as still owning it and bills you for money you no longer have.
How much are care home fees in the UK?
Councils in England paid an average of £888 a week for residential care and £1,027 for care with nursing for people aged 65 and over in 2024/25, on provisional figures excluding NHS-funded nursing care. Self-funders typically pay more: the Competition and Markets Authority found in 2017 that self-pay fees were 41 per cent higher on average, a differential of about £236 a week.
Is there still an £86,000 cap on care costs?
No. The £86,000 lifetime cap, and the planned rise in the upper capital limit to £100,000, were cancelled on 29 July 2024 when the Chancellor said it would not be possible to take forward the charging reforms. There is no cap and no replacement date. The Casey Commission is due to report on phase one during 2026 — it had not done so by early September 2026 — and on phase two by 2028.
Are the care home capital limits different in Scotland and Wales?
Yes, substantially. Scotland uses £22,750 and £36,750 from 6 April 2026 and separately pays £260.30 a week for personal care and £117.10 for nursing care regardless of means. Wales has a single capital limit of £50,000, no tariff income, and a minimum income amount of £46.35 a week. Northern Ireland uses the same limits as England but leaves residents £34.10 a week rather than £31.80, its published 2025/26 rate.
Last reviewed: September 2026. The capital limits, tariff income, personal expenses allowance, property disregards, deferred payment and deprivation rules above are the law in England for 2026/27. Social care is devolved; the other three nations’ thresholds, and how well each is dated, are in the table above. NHS Continuing Healthcare and NHS-funded nursing care are separate, non-means-tested systems. Worked examples are our own, on stated assumptions. This is general information, not personal financial advice: check your position with gov.uk or your council, or get free help from MoneyHelper, Age UK or Citizens Advice.
