Money matters when arranging care, but many families do not realise that financial assessments work differently depending on whether care is provided at home or in a residential care home.
Understanding these differences can help you ask the right questions and make more informed decisions for yourself or a loved one.
How Does a Care Financial Assessment Work?
When someone approaches their local authority for support, they will usually receive a care needs assessment first. If they have eligible needs, a separate financial assessment considers their income, savings, assets and certain expenses to calculate what they can afford to contribute.
The financial rules vary depending on whether the person receives care in their own home or moves permanently into a care home.
Will Your Home Be Included in the Assessment?
One of the most important differences concerns the person’s property.
Receiving Care at Home
When care is provided in your own home, the value of your main or only home is not included in the financial assessment.
You may still be assessed on other savings, investments, pensions, benefits and income.
Moving Permanently into a Care Home
If you move permanently into a care home, the value of your property may eventually be included as an asset.
However, the property must normally be disregarded when it continues to be occupied as their main home by certain people, including:
• A spouse, partner or civil partner
• A qualifying relative aged 60 or over
• A child of the care-home resident who is under 18
• A qualifying relative who is incapacitated
The precise rules depend on the relationship, circumstances and whether the property is genuinely the person’s main or only home. Local authorities can also apply a discretionary disregard in some situations.
How Much Income Can You Keep?
Another major difference is the amount of income someone must be left with after contributing towards their care.
Minimum Income Guarantee for Care at Home
People receiving local authority-arranged care outside a care home must be left with a Minimum Income Guarantee, commonly known as the MIG.
This recognises that someone living at home still needs money for food, energy, insurance and other everyday living costs. The amount depends on age, household circumstances and applicable disability or carer premiums.
For 2026/27, the standard amount for a single person who has reached Pension Credit age is £241.45 per week, although additional amounts may apply depending on their circumstances. Councils may also allow someone to keep more than the national minimum.
Personal Expenses Allowance in a Care Home
Someone receiving local authority-supported residential care must be left with a Personal Expenses Allowance, commonly known as the PEA.
For 2026/27, this is £31.80 per week. It is intended for personal purchases rather than costs already included within the care-home arrangement.
The two figures are not directly comparable. Someone living at home must continue paying household bills and daily living costs, while accommodation, food and essential care are generally covered within care-home fees.
What Are the Capital Thresholds?
For 2026/27, the standard capital thresholds in England are:
• Upper capital limit: £23,250
• Lower capital limit: £14,250
Someone with capital above £23,250 will normally pay the full cost of permanent residential care.
Between £14,250 and £23,250, the financial assessment includes an assumed tariff income of £1 per week for every £250, or part of £250, above the lower limit.
Below £14,250, capital is disregarded, although the person may still need to contribute from their income.
For care provided outside a care home, councils have discretion to use more generous capital limits.
What Are Disability-Related Expenses?
When someone receives care at home and disability-related benefits are included in their assessment, the council should consider necessary extra costs caused by their disability or health condition.
These may include:
• Additional heating or water costs
• Specialist food or clothing
• Extra laundry and bedding costs
• Community alarm charges
• Privately arranged support
• Cleaning or gardening required because of a disability
• Purchasing, maintaining or repairing specialist equipment
• Additional transport costs
Reasonable approved expenses can reduce the amount the person is expected to contribute. Councils may ask for bills, receipts or other evidence.
These costs are not usually treated separately in the same way for permanent residential care because accommodation and assessed care needs should be included within the care-home arrangement.
What Is the 12-Week Property Disregard?
When someone first moves permanently into a care home, the value of their main or only home must usually be excluded from the financial assessment for 12 weeks, provided their other capital is below the upper threshold.
This is known as the 12-week property disregard. It gives the person and their family time to consider how the ongoing care fees will be paid.
At the end of the 12 weeks, the property may be included unless another mandatory or discretionary disregard applies. Possible options may include selling the property, arranging alternative funding or applying for a Deferred Payment Agreement.
The 12-week disregard is not relevant to care at home because the person’s main home is already excluded from that assessment.
A Simple Example
Joan owns her home, has a modest income and has limited savings.
If Joan receives care at home:
• Her main home is not included as an asset
• Her contribution is calculated using her other income and savings
• She must be left with the applicable Minimum Income Guarantee
• Approved housing costs and disability-related expenses should be considered
If Joan moves permanently into a care home:
• Her property may be included after the 12-week disregard
• It may remain excluded if a qualifying person continues living there
• If the council supports her placement, she must be left with the Personal Expenses Allowance
• She may need to consider a property sale or Deferred Payment Agreement
This is only an illustration. The outcome of a real assessment will depend on the person’s complete financial and family circumstances.
Is Care at Home Always the Better Financial Option?
Care at home can protect more of someone’s income and prevent their main property from being included in the assessment.
However, cost should not be the only consideration. The right setting will depend on:
• The person’s care and health needs
• Whether they can remain safe at home
• The availability of suitable support
• Their wishes and quality of life
• The effect on family members and unpaid carers
• The overall cost of the required care package
The priority should always be finding appropriate care while fully understanding the financial implications.
What Should You Do Next?
If you or a loved one is considering care:
• Request a care needs assessment from the local authority
• Ask for a written explanation of the financial assessment
• Check whether all property disregards have been considered
• Provide details of disability-related expenses
• Check that all relevant benefits are being claimed
• Ask whether NHS Continuing Healthcare should be considered
• Seek independent advice before selling or transferring property
Get Help Understanding Your Options
Care funding assessments can feel confusing, particularly when you are also trying to arrange the right support for someone you love.
Safeguarding Futures can help you understand the system, the questions to ask and the options that may be available.
This article provides general information rather than legal or financial advice. The rules and 2026/27 figures quoted apply to England. Different arrangements apply in Wales, Scotland and Northern Ireland, and rates may change each year.
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