Planning for care costs: what you need to know

The cost of long-term care is one of the biggest financial risks many people face in later life — and one of the least understood. Social care is generally means-tested, while some NHS-funded care isn't means-tested at all, and the rules also depend on where you live: England, Scotland, Wales and Northern Ireland each run their own system, thresholds and benefits.

This guide explains the rules as they stand in 2026/27, including what can happen to your home, how savings and pensions are treated, the difference between residential and nursing care, and the NHS funding that's worth understanding before you start paying for care.

Social-care rules can change, and individual circumstances make a real difference. This guide is general information rather than personal financial, legal or medical advice — always check the current rules with the relevant council, NHS body or government department before making an important decision.

Care costs in 60 seconds

First, the reality: there is no care-cost cap

You may remember talk of an £86,000 lifetime cap on care costs, due to start in October 2025. It was scrapped by the government in July 2024 and isn't in the current plans.¹ Adult social care in England is now under independent review by the Casey Commission, which is due to publish a single combined report in summer 2027. For the moment, though, there is no limit on what you might have to pay: care costs are potentially open-ended, which is exactly why it's worth understanding and planning for the rules as they stand.

Residential care, nursing care, or care at home?

One of the first things to understand is that "care home" is a broad term which can cover several different things.

Residential care

A residential care home provides accommodation together with personal care and support. This might include help with washing and dressing, getting in and out of bed, eating and drinking, taking medicines, mobility, and everyday activities and supervision. A residential care home doesn't necessarily have nurses providing 24-hour nursing care.

Nursing care

A nursing home provides personal care plus registered nursing care for people whose needs require it. Nursing care is generally more expensive than ordinary residential care because of the additional clinical care involved. There's also an important financial difference: someone living in a nursing home who doesn't qualify for NHS Continuing Healthcare may qualify for NHS-funded Nursing Care instead.

Care at home

Care doesn't necessarily mean moving into a care home. Many people receive support in their own home — perhaps a few short visits each week, several visits a day, overnight or live-in care, help with medication, personal care, domestic support, or equipment and adaptations. The financial rules for care at home are different from those for permanent residential care, particularly regarding the treatment of your home.

How much does care cost?

Care costs vary enormously by location, the type of care required, and whether you're paying privately. As a current indication, carehome.co.uk's 2026 figures put the average UK self-funded cost at about:

Actual fees can be substantially higher or lower than this. London and the South East are generally among the more expensive areas, while prices vary considerably even between neighbouring towns.⁵ Specialist dementia care can also cost more than standard residential care.

Home care is normally charged by the hour or by visit. The Homecare Association's 2026/27 calculation puts the minimum sustainable price for homecare in England at £34.42 an hour.⁶ This is a benchmark for what providers need to deliver legally compliant, sustainable care — it isn't an average consumer price, and many councils still pay well below it.

How the means test works in England

For permanent residential care in England, the local authority carries out a financial assessment. For 2026/27 the capital limits are:

Between £14,250 and £23,250, the council normally assumes that every £250 of capital produces £1 a week of income. For example, someone with £20,000 of assessable capital is £5,750 above the lower limit — that produces £23 a week of tariff income. The £14,250 and £23,250 figures remain unchanged for 2026/27.⁷

Your income matters too

The means test doesn't simply look at your savings. Income can include the State Pension, occupational pensions, private pensions, some benefits, investment income, and other regular income. People whose care is arranged by the local authority generally contribute most of their available income towards care costs, but must be left with a Personal Expenses Allowance — £31.80 a week in England in 2026/27.⁷

There are detailed rules about which types of income are counted, disregarded, or partially disregarded, so don't assume that simply adding up every payment you receive will reproduce the council's calculation.

What counts as capital?

This is one of the most important questions to understand. For means-tested care, capital can include money in current and savings accounts, ISAs, Premium Bonds, stocks and shares, investment portfolios, second properties, land, some interests in trusts, cash, and other investments and property interests.

