Can a Care Home Take All Your Money? Understanding Care Home Fees in 2026

No, a care home cannot take all your money. Under the Care Act 2014, means-testing rules set clear thresholds that determine how much you contribute towards care costs, and you are always entitled to retain a Personal Expenses Allowance for personal use.

If you or someone you love is approaching the decision to move into a care home, the financial implications are likely to be one of your biggest concerns. This guide explains exactly how care home funding works in England in 2026, what the current capital limits mean in practice, which assets are assessed and which are protected, and what options are available if you need help managing the cost.

How Does Care Home Means Testing Work?

A means test is a financial assessment carried out by your local authority to determine how much you are expected to contribute toward care home fees. It considers your savings, investments, property, and income against government-set capital thresholds.

Under the Care Act 2014, local authorities in England are legally required to assess both your care needs and your financial situation before determining whether they will contribute to your fees. The financial assessment examines your capital and income separately.

Your contribution is calculated as follows:

• Capital above £23,250: You are classified as a self-funder and must pay the full cost of your care.
• Capital between £14,250 and £23,250: You contribute what you can from your income, plus a tariff income charge of £1 per week for every £250 of capital held above the lower limit.
• Capital below £14,250: Your local authority meets costs that cannot be covered by your income. You are not required to contribute from your capital.

In all cases, you retain a Personal Expenses Allowance (PEA) — rising to £31.80 per week from April 2026 — to cover personal items such as toiletries, newspapers, and clothing.

What Counts as Capital in a Care Home Assessment?

Capital includes most savings, investments, and property. However, certain assets are legally disregarded, including the value of your home if a qualifying person continues to live there.

Assets typically included in a financial assessment:

• Savings held in bank and building society accounts
• Stocks, shares, and ISAs
• Premium Bonds
• Second properties and buy-to-let investments
• Trust funds (in certain circumstances)

Assets that may be disregarded:

• Your primary home, if your spouse, civil partner, dependent child, or a relative aged 60 or over continues to live there
• Your home during the first 12 weeks of a permanent care placement (the 12-week property disregard)
• Personal possessions
• The surrender value of a life insurance policy

If your main home is included in the assessment, it can push many people above the £23,250 upper threshold, making them self-funders even with modest savings. Our guide to protecting your home and assets as a spouse covers the property disregard rules in detail.

What Happened to the £86,000 Care Cap?

The planned £86,000 lifetime cap on personal care costs was scrapped by the Labour Government in July 2024 and will not be introduced. The current means-tested system, unchanged since 2010 in real terms, remains in place for 2026.

In 2021, the previous government announced a significant reform package that would have introduced an £86,000 ceiling on the total amount any individual in England would need to spend on personal care over their lifetime. Capital thresholds were also set to increase significantly.

The reforms were delayed twice before being formally cancelled by Chancellor Rachel Reeves on 29 July 2024, with projected savings to the public purse of £1.1 billion by 2025/26 cited as justification.

What this means for you in 2026:

• There is no cap on how much you may spend on care home fees over your lifetime.
• The upper capital limit remains at £23,250.
• The lower capital limit remains at £14,250.
• These thresholds have not increased in real terms since 2010, meaning significantly more people face self-funding than would have under the original reform proposals.

Our dedicated article on the care home fees cap explains the full history and what reform could look like in future.

"The absence of a care cap is something we speak with families about regularly. Many arrive expecting the rules to have changed, and it can be a difficult conversation. Understanding where you stand financially before you reach crisis point gives families far more options." — Ashberry Healthcare

Does a Care Home Take Your Pension?

A care home does not take your pension directly, but your pension income is included in the financial assessment and will typically be used to contribute towards your care fees, leaving you with only the Personal Expenses Allowance.

Your State Pension, private pension, and any other regular income are all assessed as part of the means test. The local authority calculates what you can afford from income before determining any additional contribution from capital.

Crucially, regardless of your income level, you retain your Personal Expenses Allowance, confirmed at £31.80 per week from April 2026. You cannot be left with nothing.

For a full explanation of how different pension types are treated, see our article on what happens to your pension if you go into a care home.

What Happens When Your Savings Run Out?

When your capital falls to £23,250, you become eligible to apply for local authority funding support. It is important to contact your council before your funds are fully depleted, as the assessment process takes time.

Self-funding families often reach a point where savings dwindle toward the upper capital threshold. At that point, the rules change. Once your capital falls below £23,250, your local authority is obliged to carry out a financial assessment and, if your needs are confirmed, begin contributing to your fees.

Key steps to take when approaching this threshold:

1. Contact your local authority to request a financial assessment as early as possible.
2. Gather documentation of your savings, income, and any assets.
3. Confirm that the care home you are in accepts local authority-funded residents (not all do).
4. Understand whether a top-up fee will be required if the local authority rate falls below the home's published fees.

Our article on what happens when self-funding runs out walks through this transition in detail, and our guide to paying for care home fees covers the broader funding timeline.

Can I Give My Money Away to Avoid Care Fees?

Giving away assets specifically to reduce the amount counted in a care funding means test is known as deliberate deprivation of assets. If a local authority determines this has occurred, it may assess you as though you still own those assets.

This is one of the most frequently misunderstood areas of care funding law. Local authorities have the power under the Care Act 2014 to include the value of assets you have transferred to others, if they conclude the primary motivation was to avoid care costs. This applies regardless of how long ago the transfer took place — unlike Inheritance Tax, there is no automatic safe harbour period.

The "7-year rule" does not apply to care funding. The seven-year period is an Inheritance Tax concept relating to potentially exempt transfers. For care funding purposes, a local authority can in theory look back indefinitely, though in practice it focuses on transfers made at or after the point when care needs could reasonably have been foreseen. Our detailed article on the 7-year rule for care home fees clarifies exactly where this rule does and does not apply.

