Quick answer
In England in 2026/27, if your capital is above £23,250 you pay the full cost of care home fees yourself; below £14,250 the local authority funds your care (you contribute from income only); between the two, you pay a sliding-scale contribution of £1 per week for every £250 of capital over the lower limit (gov.uk — Social care charging 2025-26). Your home is normally counted unless your spouse or a qualifying relative still lives there. There are legitimate routes to plan ahead — but giving away assets late in life to avoid care fees is treated as deliberate deprivation of assets under the Care Act 2014, and the council can act as if you still own them. In our experience, the earlier and more carefully you plan, the more options remain genuinely available. The £86,000 lifetime cap on care costs announced in 2021 was cancelled in July 2024 and is not part of the current rules.
Last reviewed: 24 May 2026 by the MP Estate Planning editorial team. Jurisdiction: England (the Care Act 2014 regime). Wales uses its own social care charging framework with different capital limits (single £50,000 limit in 2026), Scotland has free personal and nursing care for over-65s, and Northern Ireland has its own system.
Why care fees matter for estate planning
Long-term care is the single largest financial risk most older people in England face. A residential care home typically costs £950–£1,400 per week in 2026, and a nursing home £1,150–£1,800 per week — figures vary widely by region and provider (carehome.co.uk fee data). At those rates, an estate of £400,000 can be reduced to the lower capital limit in around five years.
For homeowner families, the home itself is usually the biggest single asset at risk. The local authority will normally include the value of your home in the means test from the moment you move permanently into a care home — unless one of several specific exemptions applies (we cover these below). In our experience, this is the single biggest gap between what families think the rules are and what they actually are.
The means test in plain English — the 2026/27 numbers
| Capital you hold | Who pays for your care |
|---|---|
| Above £23,250 | You pay the full cost (a “self-funder”). The local authority will not contribute. |
| Between £14,250 and £23,250 | You pay from income plus £1 per week for every £250 of capital over £14,250. |
| Below £14,250 | Capital is ignored. You contribute from income only; the local authority covers the rest, up to its own ceiling (the “usual local authority rate”). |
Source: gov.uk — Social care charging for care and support 2025 to 2026. These limits have been frozen since April 2010 — meaning more people are pulled into self-funding territory each year as house prices and savings rise.
Income vs capital — both matter
The means test looks at capital (the asset stock — house, savings, investments, certain bonds) and income (the flow — state pension, private pensions, annuities, rental income). After the capital test, the local authority calculates what you can afford from income, always leaving you a Personal Expenses Allowance of at least £30.65 per week in 2025/26 for personal spending (gov.uk LAC).
When the home is — and isn’t — counted
This is the area where most families get the rules wrong. The value of your home is disregarded from the means test if any of the following applies:
- Your spouse, civil partner or unmarried partner continues to live in the home.
- A relative aged 60+ continues to live there.
- A relative under 60 who is incapacitated continues to live there.
- A child of yours under 18 continues to live there.
- You’re only in care temporarily (the disregard is automatic for the first 12 weeks).
The first 12 weeks of a permanent care home stay also benefit from a 12-week property disregard regardless of who lives in the home — giving families time to make decisions about selling it.
If none of the disregards apply, the local authority will typically include the home in the means test, valued at the open-market sale price less 10% for sale costs and any outstanding mortgage. The most common outcome for a single homeowner without a qualifying relative in residence is full self-funding.
The Deferred Payment Agreement (DPA)
If your home is part of the assessable capital, you don’t have to sell it immediately. You can ask the local authority for a Deferred Payment Agreement: the council pays your care fees and recovers them — with interest — from your estate after death or after the home is sold (Care and Support Statutory Guidance, Chapter 9). A DPA does not avoid the fees — it just defers when they’re paid. In our experience, DPAs are useful when family don’t want to sell the home, or when the housing market is poor — but the interest accrual over a long stay can be substantial.
The “deliberate deprivation of assets” rule — the trap families fall into
The single biggest myth in care-fees planning is the idea that you can give away your home or savings and the local authority can’t touch them after 7 years. This is wrong — there is no 7-year rule for care fees. The relevant law is the Care Act 2014 and its statutory guidance, which treats any disposal of assets where one of the main motivations was to avoid care fees as deliberate deprivation.
When deliberate deprivation is found, the local authority calculates your means test as if you still owned the transferred assets — they become “notional capital” — and you are charged as a self-funder despite no longer having the money (Age UK Factsheet 40 — Deprivation of assets).
The legal test set out in the statutory guidance turns on two things:
- Intention — was avoiding care fees a significant motivation for the transfer?
- Foreseeability — was your need for care reasonably foreseeable at the time of the transfer? Age, current health, and family history of conditions like dementia all feed into this.
