Paying for care: the means test explained (2026/27)

In England, who pays for care comes down to a financial assessment — the means test. If your parent has capital above £23,250, they pay for their own care. Below £14,250, their savings are ignored (though income still counts). In between, the council helps, but savings add a weekly “tariff income”. The house is sometimes counted and often not — and the NHS routes that skip the means test entirely are checked far less often than they should be.

This guide walks through the whole system in plain English: what happens before the means test, how the sums actually work, when the home is at risk and when it isn’t, and what to do if your parent will be paying their own way. It is the guide we wish every family had before their first phone call to the council.

This guide is general information, not financial or legal advice. For advice about your own situation, speak to a regulated professional, or a free service such as Citizens Advice or Age UK.

Who pays for care in England?

The honest answer: most older people pay something, and many pay everything, at least at first. Unlike the NHS, social care in England is means-tested. The council only contributes once your parent’s savings and income fall below set limits.

But “means-tested” is not the whole story, and families who stop at that sentence often pay more than they need to. Three things sit alongside the means test:

• The needs assessment comes first, is free, and is worth having even if your parent will clearly self-fund.
• The house is protected far more often than people think — always for care at home, and in several common care-home situations too.
• Two NHS routes are not means-tested at all: NHS Continuing Healthcare and NHS-funded nursing care. They should be ruled out before anyone signs a self-funding contract.

The rules below are for England. Scotland and Wales run different systems — there’s a section on both near the end.

What happens before the means test?

Before anyone talks about money, the council must assess what care your parent actually needs. This is the needs assessment (sometimes called a care needs assessment), and under the Care Act 2014 anyone who appears to need care is entitled to one — free, regardless of wealth. You can request one from the council on gov.uk, and you can do it on your parent’s behalf.

Don’t skip this step, even if you already know your parent will be paying for their own care:

• It produces a written record of needs, which matters later if savings run down and the council takes over funding.
• It can unlock equipment, home adaptations and short-term help that aren’t means-tested.
• It is the trigger for the council to consider whether an NHS Continuing Healthcare assessment is needed.

Only after the needs assessment — and only if the council might arrange or fund care — does the financial assessment (the means test) happen. A council that asks about money before assessing needs has the order wrong, and you can politely say so. The NHS social care and support guide explains the process from the family’s side.

How does the care means test work?

The means test looks at your parent’s capital (savings, investments and sometimes property) and income (pensions and benefits). In England, for 2026/27, the capital limits are:

Your parent’s capital	What happens
Above £23,250	Self-funder — the council does not contribute to care costs
£14,250 to £23,250	The council contributes; capital counts as “tariff income” on top of assessed income
Under £14,250	Capital is ignored entirely; income is still assessed

Rates correct for the 2026/27 tax year. Benefit rates change every April — always check the current figures on gov.uk.

Tariff income is the piece that confuses everyone. For every £250 (or part of £250) of capital above £14,250, the council adds £1 a week to your parent’s assessed income. A worked example:

• Mum has £18,000 in savings.
• £18,000 minus £14,250 = £3,750 above the lower limit.
• £3,750 divided by £250 = 15.
• So £15 a week of tariff income is added to her pensions and other income when the council works out her contribution.

One warning: Pension Credit uses a similar-looking rule — £1 a week per £500 above a £10,000 disregard — and families constantly mix the two up. They are different systems with different numbers. The care means test is £1 per £250 above £14,250.

The means test assesses only the person who needs care. A spouse or partner cannot be made to pay from their own money. Jointly held savings are usually treated as owned 50/50, though there are nuances — if large sums are involved, take advice.

What counts as capital and income?

Capital broadly means savings and investments: bank and building society accounts, ISAs, Premium Bonds, shares, and second properties. The main home is a special case with its own rules — see the next section. Some things are disregarded, such as the surrender value of life insurance policies and personal possessions; the detail is in the council’s assessment, and Age UK’s factsheets cover the fine print well.

