Care Home Fees
If you or a family member may need residential care in the future, two questions tend to dominate everything else: who pays, and is the family home at risk? The honest answer depends on a means test, on the value of your capital and income, and on whether the NHS has any continuing healthcare role.
The rules differ between England (Care Act 2014) and Wales (Social Services and Well-being (Wales) Act 2014). The principles are similar; the figures and structure are not. We act for clients in both jurisdictions.
There is also a great deal of misleading information in this market, particularly around “asset protection” or “lifetime trusts” sold as a way to put property beyond the reach of a local authority. We do not market trusts on that basis.
How the means test works
When a local authority is asked to fund residential care it carries out a financial assessment to decide how much, if anything, you must contribute. The assessment looks at your income and your capital, including your share of any property. The thresholds and the structure of the test differ between England and Wales.
England — Care Act 2014
The capital thresholds in England (2025/26) are:
| Capital | What you pay |
|---|---|
| Under £14,250 | Capital ignored. The local authority funds your care; income is still assessed. |
| £14,250 – £23,250 | You contribute from a tariff income on the capital between the two thresholds, plus your actual income. |
| Over £23,250 | Self-fund in full until capital reduces to £23,250. |
Wales — SSWBA 2014
Wales applies single capital limits, set by Welsh Ministers (2025/26):
| Care type | Limit |
|---|---|
| Permanent or temporary residential care | £50,000. At or below: local authority contributes (you still pay an income contribution). Above: self-fund until capital reaches £50,000. |
| Care in your own home (non-residential) | £24,000, but the contribution is capped at £100/week regardless of capital or income. |
The Welsh capital limit is significantly higher than England’s, with no tariff-income range and a unique cap on home care charges.
Both jurisdictions
You can request a free care needs assessment from your local authority, followed by the financial assessment. If you have substantial healthcare needs (rather than social care needs), you may instead qualify for NHS Continuing Healthcare, which is not means-tested in either jurisdiction. Care providers are regulated by the Care Quality Commission in England and Care Inspectorate Wales in Wales.
When the family home is, and is not, in the means test
Your home is potentially part of the means test if you go into permanent residential care and your capital is above the relevant threshold (£23,250 in England, £50,000 in Wales). There are statutory disregards in both jurisdictions. Your home will be left out of the assessment where:
- you are receiving care at home, not in a residential setting;
- a spouse, civil partner or unmarried partner still lives there;
- a relative who is over 60, or who is disabled, lives there;
- a child of yours under 18 lives there;
- the property is the only home of someone who gave up their home to care for you (a discretionary disregard, applied case-by-case); or
- the stay in care is temporary.
There is also a 12-week property disregard at the start of a permanent stay (in both jurisdictions), and a deferred payment agreement is available from many local authorities so that fees accrue against the property and are settled later, often on sale. These mechanisms manage cash flow rather than reduce the underlying liability.
WHERE PLANNING GENUINELY HELPS
Will trusts on first death
For couples who own their home jointly, the most well-established planning is on first death rather than during lifetime.
If the property is held as tenants in common, each spouse owns a defined share. On first death, that share can pass into a life interest will trust (an Immediate Post-Death Interest) under which the surviving spouse has the right to occupy for life, with the underlying share held for the children or other beneficiaries.
For means-test purposes, a life interest is not capital that the survivor owns: the survivor never inherited the deceased’s share outright. If the survivor later moves into care, the local authority assesses only the survivor’s own share of the property, not the deceased’s.
This planning is widely accepted, has been in mainstream use for decades, and is not deliberate deprivation by either spouse. It is the form of trust planning we most often recommend.
A NARROWER, MORE CAUTIOUS TOOL
Lifetime trusts
Lifetime trusts — sometimes marketed as “asset protection trusts”, “family protection trusts” or “home protection plans” — involve transferring assets into trust during your lifetime. They have legitimate uses, particularly in vulnerable beneficiary planning and some second-marriage situations.
They are not a route to put a home beyond the means test where care is reasonably foreseeable. The deliberate-deprivation rules apply in both jurisdictions, and the Local Government and Social Care Ombudsman, the Public Services Ombudsman for Wales and the courts have all upheld findings of deprivation where planning was framed around care-fee avoidance.
We will discuss a lifetime trust with you only where:
- there is a clear, documented non-care reason for the planning;
- you do not have a reasonable expectation of needing care at the time of the transfer; and
- the structure is proportionate, and you understand both its limitations and its tax consequences.
If avoiding care charges is the principal reason, our advice is that it will not work, and we will tell you so.
“Deliberate deprivation” — the rule, plainly
The substance of the test is the same in both jurisdictions. A local authority asks two questions about a disposal of capital:
- Did you have a reasonable expectation of needing care and support at the time of the transfer?
- Did you have a reasonable expectation of needing to contribute to the cost of that care?
If the answer to both is yes, the local authority can decide that avoiding the charge was a significant purpose of the transfer, and assess you as if you still owned the asset. There is no fixed look-back period in either jurisdiction — the seven-year rule people sometimes refer to is from inheritance tax law, not the means test.
How we work
We are members of the Institute of Professional Willwriters and follow its Code of Practice. Our approach to care-related planning is:
- We start with what you actually want to achieve, not with a product. For most clients that means a properly drafted will, severance of the joint tenancy where appropriate, lasting powers of attorney, and a life interest will trust on first death.
- We will not recommend a lifetime trust as a way of avoiding foreseeable care costs.
- We document, contemporaneously, the non-care reasons for any lifetime planning we do recommend, so that the rationale is on the file if it is ever queried.
- We are clear about what each tool does and does not do, including its tax and means-test consequences.
- Where your circumstances are complex, we refer you to a specialist (for example, a Continuing Healthcare specialist or a STEP-qualified solicitor) rather than stretch our advice beyond what is appropriate.
Both jurisdictions
Talk to us
If you would like to think this through in your own circumstances, we offer a no-obligation initial conversation.
📞 01743 387210
✉ info@clarkewright.co.uk
Nothing on this page is legal or financial advice. The means-test thresholds quoted are for England and Wales (2025/26) and are reviewed each year; figures for Scotland and Northern Ireland differ and are not covered here. Personal advice depends on your individual circumstances and should be sought before acting.