Council funding for care: the means test explained

Two separate assessments decide whether your council helps with care costs. People often conflate them, which causes a lot of confusion.

1. The needs assessment decides whether you need care and what kind. It is free and open to anyone, whatever your savings.
2. The financial assessment decides who pays. This is the means test.

Always get the needs assessment, even if you know you will pay for everything. It costs nothing, it establishes what support you need, and it is the gateway to everything else.

The capital limits

For 2026/27 in England:

Your capital	What happens
Above £23,250	You pay the full cost of your care
Between £14,250 and £23,250	You contribute from income, plus tariff income on the capital
Below £14,250	Capital ignored, you contribute from income only

These limits have been frozen for many years, so more people fall above them each year as savings and property values rise.

What counts as capital

Counted: savings and current accounts, ISAs, stocks and shares, premium bonds, second properties, and most trusts.

Ignored: personal possessions, the surrender value of life insurance, and, importantly, the home you live in whenever you are being assessed for care at home.

Tariff income

Between the limits, the council adds assumed income of £1.00 a week for every £250 of capital above £14,250.

Someone with £23,250 in savings is treated as having £36 a week of extra income, regardless of what their savings actually earn.

The property rules

This is where most of the anxiety sits, and where the rules are most misunderstood.

Care at home: your property is always ignored. Always. No exceptions.

Permanent care home: your property is normally counted, unless one of these people still lives there:

• Your husband, wife or partner
• A relative aged 60 or over
• A relative who is disabled
• A child of yours under 16

There is also a 12 week property disregard at the start of a permanent stay, giving you time to make arrangements, and a deferred payment agreement which lets the council pay now and recover from your estate later, so the house does not have to be sold in a hurry.

What counts as income

Counted: State Pension, private and occupational pensions, most benefits, and tariff income.

Ignored or partly ignored: the mobility component of PIP or DLA, and, for care at home, Attendance Allowance and the daily living component of PIP are treated differently from a care home stay. Earnings from work are ignored entirely.

What you keep

Care at home: the minimum income guarantee. For a single person over Pension Credit age that is £241.45 a week. Different rates apply by age and circumstance, and disability and carer premiums add to it.

Care home: the personal expenses allowance, £31.80 a week. That is what is left for clothes, toiletries, haircuts, phone and anything else personal.

Disability related expenditure

The most valuable thing on this page.

For care at home, the council must deduct the extra costs you face because of disability before working out your contribution. Commonly missed items include:

• Extra heating, because you are home all day or need higher temperatures
• Extra laundry, bedding and cleaning
• Incontinence products not supplied by the NHS
• Community alarm or telecare charges
• Special diets
• Privately purchased care beyond what the council funds
• Garden or home maintenance you can no longer do

Councils rarely volunteer this. Itemise your costs, keep receipts, and ask for them to be taken into account. It routinely reduces contributions.

Deprivation of assets

If a council decides you gave away money or property to avoid care fees, it can treat you as still owning it. There is no fixed time limit on how far back it can look, and the test is about your intention at the time.

This does not mean you can never give a gift. It means large transfers made when care was foreseeable will be scrutinised. Take proper advice first.

If you disagree

Ask for a written breakdown of the assessment. Check whether disability related expenditure was included, whether any income was wrongly counted, and whether property disregards were applied. Then use the council’s complaints procedure, and after that the Local Government and Social Care Ombudsman.

Work out your position

Our care fees means test calculator applies these rules to your figures for both care at home and a care home place.