There are no new rules for care home payments in the UK as of 2025/2026. The planned reforms, including the £86,000 lifetime care cap and increased financial thresholds, were scrapped by the Labour Government in July 2024.
The previous system remains in place, meaning individuals are still assessed under the old means-tested model based on income, savings, and property.
Key Points:
- No lifetime cap on personal care costs
- Capital threshold remains at £23,250 (upper) and £14,250 (lower)
- Property is often included in financial assessments
- Reforms planned for 2025 were cancelled
- Local authorities continue to mean-test
- NHS Continuing Healthcare ais vailable in specific cases
- No financial responsibility for next of kin unless contractually agreed
- No new care funding reforms announced yet
What Are The Current Rules For Care Home Payments In England?
In England, the system used to determine how much individuals pay towards care home costs remains unchanged following the cancellation of proposed reforms.
Care home funding is still means-tested, and the upper capital limit of £23,250 continues to be the key threshold used to determine whether someone qualifies for financial support from their local authority.
If someone has assets above this threshold, they are expected to pay the full cost of their care.
If their assets fall between £14,250 and £23,250, they may receive partial assistance, while those with assets below £14,250 receive the most support.
However, income will still be considered in all cases, meaning individuals must contribute towards care from pensions or benefits even if they receive council help.
This structure continues to apply in 2025/2026 as confirmed by the UK Government in the latest Social Care Charging guidance.
To put this into context, here is a breakdown of the capital thresholds and what they mean in practice:
| Capital Level | Support Eligibility | Individual Pays? |
|---|---|---|
| Over £23,250 | No support (self-funding) | Full care home fees |
| £14,250 to £23,250 | Partial support available | Some contribution required |
| Below £14,250 | Maximum support from the council | Must contribute from income |
In addition to savings and investments, property can be considered in financial assessments.
If a person moves permanently into a care home, their home may be counted as an asset unless a spouse, dependent child, or elderly relative continues living in it.
If such exemptions do not apply, the value of the property could push the individual above the £23,250 limit, making them a self-funder.
Were There Supposed To Be New Care Home Payment Rules In 2025?
The Conservative Government had planned to implement major reforms to social care funding in England in October 2025.
The centrepiece of these reforms was the introduction of a £86,000 lifetime cap on personal care costs, intended to prevent individuals from facing unlimited financial exposure due to long-term care needs.
Alongside the care cap, two key thresholds were set to change:
- The upper capital limit was due to rise from £23,250 to £100,000
- The lower capital limit would increase from £14,250 to £20,000
These changes would have meant that more people could qualify for financial support, and fewer would need to sell their homes to afford care.
The aim was to strike a balance between personal responsibility and public support, especially for those in the “just above the threshold” category who often miss out under the current rules.
Here’s how the scrapped reform compared to the current system:
| Feature | Proposed 2025 Reform | Current 2025/2026 Rules |
|---|---|---|
| Lifetime Cap on Care Costs | £86,000 | No cap currently |
| Upper Capital Limit | £100,000 | £23,250 |
| Lower Capital Limit | £20,000 | £14,250 |
| Personal Expenses Allowance | £28.25 | £28.25 |
| Property Inclusion | Sometimes excluded | Often included |
Had these changes come into effect, thousands more would have benefited from earlier access to council support and greater predictability in care planning. However, the reality is that none of these proposals were implemented.
Why Were The Care Home Funding Reforms Scrapped In 2024?
In July 2024, the newly elected Labour Government confirmed the reforms would not be going ahead. Their reasoning was largely based on the financial burden the reforms would place on public services and the belief that the proposed changes did not go far enough in addressing wider issues in the care sector.
There was also concern that the cap would benefit wealthier homeowners more than low- to middle-income individuals. The reforms focused heavily on funding mechanisms without tackling shortages in the care workforce, regional funding disparities, or access to consistent care quality.
As someone with a long-standing interest in care sector policy, I’ve spoken with council leaders and care home managers who anticipated this outcome.
Many had already voiced doubts about the feasibility of implementing such sweeping changes without more investment in infrastructure, staffing, and training.
There is now a growing call not just for funding reform, but for a complete structural overhaul of how adult social care is delivered and funded in England.
What Support Is Available If You Can’t Afford Care Home Fees?
When an individual’s assets fall below the upper capital limit of £23,250, they may become eligible for financial support from their local authority. Support is calculated following a financial assessment, which includes reviewing:
- All forms of income, such as state pensions, occupational pensions, and some benefits
- Capital, including savings, investments, and property (if applicable)
- Any previous gifts or transfers that could be considered a deprivation of assets
Where eligibility is established, councils may contribute to the cost of care and offer Deferred Payment Agreements (DPAs). These allow a person to delay the sale of their home by using it as collateral.
The local authority effectively pays the care home on the individual’s behalf and recovers the cost later when the property is sold.
People receiving council support are still allowed to retain a small portion of their income for personal use. This is called the personal expenses allowance, and it remains fixed at £28.25 per week as of 2025/2026.