Income means the State Pension, private and occupational pensions, annuities and most benefits. Disability benefits have their own wrinkles — how they are treated differs between home care and care homes — so the council’s financial assessment team should set out exactly what they’ve counted, and you are entitled to ask for the calculation in writing. If anything looks wrong, check the current rules on gov.uk before accepting the figure.

Deliberately giving money away to get under the limits does not work — the council can treat your parent as still owning it. There is more on this below and a full guide to deprivation of assets.

Is the house counted in the means test?

Sometimes — and this is the question that keeps families awake, so here is the short version.

The home is never counted when:

• Your parent is getting care at home rather than in a care home. For domiciliary care the house is always ignored, full stop.
• A spouse or partner still lives there.
• A relative aged 60 or over, a disabled relative, or a child under 18 lives there.
• The care home stay is temporary or respite.
• It is the first 12 weeks of a permanent care home stay — the 12-week property disregard, which gives families breathing space to plan.

The home is counted when your parent moves into a care home permanently and nobody in the protected categories still lives in it — and even then, a deferred payment agreement (below) usually means it does not have to be sold in a hurry, or at all during your parent’s lifetime.

We’ve written a separate guide answering do you have to sell the house to pay for care? — read it before assuming the worst.

How is home care means-tested differently from a care home?

The two means tests share the capital limits but differ in two important ways:

For care at home (domiciliary care):

• The house is never counted.
• After paying their assessed charge, your parent must be left with at least the Minimum Income Guarantee — a weekly income floor set by government each year. The figures change; check gov.uk or ask the council for the current amount.

For a care home:

• The house may count, subject to the disregards above.
• Your parent must be left with at least the Personal Expenses Allowance of £31.80 a week (2026/27) — their own money for toiletries, haircuts, newspapers and presents for the grandchildren. Everything else in the assessed income goes towards the fees.

The practical upshot: care at home is often the financially gentler route as well as the one most parents prefer, because the house stays out of the calculation entirely.

What should self-funders still do?

If your parent’s capital is above £23,250, they are a self-funder — but “the council won’t pay” is not the same as “there’s nothing to do”. Four things are worth doing straight away:

1. Get the needs assessment anyway. It is free at any wealth level, it documents needs for the day the money runs down, and it can unlock non-means-tested help such as equipment and adaptations.
2. Claim Attendance Allowance. It is not means-tested — £76.70 or £114.60 a week (2026/27) regardless of savings. It continues in a care home while your parent self-funds (it stops after 28 days only if the council is paying). Most self-funding families never claim it. That is money left on the table every single week.
3. Rule out NHS Continuing Healthcare first. If your parent’s needs are primarily health needs, the NHS may have to pay for everything — see below and our full CHC guide.
4. Ask the council to arrange the care even though your parent pays. Councils can arrange care for self-funders, and council-arranged care can come at better rates than the ones quoted to families walking in alone. Ask; the worst they can say is how their scheme works.

If the sums are large — and with care home fees they usually are — this is the point to involve a regulated, later-life financial adviser. The Society of Later Life Advisers lists FCA-regulated advisers who specialise in exactly this, and MoneyHelper has a good free overview of the funding options.

What does the council pay, and what are top-up fees?

When the council funds a care home place, it pays up to its standard rate for the level of need — and it must offer at least one home at that rate that meets your parent’s assessed needs.

If the family prefers a more expensive home — nicer rooms, closer to the grandchildren — a third party (usually the family, not your parent) can pay the difference. This is a top-up fee. Two things to know:

• Top-ups are meant to be a genuine choice. If no suitable home is available at the council’s rate, the council should pay the higher fee itself rather than force a top-up. The rules here are detailed — if you feel pushed into a top-up, get advice from Age UK or Citizens Advice before signing.
• Top-ups continue for the whole stay, and fees rise. Be honest with yourself about affordability over years, not months.

What is a deferred payment agreement?

A deferred payment agreement (DPA) is a council scheme that stops the means test forcing a house sale. The council pays the care home fees, and the debt is secured against your parent’s home — repaid when the house is eventually sold, or from the estate.