Critically, the council can also pursue the recipient of the transferred assets directly under section 70 of the Care Act 2014, where the transfer happened within 6 months of moving into council-funded care or after entering it. This means children who have received gifted houses can find themselves facing claims from their parent’s local authority years later.
In our experience, planning that is done well in advance of any plausible care need, for genuinely independent reasons (estate planning, tax mitigation, supporting children with property purchases), is much more defensible than the same arrangement done shortly before or after a care need crystallises. There is no safe formula and the right approach is highly case-specific.
What protections genuinely work — and when
Here is an honest summary of the planning options families consider, with realistic notes on each.
1. Severance of joint tenancy + property protection trust in the will
The most-used UK care-fees protection technique: couples sever the joint tenancy on their home (so each holds a defined share rather than the whole on a survivorship basis), then leave their share into a property protection trust (a type of life-interest trust) in their will. The surviving spouse has the right to live in the home for life, but the deceased spouse’s share is owned by the trust on behalf of the children.
The local authority of the surviving spouse generally cannot count the trust’s share in their means test — only the survivor’s own share is in scope. Effect: roughly half the home’s value is protected on the second-death means test.
This is genuinely a post-death structure created by the will, not a lifetime gift, so it does not normally trigger the deliberate deprivation rules in respect of the first spouse’s share. It is one of the most widely-used and best-established UK estate-planning structures for this purpose. The arrangement needs careful drafting and (often) Land Registry work to sever the tenancy. See our guides to severing joint tenancy and life-interest trusts.
2. Lifetime asset-protection trusts — done early
Transferring assets into a discretionary or asset-protection trust during your lifetime can move them out of your personal estate. If done well before any care need is reasonably foreseeable (typically while you are still in active middle age, in good health, and the transfer has a defensible purpose other than care fees), the local authority’s deliberate deprivation argument is weaker.
Pitfalls: lifetime transfers into discretionary trusts above £325,000 trigger a 20% IHT entry charge; trusts pay 10-year periodic charges of up to 6%; and the gift is gone — the settlor cannot reclaim the asset. In our experience, lifetime asset-protection trusts are best considered as part of broader estate planning, not solely as a care-fees device.
3. NHS Continuing Healthcare (CHC)
If your primary need is health rather than social care — for example, advanced dementia with associated medical complexity, or a serious neurological condition — you may qualify for fully NHS-funded care under NHS Continuing Healthcare. CHC pays for the whole package, regardless of means, so the entire means-test problem disappears.
CHC is notoriously difficult to obtain and successful claims often involve appeals (NHS — Continuing Healthcare). It is genuinely worth pursuing for any family whose loved one has significant health needs alongside care needs.
4. Local-authority funded care + top-ups
Once you reach the lower capital limit, the local authority covers the cost of care up to its own ceiling (the “usual rate” for the area). If you want a more expensive home than the council will fund, a third party (usually adult children) can pay a top-up from their own resources — but cannot use the cared-for person’s own assets to do this.
5. Equity release — generally a bad idea for care fees
Releasing equity from a home to pay care fees is often pitched but rarely sensible: the high accrued interest of a lifetime mortgage typically erodes more value than any IHT or care-fees benefit, and equity release schemes are FCA-regulated products that need full regulated financial advice. In our experience this is one of the most over-recommended and often least suitable products for care-fees planning.
6. Doing nothing — and self-funding
For families with substantial assets and modest care needs, the honest answer is often: do nothing complicated, plan instead for the IHT consequences of dying with a large estate, and choose the care provider you actually want. Self-funders typically have wider choice of homes and more flexibility — and may not need a care-fees-specific structure at all.
Common myths — and the reality
- “There’s a 7-year rule for care fees — gift the house and wait.” No such rule exists for care fees. The 7-year rule applies to inheritance tax. The local authority will look at intention and foreseeability regardless of when the transfer happened (Age UK Factsheet 40).
- “Putting the home in a trust means the council can’t touch it.” Not automatically. If the transfer to the trust is treated as deliberate deprivation, the local authority can act as if you still own the asset. The protection only holds where the trust was created for genuine non-care-fees reasons, well in advance.
- “My spouse and I should give the house to the kids now to be safe.” Risky on multiple fronts: deliberate deprivation; loss of CGT main-residence relief for the kids on later sale; exposure to the children’s divorces and bankruptcies; loss of the £175,000 residence nil-rate band; and the gift-with-reservation-of-benefit rules mean it stays in your estate for IHT if you keep living there.
- “The £86,000 care cost cap solves this.” The cap announced in 2021 was cancelled in July 2024 and is not part of current law. There is no cap on care costs in England in 2026/27.
