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Care Home Fees

Also known as: Residential Care Costs, Nursing Home Fees

Definition

Care home fees are the costs charged for residential or nursing home care, which can significantly deplete your estate depending on your savings, property value, and income.

Understanding care home fees matters when planning your will because these costs often consume assets you intended to leave to beneficiaries, making estate planning crucial for protecting what you can.

What Do Care Home Fees Mean?

Under the Care Act 2014 and Care and Support (Charging and Assessment of Resources) Regulations 2014, care home fees are the costs charged for accommodation, meals, and personal care in residential care homes or nursing homes. Who pays these fees depends on a financial assessment (means test) conducted by your local authority. Three capital thresholds determine your responsibility: if you have over £23,250 in total assets (including property, savings, and investments), you pay the full cost yourself—this is called self-funding. If your capital falls between £14,250 and £23,250, you pay a contribution based on your income plus £1 per week for every £250 of capital (tariff income). Below £14,250, the local authority helps fund your care and you pay only what you can afford from your income, keeping at least £30.65 per week as your Personal Expenses Allowance (2025-26 rate).

Care home costs vary dramatically by location and care type. As of early 2025, residential care ranges from £1,076 per week in the North East to £1,710 per week in London—that's £56,000 to £89,000 annually. Nursing homes providing registered nurses for medical care typically cost more. For someone with £180,000 in savings and a £280,000 home, these fees can consume the entire estate within a few years. Margaret, 74, moved into a care home costing £1,200 per week after a stroke. Her combined assets of £295,000 meant she self-funded. After four years—the average care home stay—her estate was depleted by approximately £250,000, leaving just £45,000 for her two children instead of the nearly £300,000 they expected. This dramatic reduction shows why care home fees are one of the biggest estate planning considerations in later life.

Your property is usually included in the financial assessment if you move into permanent care, with important exceptions: the local authority cannot count your home's value if your spouse, partner over 60, or certain disabled relatives still live there. For couples, this creates planning opportunities. David and Emma owned their £400,000 home as tenants in common with a life interest trust in David's will. When David entered care, Emma continued living in their home—meaning the property was disregarded in David's assessment. His £8,000 savings fell below the £14,250 threshold, so he qualified for funding support while protecting £200,000 for their children. This legitimate strategy works because it's implemented through a properly structured will before care needs arise, not through transferring assets after you know you'll need care.

Deliberate deprivation rules prevent people from giving away assets to avoid care fees. Unlike inheritance tax—where gifts become exempt after seven years—there is no seven-year rule for care home fees. Local authorities can look back indefinitely when assessing whether you transferred property or savings specifically to avoid means testing. If they determine you deprived yourself of assets deliberately, they assess you as if you still own them. Linda transferred her £320,000 home to her daughter 18 months after an Alzheimer's diagnosis. When she needed care, the local authority challenged this as deliberate deprivation because care needs were foreseeable. Linda was assessed as owning the property but couldn't access its value to pay the £67,600 annual fees—an expensive mistake that proper legal advice could have prevented.

Common Questions

"How much do care homes cost in the UK?" Care home costs vary significantly by location and type of care. As of early 2025, residential care costs range from £1,076 per week in the North East to £1,710 per week in London (around £56,000–£89,000 annually). Nursing homes providing medical care typically cost more. These figures apply to self-funded residents paying privately.

"Will I have to sell my house to pay for care home fees?" It depends on your assets and circumstances. If you have capital over £23,250 (including property value), you must pay care fees yourself. However, your home's value isn't counted if your spouse or certain relatives still live there. If you're the sole occupant moving into permanent care, the property will likely be assessed as part of your capital.

"What is the financial assessment for care home funding?" The financial assessment (means test) determines how much you pay toward care costs. Local authorities assess your capital (savings, investments, property) and income. If you have under £14,250 in capital, you only pay what you can afford from income. Between £14,250–£23,250, you contribute income plus £1 per week for every £250 of capital. Over £23,250, you pay the full cost.

Common Misconceptions

Myth: "The 7-year rule protects assets from care home fees like it does for inheritance tax"

Reality: There is no 7-year rule for care home fees. Unlike inheritance tax, where gifts become exempt after 7 years, local authorities can look back indefinitely when assessing deliberate deprivation of assets. If you transfer your home or savings to avoid care fees and later need care, the local authority can still include those assets in their financial assessment regardless of how many years have passed. They will ask: "Did you know or should you reasonably have known at the time of transfer that you might need care?" If yes, it's deliberate deprivation.

Myth: "Putting my house in a lifetime property trust guarantees it won't be assessed for care home fees"

Reality: Lifetime property trusts do not guarantee protection from care home fee assessments. Age UK has warned that asset protection trusts have been "mis-sold" to tens of thousands of people. If a local authority determines you transferred your property into trust to deliberately avoid care fees, they can still assess you as if you own it (deliberate deprivation). Additionally, these trusts have significant downsides: loss of control over your home, potential capital gains tax liability, complications if you want to move or downsize, and inheritance tax implications.

  • Means-Tested Benefits: Care home fees are means-tested using the same capital assessment principles as means-tested benefits to determine who qualifies for funding support.
  • Local Authority: The local authority conducts financial assessments for care home fees and funds care for eligible residents below capital thresholds.
  • Estate Depletion: Care home fees are a primary cause of estate depletion, consuming assets you intended for beneficiaries over several years.
  • Property Protection: Various strategies exist to protect property from care fee assessments—some legitimate like life interest trusts in wills for couples, others ineffective.
  • Deliberate Deprivation: Transferring assets to avoid care fees can be classed as deliberate deprivation, allowing local authorities to assess you as if you still own them.
  • Asset Planning: Strategic asset planning in your will can legitimately protect some assets from care fees through provisions like life interest trusts for married couples.

Need Help with Your Will?

Understanding care home fees shows why including protective provisions in your will is crucial. For couples, a properly structured will can legitimately safeguard some assets for your children while ensuring your partner's security if one of you needs care.

Create your will with confidence using WUHLD's guided platform. For just £99.99, you'll get your complete, legally binding will plus three expert guides. Preview your will free before paying anything—no credit card required.

Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.