Key points:

• Councils charge interest and administration fees on DPAs. The rates are capped nationally but vary — check your council’s scheme documents.
• Your parent has a right to a DPA in broad terms where their capital apart from the home is below the threshold; the exact qualifying conditions have detail, so ask the council to set out its criteria in writing.
• A DPA buys time and options: the house can be sold later at a sensible price, kept for a spell, or in some schemes rented out to offset fees.

DPAs are a genuinely useful tool and too few families are told about them. There is more in our guide on whether you have to sell the house.

Can you give money away to avoid care fees?

Not deliberately, no — and this trips up well-meaning families every year. If your parent gives away money or property mainly to reduce what they’d pay for care, the council can treat them as still owning it (“notional capital”) or, in some cases, recover the cost from whoever received the gift.

Two things worth stating plainly:

• There is no 7-year rule for care fees. The 7-year rule belongs to inheritance tax, a completely different system. For care fees there is no time limit — what matters is intention, not the calendar.
• Normal life is fine: birthday and Christmas presents, ordinary spending, gifts made years before care was ever on the horizon. What is not fine is, say, transferring the house to the children shortly after a dementia diagnosis.

This deserves its own article, and it has one: gifting money before care — the deprivation of assets rules. Read it before moving any money.

Which NHS routes skip the means test entirely?

Two — and they are checked far less often than they should be.

NHS Continuing Healthcare (CHC). If your parent’s needs are primarily health needs rather than social care needs, the NHS pays the full cost of their care — at home or in a nursing home — with no means test at all. Savings, income and the house are irrelevant. CHC is hard to get and the assessment process is a battle of its own, but the stakes are the entire cost of care. Our NHS Continuing Healthcare guide explains eligibility and the assessment.

NHS-funded nursing care (FNC). If your parent is in a nursing home (not a residential home) and doesn’t qualify for full CHC, the NHS pays £267.68 a week (2026/27) directly to the home towards the nursing part of the fees. It is not means-tested either.

The rule of thumb: always ask about CHC before concluding your parent must self-fund. A CHC screening (the checklist) costs nothing and can be requested from the GP, hospital team or council. The Alzheimer’s Society has good material on CHC for families dealing with dementia.

What happens when a self-funder’s money runs down?

Self-funding is rarely forever. Care home fees erode savings quickly, and the means test is waiting at the bottom. Two practical points for families planning ahead:

• Approach the council well before capital reaches £23,250 — around three months ahead is a sensible rule of thumb. Assessments take time, and you want council funding to start the moment eligibility begins, not months later after savings have dipped far below the line.
• Keep records as you go: fee invoices, bank statements, and the original needs assessment. When the council takes over, it will want to see how the money was spent — and ordinary care fees are, obviously, a perfectly good answer.

One caution for this moment: if the council’s standard rate is lower than the home’s fee, the family may be asked about a top-up to keep your parent in the same home. Get advice before agreeing — councils must meet assessed needs, and moving a settled resident is not a decision to wave through.

What about Scotland and Wales?

Everything above describes England. The other UK nations differ:

• Scotland provides free personal care for those assessed as needing it, and uses different capital limits for accommodation costs. See mygov.scot for the Scottish system.
• Wales uses a different (higher) capital limit and its own charging rules. See gov.wales for details.

If your parent lives outside England, use the links above rather than the figures in this guide.

Where should you start?

In this order: needs assessment → CHC question → benefits → financial assessment. Ask the council for the free needs assessment, ask whether a Continuing Healthcare checklist is appropriate, and claim what isn’t means-tested — starting with Attendance Allowance, which most families in this position are entitled to and haven’t claimed. Our free benefits check takes a few minutes and shows what your parent may be missing before the means test even enters the picture.

And if the decisions involve the house or large sums: general information (including this guide) is not a substitute for regulated advice. An FCA-regulated later-life adviser via SOLLA or guidance from MoneyHelper is money and time well spent.