Facing the reality that a loved one needs care is difficult enough without the added worry of how it will be funded. Many families find the financial side of care confusing and emotionally draining — especially when decisions must be made quickly.
This guide will walk you through the financial assessment for care in the UK, helping you understand what it is, how it works, and what to expect. We’ll explain the different care funding pathways available, how the means test for care is carried out, what local authority care funding might cover, and how you can prepare.
Why a Financial Assessment Is Needed (and Where It Fits in Care Funding Pathways)
When someone needs care, whether at home or in a care home, one of the first questions is: who will pay? A financial assessment, also called a means test for care, is how your local council decides whether you’ll need to pay for your care yourself, get some help with the cost, or have it fully funded.
This process is grounded in the Care Act 2014, which legally obliges councils in England to assess both your care needs and your ability to pay for care. It ensures that local authority care funding is allocated fairly and consistently, based on need and financial circumstances.
Your financial assessment follows your care needs assessment. The council will only move on to checking your finances if you’ve been found eligible for care and support. From there, they’ll calculate how much, if anything, you need to contribute, and what the local authority will fund.
There are three main outcomes from this assessment:
- Self-funding: you pay for your care in full.
- Partially funded: the council pays some, and you pay the rest.
- Fully funded: the council covers all eligible costs.
Now let’s explore exactly how the financial assessment works in practice.
Step-by-Step: The Financial Assessment / Means Test Process
Before any money is discussed, your local council needs to understand what care you actually require. Only then will they look at your financial situation to decide how the costs should be covered.
1
Care Needs Assessment
The process begins with a care needs assessment carried out by your local council. This determines whether the person has eligible care needs under the Care Act 2014. Only after confirming eligibility does the financial assessment take place.
2
Requesting the Financial Assessment
If care needs are confirmed, the council will offer, or you can request, a financial assessment. This means test for care will evaluate how much, if anything, you need to contribute towards your care.
3
Providing Financial Information
You’ll be asked to supply details of your income, savings, property, and any disability-related expenses. This may include bank statements, pension documents, and proof of benefits. Some councils carry out this assessment in person, over the phone, or online.
4
How the Council Works It Out
Using national rules, the council calculates your contribution. They consider:
– Your total income (minus certain disregards)
– Your capital (savings and assets)
– Whether the value of your home should be included (usually only in residential care cases)
If your assets exceed £23,250, you’ll likely pay for your care in full.
5
The Outcome
The council will tell you how much you must contribute. If you have:
– More than £23,250: you pay the full cost
– Between £14,250 and £23,250: you pay a portion (tariff income applied)
– Less than £14,250: the council funds most care, but you may contribute from your income
6
If You Disagree
You can ask for a review or file a formal complaint. Councils are required to explain how your contribution was calculated and respond to concerns. You may also seek support from advocacy or legal services.
How to Prepare & What Documents You’ll Need
Preparing for a financial assessment for care can feel daunting, but having the right paperwork ready will make the process much smoother. Councils usually ask for evidence of both your income and your capital, along with any expenses linked to a disability.
Documents you may need:
- Recent bank statements
- Pension statements (State and private)
- Details of savings and investments
- Benefit award letters
- Mortgage statement or rent agreement
- Proof of property ownership (if applicable)
- Evidence of disability-related expenses, such as higher utility bills, equipment costs or care-related travel
Tips to make it easier:
- Keep your documents organised and up to date
- Make copies before handing anything over
- Note down any regular expenses that might be relevant, such as medical or care-related costs
Being prepared will help ensure your financial assessment is accurate and that you receive all the allowances you’re entitled to.
What’s Included and What’s Excluded (What Local Authorities Count & Disregard)
When a council carries out a financial assessment, not everything you own or receive is treated the same way. Some income and assets are included, while others are disregarded to make sure you’re left with enough for everyday living. This is a key part of how care funding pathways are decided.
What is usually included:
- Income: Most pensions, earnings, and some benefits
- Capital: Savings, investments, and other financial assets
- Property: The value of your home is included if you move into residential care (with some exceptions). If you are receiving care at home, the value of your property is not included in the means test.
What can be excluded:
- Disability-related expenses (DREs): Extra costs linked to your condition, such as higher heating bills, special diets, or mobility equipment
- Certain benefits: For example, Disability Living Allowance mobility component or Personal Independence Payment mobility element are often disregarded
- Personal expenses allowance: You are always allowed to keep a set minimum income for day-to-day living
- Property disregards: If a partner, dependent child, or certain relatives live in your home, its value may not be counted
Deprivation of assets:
If the council believes you’ve given away money or property deliberately to avoid paying for care, they can still treat you as if you own those assets. This is called deprivation of assets.
For full details on what’s included or excluded, see Age UK – Financial Assessment or check your local council’s guidance.
Capital & Thresholds (Lower / Upper Limits, What They Mean)
When your local council carries out a financial assessment, one of the key factors is how much capital you have — including savings, investments, and, in some cases, the value of your property.
