Deprivation of assets to avoid paying for care home fees | 2025

Deprivation of assets means you have deliberately reduced your overall assets to avoid paying care home fees.

Assets include the value of savings, property and income which your local authority includes in the financial assessment. This will be used to determine how much you should contribute towards your social care.

Some people assume if they transfer home ownership to their children, they are protecting their home from being used for care home fees.

However if the local authority believes you have intentionally deprived yourself of assets, such as giving away money or transferring property, they may include the value of these assets in the means test to determine your contribution towards care costs.

Key points

• Meaning of deprivation of assets – if you deliberately reduce your wealth (e.g. give away money, transfer property, sell assets cheaply, put money into trusts) to avoid paying for care, the council can still treat you as if you still own those assets. This is called notional capital.

• 7 year rule – unlike inheritance tax rules, there is no 7 year limit for care home fee assessments. Local authorities can look back indefinitely, but they must prove your intention was to avoid paying care home fees.

• Assets that are exempt – Some items are not counted in the means test, such as personal possessions, life insurance policies, certain trusts, and (in some cases) your main home — such as if a spouse, partner, or dependent relatives still live there.

• Challenging a decision – if accused of deprivation of assets, you can use the council’s complaints process, provide evidence of other motives (e.g. gifting for family reasons), take legal action, and appeal to the Social Care Ombudsman if necessary.

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What is deprivation of assets?

Deprivation of assets is when someone deliberately reduces their wealth by giving away money, transferring ownership of their property, or spending large sums with the intention of avoiding care home fees. This can include:

• Gifting a lump sum of money to a family member or friend
• Transferring property into someone else’s name
• Selling a property to someone for less than it is worth
• Buying or gifting expensive items
• Suddenly spending unusually large amounts of money
• Gambling
• Putting money into a trust

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How do local authorities assess deprivation of assets?

Some people in their lifetime gift either money or assets to family members and relatives.

The key factors for deciding whether it is deliberate deprivation of assets are:

• Intention

• Amount

• Timing

During the financial assessment, the local authority will ask about what property you own and ask to see your bank statements. If they show you have quickly reduced your wealth, the local authority may allege deliberate deprivation of assets.

There could be other legitimate reasons for this. So the council must consider the timing and the intention of the actions. For a purchase or transfer to count as deliberate deprivation of assets, the local authority must prove you were aware you might need care in the near future.

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What assets are exempt from care home fees?

There are certain assets which are exempt from care home fees

Assets which can be exempt are:

• Personal possessions: These include items such as a car, boat, jewellery, clothing, furniture, etc. But if they are of high monetary value and are considered an investment rather than a personal possession, they may not be exempt. 
• Life insurance policies: The surrender value of a life insurance policy is typically exempt. 
• Annuities: The capital value of an annuity may be exempt. 
• Occupational pensions: The capital value of an occupational pension is usually exempt. However the income from it is not exempt.
• Trusts: The value of certain trusts, such as a reversionary trust, may be exempt. A life interest trust may also be exempt. 
• Main home: The main home is disregarded for the first 12 weeks of permanent residential care. If a spouse, partner, or certain other relatives (if they are over 60, under 16, or incapacitated) live in the main home, it will not be included as an asset. 
• Personal Injury awards: A personal injury award is generally disregarded for the first 52 weeks after the initial payment, or indefinitely if it is held in trust. 

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What is the 7 year rule for care home fees?

Many people believe there is a 7 year rule for care home fees when it comes to transferring assets. They assume if you give away money or property at least 7 years before you move into a care home, it won’t be taken into consideration. However this is not the case.

There is actually no time limit to deprivation of assets. So any past disposal of assets could be considered. However, the local authority must provide evidence of motive. They must also consider if the amount made any substantial difference to the capital limit, i.e. £23,250 in England.

Intention is the key factor

Intention is the most important factor to consider. When you gave away the large sum of money or transferred your property, was it reasonable for you to expect to need care and support?

If the local authority conducts a needs assessment and concludes you need residential care, it is reasonable to expect you are aware you need care.

If you then transfer a property to a relative for a nominal fee, this could be grounds for deprivation of assets.

People who are found to have deprived themselves of assets, will find the value of the property will still be taken into account in the financial assessment. This is known as notional capital.

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What are the consequences of deprivation of assets?

If the local authority does decide that deliberate deprivation of assets has taken place:

Financial implications

The local authority can refuse to pay for your care and you will be forced to find the money to fund the care as if you still have the assets.

Impact on family

If you have deliberately transferred the assets to your family to avoid paying for care, then they could be held responsible for paying the costs of your care

Cause delay in arranging care

There will be a delay while the council investigates potential deprivation of assets. This can lead to a delay in arranging residential care and add a layer of stress to what is probably already a stressful situation.

So the attempt to protect assets can backfire and people can be left in a worse financial position.

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Legitimate ways to manage your assets

Deliberate deprivation of assets could end up with you being penalised but you may be able to find a legal and ethical way to manage your finances.

Plan what to do with your assets early

Make arrangements for your finances that are legal such as setting up a lifetime trust. In order to do this you will need to own your house or apartment as Tenants in Common.

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How do you get council funding for care home fees?

Around half of people aged 65 and over in the UK receive council funding for their care home costs. The amount of help with care costs you get from social services depends on the value of your assets. The more your assets are worth, the more you have to contribute.

Following a needs assessment, if your local council thinks you need to move into a care home, they will conduct a financial assessment. This means test will show if you are eligible for financial support.

If you move into a care home permanently, your home will be included in the means test. It will be exempt if your partner still lives there, or a relative in some circumstances. 

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What are the thresholds for care home funding?

Care home funding thresholds	Who pays
England	Over £23,250 – you pay all. £14,250 – £23,250 – part help. Under £14,250 – council pays.
Scotland	Over £35,000 – you pay all. £21,500 – £35,000 – part help. Under £21,500 – council pays.
Wales	Over £50,000 – you pay all. Under £50,000 – council pays.
Northern Ireland	Over £23,250 – you pay all. £14,250 – £23,250 – part help. Under £14,250 – council pays.

Find out more in our article Care home costs and fees advice | How to pay.

Paying for care home fees completely out of your own pocket is expensive. Some people have to sell their homes to afford long-term residential or nursing care. People sometimes consider reducing their assets to get below the threshold and qualify for social care funding.

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What is deprivation of capital?

If a property you used to own is deemed notional capital, its value may be added to the means test. In which case you will be considered to own more assets than you actually do.

This means you may have to pay care home fees – without a house you could have used to pay for your care. In other words, you could be told you do not qualify for any support. Even if you do not have enough money to pay for it.

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How do you challenge a deprivation of assets decision?

If you wish to challenge a decision by your local authority, you can ask for their complaints procedure.

In your complaint, you will need to say why the disposed assets had nothing to do with avoiding care costs. Include evidence and outline the motives behind the disposal of assets.

Evidence could be bank statements, or letters explaining you promised to gift a certain sum of money to your grandchildren.

If you still disagree with the local authority after their response, you can pursue a legal case

If this fails, your final option is to contact the Social Care Ombudsman.