The system is designed to ensure that no one is left without essential care due to lack of funds. However, the process can be complex, especially when questions around gifts and asset transfers arise.
Councils are vigilant about identifying deliberate deprivation of assets, which could disqualify someone from support if they gave away property or savings in anticipation of needing care.
Are Next Of Kin Ever Responsible For Care Home Fees?
Next of kin are not automatically responsible for a family member’s care home costs. The responsibility to pay rests with the individual receiving care, based on the outcome of their financial assessment.
However, legal obligations can arise if a relative:
- Agrees to a third-party top-up, choosing a care home more expensive than what the local authority is willing to pay
- Sign a contract or guarantee with the care provider
- Uses their own finances to cover deposits or fees on behalf of the individual
Cases of confusion often occur when family members assume informal responsibility or are misinformed about their obligations. If a care home requests a top-up or payment from a relative, it is crucial to ensure there is clear documentation outlining who is financially liable.
Do Dementia Patients Have To Pay Care Home Fees In The UK?
The question of whether dementia patients have to pay for care is one of the most emotionally and politically sensitive issues in social care. The answer depends on whether the individual’s needs are considered medical or social.
People with complex or unpredictable health conditions may qualify for NHS Continuing Healthcare (CHC). This is a full care package funded by the NHS and is not subject to financial assessment.
To qualify, a person must undergo an eligibility assessment that considers the nature, complexity, intensity, and unpredictability of their care needs.
Unfortunately, many people with dementia do not qualify for CHC because their needs are classified as social rather than medical, even in advanced stages of the condition.
As a result, they are routed into the local authority system, which is means-tested.
This means that unless someone qualifies for NHS CHC, they will be expected to pay for their care home place just like anyone else, subject to their financial circumstances.
What Is The 7-Year Rule In Relation To Care Home Fees?
The 7-year rule is often misunderstood. It originates from inheritance tax regulations, which state that gifts given more than seven years before death are usually exempt from tax.
However, this rule does not apply to social care assessments.
Local authorities can investigate any financial transfers, regardless of when they occurred, if there is reason to believe the assets were given away to avoid paying care home fees.
This is called deprivation of assets, and it allows councils to treat the person as if they still owned the assets.
There is no time limit, which means a gift given 10 or even 15 years earlier can be examined if the person’s health was deteriorating at the time or if there was a clear indication that care might be needed.
When considering gifts or transfers, councils assess:
- The timing in relation to health status
- Financial circumstances at the time of the gift
- Whether the person could reasonably foresee the need for care
The best way to protect yourself from unintended consequences is to seek professional legal and financial advice before making significant gifts if future care needs are a concern.
Has The Care Home Fees Cap Been Scrapped Permanently?
The £86,000 cap on care costs, a centrepiece of the previously planned reforms, has been officially withdrawn. There is no indication from the current government that a similar policy will be introduced in the near future.
In the absence of a cap, individuals may continue to pay for care indefinitely, which can deplete savings, pensions, and even force the sale of property.
For many families, this creates financial uncertainty and anxiety, particularly for those in middle-income brackets who do not qualify for state support but cannot afford prolonged self-funding.
While some policy experts have proposed alternative models, such as social insurance or co-payment schemes, no formal proposals are currently under review. The scrapping of the cap has left many without the long-term security they were hoping for.
What Happens When Someone Runs Out Of Money While Paying Care Home Fees?
When a self-funder’s assets drop below the upper capital threshold of £23,250, they can apply to the local authority for support. This typically involves a new financial assessment and possibly a reassessment of care needs.
Timing is critical. It is advisable to begin the process before funds run low, as there may be delays in processing the application or sourcing a suitable placement.
Once approved, the council will begin contributing to care costs. However, the individual will still need to contribute from income sources like pensions. The transition from self-funded to council-funded care can be managed smoothly if started early and handled with accurate documentation.
Conclusion
Despite previous plans for reform, the current rules for care home payments in England remain unchanged, with no cap on personal care costs and strict means testing still in place.
The scrapped 2025 reforms leave individuals to fund care largely from their own resources unless they qualify for limited council or NHS support.
With no new system announced, it’s vital for families to stay informed, plan early, and seek professional advice when navigating care funding decisions.
FAQs About Care Home Payment Rules
Can I Refuse To Pay Care Home Fees For My Parent?
You’re not legally obligated to pay unless you’ve signed a contract with the provider.
Is There Any Help If Someone’s Savings Drop Below The Threshold While In Care?
Yes, local authorities may step in when capital drops below £23,250.
What If I Gave My House To My Children, Will It Be Counted?
Yes, it may still be included if seen as deliberate deprivation of assets.
Do All Care Homes Follow The Same Funding Rules?
Council-funded care follows national rules, but private homes can set different rates.
How Do I Apply For NHS Continuing Healthcare?
Contact your GP or hospital team to initiate the assessment.
Is The Personal Expenses Allowance Changing In 2025?
As of now, it remains £28.25 per week with no announced changes.
Can Care Fees Be Backdated If Eligibility Changes?
Yes, in certain cases, councils can backdate funding once eligibility is confirmed.
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