Your main home can also be relevant if you move permanently into a care home, although there are important exceptions and disregards — not every asset is necessarily counted. This is why it's dangerous to use a simple rule such as "everything you own counts". If you're approaching a care-needs assessment, ask the council for a financial assessment and make sure you understand which assets they've included and why.

What happens to your home?

Your home is never counted if you're receiving care in your own home. And even for a care home stay, its value is completely disregarded if a spouse or civil partner — or a dependent relative, or a relative aged over 60 — still lives there. On top of that, there's a 12-week disregard at the start of a permanent stay, giving families breathing room before the home enters the calculation at all.⁸

If you receive care in your own home

If you continue living in your own home and receive care there, the value of your home is normally disregarded in the financial assessment for care at home. That doesn't necessarily mean your other assets are ignored — your income and other capital can still be relevant.

If you move permanently into a care home

Your former home can potentially become part of the financial assessment. But there are important exceptions: the value of your home must generally be disregarded where certain people continue to live there, including a spouse or civil partner and certain dependent relatives, and there are also other circumstances in which a property can be disregarded — as well as the 12-week disregard, which can give someone time to consider their options before the value of their property is taken into account.⁸

Does the house have to be sold?

Not necessarily. A Deferred Payment Agreement can allow eligible people in England to delay paying some of their care costs by effectively borrowing against the value of their home. The council pays or defers eligible care costs and places a legal charge against the property. The debt is normally repaid later — for example when the property is sold, or after the person's death.

A Deferred Payment Agreement isn't free money — it's a loan, and interest and administration costs can apply. The maximum interest rate for deferred payments in England is currently 4.65% a year for 1 July to 31 December 2026, with the rate reviewed every six months. Interest is calculated daily and can be compounded.⁹

The precise eligibility rules and the amount that can be deferred are important, so anyone considering this route should obtain the council's current terms before relying on it — and should understand the equity limit, interest, administration charges, and what happens when the agreement ends.¹⁰

Can I give my house to my children to avoid care fees?

This is an area where it's particularly important to be cautious. Giving away your house, transferring savings to your children, or moving assets into another person's name doesn't automatically protect those assets from a future care assessment. If a council concludes that you deliberately reduced your assets in order to avoid or reduce care charges, it can apply the deprivation of assets rules — for example, deliberately transferring your home to your children shortly before you need care could be investigated as a possible deprivation of assets.

There's no simple rule saying a gift is safe if it was made "X years before going into care" — the circumstances and your reasons for making the transfer matter, and there can also be separate legal, tax and inheritance consequences to giving away a property. The Care Act guidance allows councils to consider whether someone deliberately deprived themselves of capital to avoid care charges.⁸ For these reasons, don't give away your home simply because you're worried about future care fees without taking appropriate professional advice first.

What about care-home top-up fees?

This is another issue families sometimes discover only after a placement has been arranged. Suppose the council agrees you need a care home and will contribute towards the cost — you may find the home you want charges more than the amount the council is prepared to pay for a suitable placement. The difference is known as a top-up, and it can sometimes be paid by a family member, a friend, another third party, or in certain circumstances the person receiving care themselves.

A third party shouldn't agree to a top-up without understanding the commitment they're taking on — a written agreement should set out the arrangement, since fees can rise and a seemingly manageable £50 or £100 weekly difference can become substantial over several years. The Care Act guidance contains specific rules around top-ups, making clear they're additional costs where a person chooses accommodation costing more than the local authority would otherwise pay.⁸

Before accepting a place, it's worth asking: What is the total weekly fee? How much will the council pay? How much will I pay? Is there a top-up, and who's expected to pay it? What happens if the fee increases, or if the person paying the top-up can no longer afford it? These questions can prevent unpleasant surprises later.

What happens to your pension?

Your pension doesn't simply become "protected" because you enter a care home. In England, pension income is generally taken into account when calculating what someone can contribute towards care. The rules are complicated, however, and there are circumstances in which part of a pension can be treated differently — for example, where someone has a spouse or civil partner to whom at least half of certain occupational or personal pension income is paid for their maintenance.⁸ The important point is that your State Pension and private pension income can form part of your contribution towards care costs — which is one reason retirement planning and care-cost planning shouldn't be treated as completely separate subjects.

