Local Authority Care Fees: The Financial Assessment Explained

A letter or phone call from the local council asking to carry out a financial assessment for care fees can feel alarming, especially if it arrives at a moment when your family already has enough to think about. It shouldn't. The assessment is a routine, structured process, and families who arrive prepared usually find it far less daunting than they feared.

This factsheet explains how the assessment works in England (Wales has a different system), what the council looks at, what it ignores, and what to have ready. The rules are as at July 2026. For the myths that surround this subject, our Care Fees & Your Home: Myths vs Facts factsheet is the place to start.

Three things come first, in this order. Ask for a care needs assessment, which is free, not means-tested, and which everybody is entitled to whatever their wealth. Ask about NHS continuing healthcare before you accept any means-tested bill. Make sure Lasting Powers of Attorney are in place while they still can be made.

Before anything else: change nothing

When an assessment letter arrives, the most valuable thing you can do is also the easiest: carry on as normal. Do not move money between accounts, make gifts, or “tidy up” finances while the assessment is under way without taking advice first. Transfers made after the council has been in touch are exactly what the deprivation rules (explained below) are designed to catch, and even innocent housekeeping can look like something else in hindsight. Engage with the process, gather the paperwork, and let the documents speak.

The basics: how the means test works

If you ask your local council to help fund care, at home or in a care home, it must first carry out a care needs assessment (a free assessment of what care is actually needed), and then a financial assessment (a means test of your income and capital). The council arranges both; you don't need to organise anything yourself, and the assessment itself costs nothing.

The means test looks at one person's finances only. Councils have no power to assess a couple's joint resources. Each person is assessed individually, and only on their own share of anything owned jointly.

For the 2026/27 financial year, the capital limits in England are:

• Above £23,250: you pay for your care in full (the council calls this being a “self-funder”).
• Between £14,250 and £23,250: you contribute from income, plus £1 a week for every £250 (or part of £250) of capital between the limits, known as “tariff income”.
• Below £14,250: your capital is ignored altogether; only your income is assessed.

Those limits mean more if you know what care costs. The NHS puts a typical hourly rate for a carer visiting you at home at around £20, and live-in care at between roughly £800 and £1,600 a week depending on how much care is needed (NHS website, reviewed April 2026).

Care home fees are harder to pin down, because neither GOV.UK nor the NHS publishes an average weekly rate for people paying their own way. The care home directory carehome.co.uk does, using fee data collected from the homes it lists. In its 2026 care home costs guide, drawing on fee data dated September 2025, it puts the UK average for someone funding their own care at £1,298 a week for residential care and £1,535 a week for nursing care. Those are industry figures rather than official ones. The spread by region is wide: the same guide shows residential care averaging £1,112 a week in the North East and £1,548 a week in London. What you actually pay depends on where you live and on the type of care needed, so ask homes near you for their current weekly rate before you budget.

There is currently no overall cap on how much one person can pay towards care in England. The cap announced in previous years was abandoned before it came into force, and no replacement is in force as at July 2026.

If you move into a care home with council support, you must be left with a Personal Expenses Allowance of at least £31.80 a week (the rate from 6 April 2026). If you receive care at home, the council must instead leave you with a Minimum Income Guarantee to cover ordinary living costs; for a single person who has reached Pension Credit age that is £241.45 a week from 6 April 2026. And for care in your own home, the value of your main or only home is never counted at all.

When your home counts, and when it doesn't

Your home only enters the means test if you move permanently into a care home. Even then, it must be disregarded (left out entirely) while it is still lived in, as their main home, by someone who was living there when you moved into care and who is:

• your spouse, civil partner or partner (unless you are estranged);
• a relative aged 60 or over;
• a relative who is incapacitated (broadly, receiving or eligible for a disability benefit such as Attendance Allowance or PIP);
• your child under 18.

Two more protections are worth knowing. The 12-week property disregard means the value of your home is ignored for the first 12 weeks of a permanent care home stay, giving families breathing space. And a deferred payment agreement lets the council secure the fees against your home rather than forcing a sale in your lifetime. It works like a loan: the debt is usually repaid from the estate, and most councils charge compound interest, though they are not obliged to. Where you meet the criteria (your other capital is £23,250 or less, the home is not disregarded, and the council can take a first charge on it) the council is required to enter into one. Ask, in writing, and ask to see the council's published deferred payment policy.