- “NHS will pay because of dementia.” Not automatically. Dementia is treated as social care unless the level of complex medical need qualifies for NHS Continuing Healthcare — which is fully NHS-funded but hard to win.
The 5-step plan we recommend most families consider
- Make your LPAs first. Without a Property & Financial Affairs Lasting Power of Attorney, no one can manage your money for you if you lose capacity — and most care decisions arrive alongside capacity loss. This is the cheapest, most important step.
- Get your will right. For couples who own their home, sever the joint tenancy and use a property protection trust in the will. This is the single most-used and best-established UK structure for protecting roughly half the home value from the surviving spouse’s eventual means test.
- Don’t rush gifts late in life. Substantial transfers in your 70s or 80s carry meaningful deliberate-deprivation risk. Earlier and well-reasoned gifting has a much stronger defence.
- Pursue NHS Continuing Healthcare aggressively where there’s a medical case. The CHC checklist and full assessment process is worth pursuing for anyone with a significant health element to their care need. Successful CHC claims remove the means test entirely.
- Take advice before, not after, a care need crystallises. Once a need is in sight, almost every planning option is meaningfully weaker. In our experience, families who plan in their early 60s have far more options than those who plan in their 80s.
Frequently asked questions
What are the care home fee thresholds in England for 2026/27?
The upper capital limit is £23,250 and the lower capital limit is £14,250 (gov.uk — LAC 2025-26). Above the upper limit you pay the full cost; below the lower limit your capital is ignored.
Will the council take my house?
The council does not “take” your house — but if your home is part of your assessable capital, you are usually expected to fund your care from its value. You can defer the payment under a Deferred Payment Agreement rather than selling immediately. The home is disregarded entirely while a spouse, qualifying relative aged 60+, incapacitated relative under 60, or your child under 18 still lives there.
Can I gift my house to my children to avoid care fees?
It is rarely safe to do so. The local authority can treat the transfer as deliberate deprivation of assets under the Care Act 2014 and means-test you as if you still owned the property. There are also significant IHT, CGT and family-protection downsides. In our experience, alternatives such as severing joint tenancy + a property protection trust in the will, or NHS CHC, are usually better starting points.
What is a property protection trust?
A property protection trust (technically a life-interest or interest-in-possession trust) is created by your will. It gives your surviving spouse the right to live in the family home for life, while the underlying capital ultimately passes to your chosen beneficiaries (typically children). It is widely used to protect roughly half a home’s value from a surviving spouse’s later care-fees means test, because the deceased spouse’s share is owned by the trust rather than the survivor.
Is there a cap on UK care home costs?
No. The £86,000 lifetime cap on personal care costs announced in 2021 (with the upper capital limit rising to £100,000) was cancelled in July 2024 and is not part of current law (Commons Library — Cap on care costs). The longstanding £23,250 / £14,250 limits continue.
What about NHS Continuing Healthcare?
If your primary need is health rather than social care — typical examples include advanced dementia with complex medical needs, advanced Parkinson’s, or post-stroke care — you may qualify for NHS Continuing Healthcare, which is fully NHS-funded regardless of means. Worth pursuing actively for any family with significant health needs (NHS — CHC).
How do the rules differ in Scotland, Wales and Northern Ireland?
Scotland offers free personal and nursing care for people aged 65+ as a national entitlement (subject to assessment) — the regime is meaningfully more generous than England. Wales has its own social care charging framework with a single capital limit of £50,000 for 2026/27 (more generous than England). Northern Ireland operates under separate Health and Social Care Trusts. This guide focuses on the England rules; specialist advice is essential where the cared-for person has crossed borders or has assets in multiple parts of the UK.
Talk to us about care fees planning
Care fees planning is one of the most important — and one of the most easily got wrong — areas of family finance. We offer a free initial consultation to look at your specific position and the realistic options for your family. Our pricing is transparent and fixed — no hourly clocks running.
Related guides
- Deprivation of assets in the UK: why giving away money may not avoid care fees
- How to sever joint tenancy on UK property (Form SEV)
- Life-interest trusts — what they are and when you’d use one
- Power of Attorney in the UK: the 2026 complete guide
- The UK inheritance tax threshold in 2026/27
- Protecting an inheritance from means-tested benefits
Sources
- Care Act 2014 — full text on legislation.gov.uk.
- Department of Health & Social Care — Care and Support Statutory Guidance (the operative working guidance for local authorities).
- DHSC — Social care charging for local authorities 2025 to 2026 (current capital limits and PEA).
- House of Commons Library — Introducing a cap on care costs (CBP-9315) — explains the cancelled 2021 reforms.
- NHS — NHS Continuing Healthcare.
- Age UK — Factsheet 40: Deprivation of assets in social care.
- Age UK — Paying for care (general overview).
- Carehome.co.uk — 2026 care home fee data.