NHS Continuing Healthcare — the funding you should know about

NHS Continuing Healthcare, usually shortened to CHC, is one of the most important parts of the care-funding system to understand — and it's completely different from means-tested social care. If you're eligible in England, your assessed package of care is funded by the NHS in full, whether that's in your own home, a care home, or another appropriate setting. Your savings and income aren't what determine eligibility — instead, the assessment looks at your health and care needs.¹¹

Your diagnosis is not enough

Having dementia, Parkinson's disease, multiple sclerosis, cancer or another serious condition doesn't automatically qualify someone for CHC. Equally, not having one of those diagnoses doesn't automatically rule someone out. The assessment considers the person's actual needs — their nature, intensity, complexity and unpredictability — across areas including breathing, nutrition, continence, skin, mobility, communication, psychological and emotional needs, cognition, behaviour, medication and other significant care needs.¹¹ Two people with the same diagnosis can therefore receive different decisions, because their care needs may be very different.

How does the CHC assessment work?

For most people, the process begins with a Continuing Healthcare Checklist, which can be completed by an appropriate health or social-care professional. The purpose is to decide whether a full CHC assessment should be carried out — a positive checklist doesn't mean you've been awarded CHC, only that you should proceed to the next stage.

The full assessment is carried out using the Decision Support Tool by a multidisciplinary team, which looks at the person's needs across the relevant care domains and considers the overall picture rather than simply adding up diagnoses. A decision should normally be made within 28 days of the NHS receiving the completed checklist or other notification that a full assessment is required, although there can be exceptions where circumstances outside the NHS's control cause a delay.¹¹

Fast-track CHC

If someone is rapidly deteriorating and may be entering a terminal phase, the Fast Track Pathway can be used instead. It doesn't require the ordinary checklist and full assessment process — an appropriate clinician completes the Fast Track Pathway Tool so that urgent care and funding can be put in place. The NHS says this will normally happen within 48 hours of receiving the completed fast-track tool.¹¹

What if CHC is refused?

If refused, get the reasons in writing and consider appealing within the 6-month window. Ask for the written decision, the reasons for the decision, copies of the assessment documents, and details of the review or appeal process.

Pay particular attention to whether the assessment accurately describes what happens day after day, rather than what happens on a particularly good day. It can be useful to keep a detailed record of how often help is required, how long tasks take, medication and interventions, falls, continence problems, challenging behaviour, night-time care, risks, supervision, changes in condition, and what happens when care is delayed or unavailable. The aim isn't to exaggerate needs, but to make sure the assessment reflects the person's real situation.

NHS-funded Nursing Care

If someone doesn't qualify for full Continuing Healthcare but lives in a nursing home and has assessed nursing needs, they may qualify for NHS-funded Nursing Care (FNC) instead. This is different from CHC: for England in 2026/27, the standard rate is £267.68 a week, paid directly to the home towards the nursing element. It covers only part of the bill — roughly a sixth of an average nursing fee — but many families never discover it exists.

There's also a higher rate of £368.24 a week, though this only applies to people who were already receiving the higher band before October 2007 — anyone newly assessed now receives the standard rate.¹²

Don't forget Attendance Allowance

Attendance Allowance is another benefit worth understanding if you're over State Pension age and need help because of illness or disability. It isn't means-tested, isn't taxable, and doesn't have to be spent on formal care — £114.60 a week at the higher rate or £76.70 at the lower rate in 2026/27. It's widely under-claimed, and it can be received alongside NHS-funded Nursing Care. However, the rules change if you enter a care home.

You can normally continue to receive Attendance Allowance if you're paying your own care-home costs, but you usually can't receive it if your care home is being paid for by the local authority. Benefits can also be affected when NHS Continuing Healthcare or NHS-funded Nursing Care is involved.¹³ If you live in Scotland, Attendance Allowance has been replaced for new claims by Pension Age Disability Payment.¹⁴

How the four nations differ

It's important not to take an English care-fees calculation and assume it applies throughout the UK.