When deliberate deprivation is found, the local authority treats the transferred assets as "notional capital" — meaning they are included in your means test as if you still held them.

For more on this, read our full guide to deprivation of assets and the rules around timing and intent.

What Is a Deferred Payment Agreement?

A Deferred Payment Agreement (DPA) is a formal arrangement with your local authority that allows you to delay paying care home fees by using your property as security. The council pays the fees on your behalf, and the debt is repaid when the property is eventually sold.

If you own a home but have limited liquid savings, a DPA may prevent you from having to sell your property immediately. The local authority effectively becomes a secured creditor against your property, recovering its outlay with interest when the home is sold.

DPAs are subject to eligibility criteria and local authority discretion. Not all councils operate identical schemes, and interest accrues on the outstanding amount. Our full guide to deferred payment agreements for care home fees sets out how to apply and what to consider.

Could NHS Continuing Healthcare Cover My Fees?

NHS Continuing Healthcare (CHC) is a package of ongoing care arranged and fully funded by the NHS for individuals whose primary need is a health need. If eligible, it covers the full cost of care with no means test.

CHC is assessed against the NHS Decision Support Tool, which measures need across twelve care domains including behaviour, cognition, nutrition, and skin integrity. Eligibility is not based on diagnosis but on the nature, complexity, and intensity of care needs.

Data from NHS England indicates that a relatively small proportion of care home residents qualify for CHC — around 1 in 7 assessments results in eligibility — but for those who do, the financial relief is significant. There is no capital threshold and no income assessment.

For residents in nursing care homes, a separate entitlement called Funded Nursing Care (FNC) may apply. This is a flat-rate contribution from the NHS toward the nursing element of a care placement, regardless of CHC eligibility. Our guides to NHS Continuing Healthcare for care home residents and navigating NHS nursing care funding explain both in full.

"We always encourage families to explore CHC with the relevant Integrated Care Board before assuming care costs will fall entirely to them. Eligibility is assessed, not awarded automatically, but the outcome can be life-changing for the families involved." — Ashberry Healthcare

What Benefits Can Self-Funders Still Claim?

Self-funders are not excluded from all financial support. Attendance Allowance, Pension Credit, and Council Tax disregards may still be available, and the benefits picture changes once local authority funding begins.

Many families paying for care privately are unaware that they may still qualify for:

• Attendance Allowance — a non-means-tested benefit for those aged 65 or over who need help with personal care or supervision due to illness or disability. It is not affected by savings or capital.
• Pension Credit — a means-tested benefit that tops up weekly income. Eligibility may still apply even for those with modest savings.
• Council Tax disregard — if your home is unoccupied because you have moved into a care home, you may qualify for a full or partial Council Tax exemption.

Our article on benefits you can claim as a self-funder outlines each entitlement in detail.

Can I Challenge a Local Authority Financial Assessment?

Yes. If you believe your local authority has made an error in your financial assessment — for example, by including assets that should be disregarded or by incorrectly applying the deliberate deprivation rules — you have the right to formally challenge the decision.

The complaints process typically involves:

1. Submitting a written challenge to the local authority's care funding team, setting out the specific grounds for dispute and providing supporting documentation.
2. Requesting an internal review if the initial response is unsatisfactory.
3. Escalating to the Local Government and Social Care Ombudsman if the complaint remains unresolved after the internal process is exhausted.

The Ombudsman can investigate maladministration and direct local authorities to reconsider decisions, though they cannot overturn decisions on merit alone. Independent financial or legal advice can significantly strengthen a challenge.

Frequently Asked Questions

Can a care home take all of my savings? No. Under the Care Act 2014, your local authority may require you to use savings above £23,250 toward your care costs, but you retain your Personal Expenses Allowance of £31.80 per week (from April 2026) and certain assets are legally protected from assessment.

What is the 12-week property disregard? During the first 12 weeks of a permanent care placement, your main home is excluded from the financial assessment even if no qualifying person lives there. This gives families time to make informed decisions about the property without being immediately forced to sell.

Can I avoid care home fees by putting my house in trust? Possibly, in limited circumstances, but this approach carries significant legal risk. If the local authority determines the trust was established primarily to avoid care fees, it may still include the property's value in your means test as notional capital. Independent legal advice is essential before establishing any trust arrangement.

Does my spouse have to pay for my care home fees? No. Spouses and civil partners are not legally liable for each other's care costs. However, a jointly owned home may be included in the assessment depending on the ownership structure.

What if I disagree with my local authority's decision? You can challenge it through the local authority's formal complaints procedure and, if unresolved, escalate to the Local Government and Social Care Ombudsman.

Getting Help and Planning Ahead

Navigating care home funding is complex, and the stakes — for your finances, your home, and your peace of mind — are high. The most important step is to seek specialist advice early, before a crisis forces rushed decisions.

Useful sources of independent guidance include:

• Age UK — free advice on care funding, benefits, and financial assessments
• Citizens Advice — legal rights and complaints support
• Society of Later Life Advisers (SOLLA) — accredited financial advisers specialising in care funding
• Local authority care funding teams — entitled to carry out a free financial assessment on request

Our care home funding guide brings together the key information across all funding routes, and our team is always available to talk through what the options look like in practice.

If you are considering care for yourself or a loved one at one of our homes, we welcome every conversation — however early in the process. Get in touch with the Ashberry team and we will help you understand what support may be available.

Capital limits and Personal Expenses Allowance figures are confirmed by the GOV.UK Social Care Charging circular for 2026 to 2027, published February 2026. Figures are subject to annual government review. Always verify current thresholds with your local authority or an accredited financial adviser.

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