Care home costs and fees advice | How to pay

Understanding care home fees is crucial. Nearly half a million people in the UK live in care homes, and costs can be significant. This guide explains who pays, how much a care home costs, and what financial support is available.

Who pays care home costs?

Care home residents typically fall into two groups:

• Self-funders: Around 50% of care home residents pay for their care privately.
• Local authority-funded residents: The other half receive funding from their local authority, although many still contribute through top-up payments.

How much does a care home cost in the UK?

Care home fees vary according to where you live in the UK. London and South East England tends to be the most expensive.

If you are paying for your own care:

• The average weekly cost is £1,298.
• The average monthly cost is £5,192.
• The average annual cost is £67,496.

How much does a nursing home cost in the UK?

If you are paying for the nursing home yourself:

• The average weekly cost is £1,535 per week.
• The average monthly cost is £6,140 a month.
• The average annual cost is £79,820 a year.

How much is a dementia care home in the UK?

• Care homes that offer specialist care, such as care for people living with dementia, tend to charge a higher fee.
• Residential dementia care costs on average £1,343 a week. Annually (52 weeks) a dementia care home costs £69,836.
• Dementia care in a nursing home costs an average of £1,564 a week. Annually it costs £81,328.

Is there a cap on care home fees?

There is currently no cap on care home fees in the UK.

The Conservative government had announced that from October 2025 (this was originally due to come into effect in 2023 but was delayed), no one in England would have to pay more than £86,000 in care costs during their lifetime.

These reforms were scrapped by the Labour government on 29 July 2024.

The idea behind the cap was it would put an end to people having to sell their houses to pay for care.

However, daily living costs in residential care such as accommodation, food and energy bills would not have been covered.

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How to pay care home costs

The amount you pay towards your care depends on where you live in the UK.

England

• Assets over £23,250 – self-funder (pay full cost)
• Assets between £14,250 – £23,250 – partial help from local authority

Scotland

• Assets under £21,500 – maximum support
• Assets over £35,000 – pay full cost

Wales

• Assets under £50,000 – fully funded care

Northern Ireland

• Assets over £23,250 – pay full cost
• Assets under £14,250 – partial help

If your savings or income fall below the threshold, the local authority has to pay for some or all your care.

You can ask the local authority to carry out a review while in a care home if your savings drop below the threshold or are about to. This will enable it to take over paying care costs

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How do I plan my budget?

Self-funders should:

• Calculate annual care costs
• Identify benefits and income sources
• Find out what the fees include (e.g., hairdressing, newspapers, chiropody)
• Ensure a clear contract with the care home detailing obligations, fees, and notice periods

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How do I work out the value of my assets?

Means test

Include:

• Savings, investments and property equity
• Exclude your property if a spouse, close relative over the age of 60, dependent child or disabled relative lives with you
• 50% of jointly held capital is counted
• Personal possessions are ignored
• Certain benefits and pensions are ignored. Ensure you are claiming all the benefits you are entitled to

If your home is included in your means-test, it is disregarded for your first 12 weeks in a care home. Therefore if other capital assets and income are low, you may only become a self-funder after 12 weeks.

Deprivation of assets

If you deliberately transfer ownership of a property into someone else’s name or money into someone else’s bank account to avoid paying for your care, it may be seen as a deprivation of assets. If this happens the local authority could refuse to fund your care.

It is advisable to register a Lasting Power of Attorney to give someone you trust control over decisions regarding your health, welfare and finances. This is in case you lose the capacity to make these yourself in the future.

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Advice on paying care home fees

There are a number of different ways self-funders can fund their care, each with advantages and disadvantages. The main decision is often whether you keep or sell your home.

Selling Your Home

• Invest proceeds in a high-interest account or safe investments. The disadvantage is high interest accounts tend to lock your money away and you need to have it readily accessible so you can pay your care home fees. Look closely at bank interest rates before making a decision. If you decide to invest your money, make sure they are not high-risk investments.
• Consider a Care Fee Annuity for guaranteed, tax-free income directly to the care home. The annuity will cover you for life. The disadvantage is the cost will vary according to your health and age. In addition, if you change your mind or become eligible for Continuing Healthcare you won’t be able to cancel it and get your lump sum back. If you die six months after going into a care home, your family will lose the lump sum. You can buy a guarantee to insure against dying early.

Keeping Your Home

• Rent it out if rental income covers care costs (note this would be taxable)
• Deferred Payment Scheme (DPS): Your local authority covers your care fees and repayment to the council occurs after death when the property is sold. This is only available in England, Scotland, Wales, not Northern Ireland. Interest on the loan starts from the date it is arranged. Councils may charge set up fees. This scheme cannot be used for respite care. In Scotland, local authorities often use charging orders instead. This places a legal charge on your property to ensure repayment once it is sold.

Equity Release

• Use property equity and remortgage your home to fund care
• This usually involves higher interest rates

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What benefits can self-funders claim?

When you go into a care home, you can still claim a number of state benefits. This includes the State Pension.

• Attendance Allowance (AA) for those over 65 (tax-free, not means-tested). Daytime care: £73.90 per week. Day & night: £110.40 per week
• Personal Independence Payment (PIP) if under 65

Funded Nursing Care

• Funded Nursing Care (FNC) for nursing care costs. The care home, social worker or GP can arrange to have your nursing needs assessed to find out if you are eligible. This money is only paid if a person who needs nursing care is in a care home that is registered to provide it. If you are a self-funder and paying all your own fees, which include nursing costs, FNC might be deducted from the total bill. However, different care homes have different approaches to this. In some cases FNC may be paid to the care home in addition to the fees stated to you, to make it possible to cover the fees of additional support required. You should check your contract and speak to the individual care home to find out whether receiving FNC will reduce your bill. 