England

England uses the Care Act 2014 framework. For 2026/27: upper capital limit £23,250, lower capital limit £14,250, Personal Expenses Allowance £31.80 a week, and NHS Continuing Healthcare available for people who meet the relevant health-need criteria. The value of the home may be disregarded in various circumstances, including where certain relatives remain living there.⁸

Wales

Wales has its own charging system. For residential care, capital above £50,000 can mean you have to pay the full cost; below that level, the local authority can contribute, subject to a financial assessment. For non-residential care, the maximum charge is currently £100 a week, and the Welsh system also requires a person receiving residential care to be left with at least £43.90 a week for personal items.²

Scotland

Scotland provides free personal care for people assessed as needing it, regardless of age, income or savings. From April 2026, the care-home rates are £260.30 a week for personal care and £117.10 a week for nursing care. However, these payments don't mean every care-home cost is free — accommodation and other costs can remain payable, and financial assessments still apply to chargeable services.³

Northern Ireland

Northern Ireland's system is administered through the Health and Social Care Trusts, which carry out a financial assessment of income and capital for residential and nursing care — capital can include savings, investments and property, including the value of your home. The upper capital limit is £23,250; above that level, you're generally assessed as able to meet the full cost of residential or nursing care.⁴ The detailed treatment of home care and other services differs from England, so Northern Irish residents should use their local Trust for an individual assessment rather than applying the English rules.

Six things to do before you need care

You can't predict whether you'll eventually need residential care, but you can make the financial and practical side much easier for yourself and your family.

1. Make a Lasting Power of Attorney

Consider making both a Property and Financial Affairs LPA and a Health and Welfare LPA. An LPA lets you appoint people you trust to make decisions on your behalf if you become unable to make them yourself — a property and financial affairs LPA can cover things such as bank accounts, pensions, investments, benefits and property, while a health and welfare LPA can cover decisions about care, medical treatment and where you live.¹⁵ Do this while you still have the mental capacity to make the LPA — the rules differ in Scotland and Northern Ireland, where different powers of attorney are used.

2. Understand what you own

Make a simple list of bank accounts, savings, ISAs, investments, pensions, property, Premium Bonds, trusts and other significant assets. Keep it somewhere your attorney or trusted family member can find it.

3. Check your pension and benefits

Make sure you understand your State Pension, private and workplace pensions, Pension Credit eligibility, Attendance Allowance or the relevant Scottish benefit, and any other benefits you may be entitled to. Don't assume you're not entitled to help simply because you own your home.

4. Think about the house

Ask yourself what would happen if one partner needed residential care while the other remained at home. Check how the property is owned, who lives there, whether there are dependants, whether there's a mortgage, and what would happen if the property eventually became assessable. You don't need to make a decision about selling or transferring the property simply because you're planning ahead.

5. Keep good records

If you make significant gifts or transfers, keep records explaining what they were for and when they were made. This won't prevent deprivation-of-assets rules being applied where appropriate, but good records can help establish the circumstances surrounding financial decisions.

6. Build care costs into your retirement plan

You don't necessarily need to set aside a huge "care fund", but you should at least consider what would happen financially if you needed a few hours of home care each week, daily care at home, several years in residential care, specialist dementia care, or nursing care. For some people, insurance or a specialist immediate-needs annuity may be worth investigating once care is actually required.

If you're considering specialist care-fee planning, look for a financial adviser with appropriate later-life-care expertise — the Society of Later Life Advisers (SOLLA) is one organisation that can help people find advisers specialising in later-life financial planning.

A final word about planning for care

Care planning isn't about assuming you'll end up in a care home. For many people, the best outcome is to remain independent in their own home for as long as possible — good planning is about understanding your options before a crisis happens.