What the assessor will ask for

The financial assessment is mostly a paperwork exercise. Having these ready makes it quick:

• Bank and building society statements, savings, ISAs, Premium Bonds and other National Savings & Investments products.
• Income evidence: State Pension, occupational and private pensions, benefits, any earnings.
• Property details, including any property abroad.
• Investments, shares and bonds.
• Records of any significant gifts or transfers you have made: dates, amounts and the reason at the time.
• Any trust documents. If the trust is an Estate Allocation Trust, our How Your Estate Allocation Trust Is Treated in a Care Fees Assessment factsheet explains exactly what to expect.
• If someone is helping because of lost capacity: the registered Lasting Power of Attorney, deputyship order or appointeeship (DWP authority to manage someone's benefits).

If a parent's capacity is declining and no Lasting Power of Attorney exists yet, act on that now, while it can still be made. The council must deal with someone who holds proper authority.

Ask for the written record of the assessment: the council must give you one showing how the figures were worked out. The assessment is also a good moment for a benefits check, as it often uncovers unclaimed Attendance Allowance or Pension Credit.

Giving things away: the deprivation rules

If the council believes you deliberately gave away money, property or other assets with avoiding care charges as a significant motive, it can assess you as if you still owned them. There is no time limit on this, and the “seven-year rule” belongs to Inheritance Tax rather than to care fees.

Our Care Fees & Your Home: Myths vs Facts factsheet sets out the deprivation rules, the seven-year myth and the trust schemes in full.

Care that isn't means-tested

Some care is free regardless of wealth, and it is always worth asking about before accepting a lifetime of fees. NHS continuing healthcare is a full package of care funded entirely by the NHS where someone's primary need is a health need; our NHS Continuing Healthcare factsheet explains it in detail, including how to ask for an assessment. NHS-funded nursing care pays a weekly amount direct to a nursing home where a registered nurse's care is needed. Intermediate care and reablement (up to six weeks) and aftercare under section 117 of the Mental Health Act are also free.

A hypothetical example

Imagine Malcolm, who moves permanently into a care home while his wife Pat stays in their jointly owned house. The house is disregarded entirely while Pat lives there, so the assessment looks only at Malcolm's half of their savings and his income. His share comes to £30,000, so he starts as a self-funder; once it falls below £23,250 the council begins to contribute, with Malcolm paying tariff income on the capital between the limits: at £20,000 of capital that is £23 a week. The assessor's written record shows the workings, and the benefits check picks up an Attendance Allowance claim the family had never made. This is a hypothetical example for illustration only.

Common mistakes

Moving money after the letter arrives. Transfers made once an assessment is in prospect are the easiest deprivation findings a council ever makes. Take advice before touching anything.

Guessing at what the council counts. The rules on what is capital, what is income and what is disregarded are detailed and not intuitive. Ask for the written record and check the workings rather than assuming the first figure is right.

Missing the deferred payment option. Where you meet the criteria and the council can take a first charge on the property, it is required to enter into a deferred payment agreement. Many families sell a house they did not have to sell, simply because nobody mentioned it.

Not asking for the written record. You are entitled to see how the figures were worked out, and you cannot challenge what you have never seen.

Skipping the NHS questions. If needs are primarily health needs, NHS continuing healthcare may fund everything, regardless of wealth. Ask before accepting a means-tested outcome.

Facing it without authority in place. If capacity is failing and there is no Lasting Power of Attorney, everything becomes slower and harder. Put LPAs in place while they still can be made.

For the myths about gifting, seven-year rules and trust schemes, see our Care Fees & Your Home: Myths vs Facts factsheet.

Questions? Book a free call

Pick a time that suits you and your local Squiggle consultant will call you. No charge, no obligation. Book a call or call 01233 659 796.

Talk to Squiggle: 01233 659 796 | hello@squiggleconsult.co.uk | www.squiggleconsult.co.uk | Book a free call: meet.squiggleconsult.co.uk

This factsheet describes the position in England. Wales operates a different charging system with different limits. It is general information, not legal, tax or financial advice, the rules can change, and you should take advice on your own circumstances. Last reviewed: August 2026.