Continuing Healthcare

• Continuing Healthcare Funding (CHC) for full health and personal care costs. CHC is not means tested and pays for the cost of a person’s care. It funds a person’s health and social care (personal care) needs as well as their care home accommodation. To be eligible you must have a ‘primary health need’ and a care and support package will be put in place that meets your assessed needs.
• A person living with dementia may be eligible for NHS Continuing Healthcare funding which will cover the cost of their care. However, because people with dementia are often assessed as having social care needs rather than health care needs, they may be found ineligible.

Note: FNC and CHC eligibility varies across the UK. Check with your care home, GP, or local council.

Can I claim both FNC and Attendance Allowance?

In England, Wales and Northern Ireland, even if a person is paying for their own care in a nursing home, they may still be able to get help with their nursing care costs, through Funded Nursing Care (FNC) or Continuing Healthcare Funding (CHC).

If they receive FNC they can continue to get Attendance Allowance. If they receive CHC their Attendance Allowance will stop after 28 days.

In Scotland, everyone, regardless of their income, assets or partner status, who is aged 65 and over, receives free personal and nursing (up to a certain limit). But they have to be assessed by the local authority as needing it. They will still have to contribute towards their accommodation in the care home.

Scotland

Attendance Allowance isn’t available in care homes in Scotland. This is because everyone over the age of 65 in Scotland is entitled to free personal care, regardless of income, if the local authority has assessed them as needing it.

Other benefits

Other state benefits might be available such as Pension Credit, Incapacity Benefit, Severe Disablement Allowance, Widow’s Pension, Bereavement Allowance, Widowed Parent’s Allowance, Industrial Injuries Disablement Benefit, Statutory Sick Pay, Employment and Support Allowance.

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What care and support is free of charge?

Care and support that is free of charge includes:

• Intermediate care, including reablement (for up to six weeks) paid by NHS
• Aids and minor adaptations to a person’s home which cost less than £1,000 paid by the NHS
• The NHS is responsible for funding any after-care in a care home, if the person with dementia has been assessed or treated in hospital under the Mental Health Act 1983
• NHS services
• any services that an authority has a duty to provide based on other legislation

You may also be eligible for other NHS services such as continence aids or specialist services such as chiropody, physiotherapy, pressure relief mattresses and mobility or communication aids.

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State funded care

• Care Needs Assessment: Your local authority will evaluate your physical, mental, social, and cultural needs.

• Financial Assessment: A means test calculates how much you will need to contribute towards your care fees.

• Personal Budget: This covers your assessed care needs. Contributions from benefits will be deducted.

If the local authority does pay your care home costs, then any payments you receive for Attendance Allowance, Disability Living Allowance (DLA) or Personal Independence Payment (PIP) will stop after you have been living in the care home for 28 days.

It may feel like your privacy is being invaded when someone is asking details about your finances. However, if you refuse to answer questions about your finances, you may be charged automatically for your own care.

If you wish you can get a written statement from the local authority. This should list their calculations and how much you should contribute.

How much will the local authority pay?

There is usually an upper limit on how much a local authority will pay for someone’s care home costs. This is often called the usual or standard rate. The local authority may give you a list of local care homes. They must offer you at least one care home that is suitable for your care needs.

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How do I pay top-up fees?

If you or your relative sets their heart on a more expensive care home, the local authority may agree to pay for it. But this is only if a third party, such as a family member, friend or charity pays the extra. You, as the resident, cannot pay this extra amount, which is often referred to as a top-up fee.

Local authorities can only ask for a top-up fee if you refuse a care home that meets your assessed needs and choose a more expensive home instead.

Whoever is paying the top-up fee will have to sign a contract with the local authority agreeing to pay the fee. The agreement will state what will happen if the fees change or if the top-up fees can no longer be paid.

The top-up fee can be paid either to the local authority or to the care home. If the top-up fee can no longer be paid, the local authority has the right to move the person to a cheaper care home. This is as long as it meets their assessed needs.

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Personal expenses allowance (PEA)

If you are state-funded, benefits such as pensions will be paid towards the cost of care. However, you will still need an income each week. This is called the Personal Expenses Allowance. It is a set amount a person should be left with. In Wales it is called the Minimum Income Amount (MIA).

Personal Expenses Allowance for 2025 is:

• England: £30.65
• Scotland : £35.90 
• Wales: £43.90 
• Northern Ireland: £27.19 

The allowance is for personal items such as stationery, birthday cards and toiletries. 

This amount will not be taken into account by the local authority when it is calculating how much you should contribute towards your care. English local authorities have the discretionary power to increase the personal expenses allowance. But this is only in special circumstances such as if the resident has property-related expenses or is supporting a spouse.

This video will help you find out if you are eligible for state funding or whether you will have to pay for your own care.

How do I find a good care home?

The best place to search for a care home is carehome.co.uk. This is the UK’s leading reviews site for care homes. Here you can read genuine reviews of care homes written by family members, friends and the care home residents themselves. It also has transparent fees.

If you are struggling to find a care home, it has a free care helpline. You can call the helpline and experts can guide you in your search for a home.

If there are no places in care homes available at your personal budget level, the local authority should organise a place in a more expensive care home. It will need to increase your personal budget to cover the additional cost.

If your local authority is currently funding your care and you wish to move to a care home in another county to be closer to family, you can do this. It will still be responsible for paying for your care.

The local authority should place you on a waiting list for a care home if there are no vacancies. It should then organise alternative arrangements in the interim period for another care home or care in your home with a high level of care.