The most valuable things you can do now are sometimes the most simple:

• Understand the rules
• Know what you own
• Make powers of attorney
• Check your benefits
• Understand the difference between social care and NHS care
• Know what can happen to your home
• Don't give away assets simply because someone told you it will avoid care fees
• Get an assessment when you need one
• Ask about NHS Continuing Healthcare if your needs are substantial

If you or a family member is approaching a point where care may be needed, don't wait until the savings are nearly gone before asking for help.

Frequently asked questions

Will I have to sell my house to pay for care?

Not necessarily. The home can be disregarded in several circumstances, including where a qualifying spouse or relative continues to live there. If the property is eventually included in the assessment, a Deferred Payment Agreement may allow eligible people to delay paying care costs secured against the property.

How much savings can I have before I have to pay for care?

There's no single UK-wide figure. In England in 2026/27, the upper capital limit for permanent residential care is £23,250 and the lower limit is £14,250. Wales uses £50,000 for residential care, while Scotland and Northern Ireland have different systems.

Can I give my house to my children so the council cannot take it?

Giving away your house doesn't automatically protect it. If avoiding care charges was a significant reason for deliberately reducing your assets, the deprivation-of-assets rules may apply.

Does the NHS ever pay for care?

Yes. NHS Continuing Healthcare can fund an assessed package of care for people who meet the eligibility criteria. Unlike means-tested social care, CHC eligibility is based on assessed healthcare needs rather than your savings or income.

Is NHS Continuing Healthcare the same as NHS-funded Nursing Care?

No. CHC can fund the full assessed package of care where someone is eligible. NHS-funded Nursing Care is a contribution towards nursing care for eligible people in a nursing home who don't qualify for full CHC.

How much is NHS-funded Nursing Care in 2026/27?

In England, the standard rate is £267.68 a week from 1 April 2026. A higher rate of £368.24 applies only in the small number of cases where the person was already on the previous higher band before October 2007.

Can I keep Attendance Allowance if I go into a care home?

If you're paying your own care-home costs, you can normally continue to receive Attendance Allowance if you remain eligible. If your local authority is paying for your care home, Attendance Allowance will usually stop. The rules can also be affected by NHS funding.

Does my State Pension have to be used to pay care fees?

Pension income is generally taken into account in a means-tested care assessment. There are some important exceptions and disregards, so the amount you actually contribute depends on your individual circumstances.

What is a care-home top-up?

A top-up is an additional amount that may have to be paid when the cost of a chosen care home is higher than the amount the local authority would normally pay for an appropriate placement. A family member or another third party may sometimes agree to pay the difference.

Is there a maximum amount I can pay for care?

There's currently no general lifetime care-cost cap in England. Future reform is being considered, so this is an area worth checking regularly.

Are the rules the same throughout the UK?

No. England, Wales, Scotland and Northern Ireland have different systems. Always check the rules for the nation in which you live before making a financial decision.

References

All figures were checked against the sources below in August 2026. Rates and thresholds change — always confirm current figures with the relevant body before making a decision.

1. House of Commons Library — Introducing a cap on care costs
2. Welsh Government — Charging for social care
3. mygov.scot — Costs of personal and nursing care
4. nidirect — Paying your care home fees
5. carehome.co.uk — Care home fees and costs: how much do you pay?
6. Homecare Association — Minimum Price for Homecare, England 2026/27
7. GOV.UK — Social care charging for care and support 2026 to 2027
8. GOV.UK — Care and support statutory guidance
9. Essex County Council — Paying for a care home: Deferred Payments (current national rate, reviewed every 6 months)
10. MoneyHelper — Deferred payment agreements
11. NHS — NHS Continuing Healthcare
12. NHS — NHS-funded nursing care
13. GOV.UK — Attendance Allowance
14. mygov.scot — Pension Age Disability Payment
15. GOV.UK — Make, register or end a lasting power of attorney

Care costs can derail even a well-made retirement plan if they arrive as a surprise. Modelling a realistic scenario now — even a rough one in the Care Cost Planner — gives you far more options later.