As of 2024, the thresholds in England are:
| Capital Level | Details |
|---|---|
| £23,250 and above | You are classed as a self-funder and must pay the full cost of your care. |
| Between £14,250 and £23,250 | The council calculates a “tariff income” from your savings. For every £250 above £14,250, you’re treated as having £1 of extra weekly income. |
| £14,250 or less | Your savings are not counted as part of the means test. The local authority funds most of your care, though you may still contribute from your income. |
These figures apply to social care means testing in England. Scotland, Wales and Northern Ireland have different thresholds.
Proposed Reforms
The government has announced plans to change how care is funded in England, but these reforms have been delayed several times and are not yet in place.
If implemented, the new rules would:
- Increase the upper capital limit from £23,250 to £100,000, meaning more people could qualify for some financial support.
- Raise the lower capital limit from £14,250 to £20,000, offering more protection for people with limited savings.
- Introduce an £86,000 cap on personal care costs, so no one would have to pay more than that over their lifetime for eligible care (not including accommodation or daily living costs in care homes).
These changes were originally planned for October 2023, but have been postponed. There’s no confirmed date yet, so for now, the current rules still apply. To stay informed, check the gov.uk website or speak to your local council for updates.
Example Scenarios
Understanding how the financial assessment works in real life can help make sense of the numbers. Here are two simplified examples based on guidance from local councils and national rules:
Example 1: Receiving Care at Home
Anna, aged 80, lives alone and receives daily help at home. Her total weekly income is £300, and she has £16,000 in savings.
- The first £14,250 of her savings are not counted.
- The remaining £1,750 is used to calculate “tariff income”: £1,750 ÷ £250 = £7 (rounded down). So, £7 is added to her weekly income.
- Her total assessed income becomes £307.
The council compares this against a minimum income threshold (which allows her to keep enough for basic living costs). Based on this, Anna is asked to contribute around £90 per week, and the council funds the rest of her care through local authority care funding.
Example 2: Moving into a Residential Care Home
George, aged 85, needs to move into a care home. He receives a State Pension and small private pension totalling £250 per week. He owns a home valued at £150,000 and has £10,000 in savings.
Because George is moving into residential care and lives alone, the value of his home is taken into account in the financial assessment — but only after the initial 12-week property disregard period. This pushes his capital well above the £23,250 upper threshold for local authority funding in England.
- George is classed as a self-funder and will need to pay for his care in full.
- He can either sell his home to pay the fees or apply for a Deferred Payment Agreement, which allows the council to cover the costs and recover the money later from his estate.
These are simplified examples, but they reflect how local authorities across England typically apply the rules under the Care Act and charging regulations. For tailored advice, contact your local council or visit NHS guidance on paying for care.
What If You Disagree — Reviews, Appeals, Complaints
If you don’t agree with the outcome of your financial assessment, you have the right to challenge it.
- Ask for a clear explanation: Councils must explain how they calculated your contribution. If something seems unclear or incorrect, you can request a written breakdown.
- Request a review: If you believe your assessment is wrong — perhaps income was miscounted or disability-related expenses were missed — ask the local authority to review the decision. Provide any new evidence that supports your case.
- Make a formal complaint: If you’re not satisfied with the review or how your concerns were handled, you can make a formal complaint through the council’s complaints process. If you’re still unhappy after that, you can escalate your complaint to the Local Government and Social Care Ombudsman.
Support from a carer, advocate or independent financial adviser can help if you’re unsure how to proceed. For more guidance, visit the Local Government and Social Care Ombudsman or Age UK – Challenging a Financial Assessment for independent advice.
Finding Support with Care Funding Decisions
Sorting out how care will be paid for can feel overwhelming, but understanding the financial assessment for care UK helps to make things clearer. A means test for care shows whether you will need to fund your care yourself, share the cost with your local authority, or receive full support through local authority care funding. Knowing what documents to prepare, how thresholds work, and what is included or excluded can make the journey far less stressful.
At Unique Senior Care, we know these decisions are deeply personal and often emotional. While we cannot give financial advice, our team can explain how the care system works, what to expect from local authority processes, and signpost you to trusted sources of guidance. If you’re unsure where to begin with arranging care, we’re here to listen and support you.
Contact us for no-obligation guidance about arranging care and understanding your options.
With over 40 years of experience in the care industry, providing outstanding care has always been Helena’s core mission.
Helena has been a dedicated member of Unique Senior Care for eight years, starting as Care Manager and advancing to Head of Extra Care and now serving as Director of Operations.
She holds a Level 5 Diploma in Leadership for Health and Social Care and Children and Young People’s Services (England), as well as a Diploma in Welfare Services. Helena has completed various leadership and management courses, enhancing her expertise in the care industry.
Helena has authored published articles, including one for Skills for Care on managing change through the COVID pandemic. She has a steadfast commitment to advocating for and supporting those in need, ensuring their voices are heard and their rights upheld.