Every option for paying for care in the UK — explained in plain English.

How care home funding works in the UK

When someone needs to move into a care home, the question of who pays is one of the most stressful and confusing issues families face. The short answer is: it depends on the person's health needs, their financial situation, and where they live in the UK.

There is no single “care home funding” system. Instead, there are multiple overlapping funding routes — some based on health needs (paid by the NHS), some based on financial means (paid or arranged by the local authority), and some based on age or disability (benefits from the Department for Work and Pensions). Many families use a combination of these.

The main funding routes are:

The rest of this guide explains each option in detail — who qualifies, how much is covered, and how to apply. We'll also cover the means test, what happens to your property, top-up fees, and the duties your local authority owes you under the Care Act 2014.

NHS Continuing Healthcare (fully NHS-funded)

NHS Continuing Healthcare is the most valuable form of care home funding — and the least well-known. If your loved one qualifies, the NHS pays the entire cost of their care, wherever they receive it. There is no means test. It doesn't matter if the person has savings, property, or a pension worth millions — CHC is based entirely on health needs.

To qualify, the person must have what is called a “primary health need”. This means their main reason for needing care is a health condition rather than a social care need. The test is carried out using the Decision Support Tool (DST), which assesses needs across 12 care domains including behaviour, cognition, mobility, continence, skin integrity, and breathing.

The assessment is carried out by a multidisciplinary team (MDT), typically including a nurse assessor and social worker. If the overall picture shows that the person's needs are primarily health-related — taking into account the nature, intensity, complexity, and unpredictability of those needs — CHC should be awarded.

How much: CHC covers the full cost of your care — typically £800-£1,500+ per week depending on the home and the level of care needed. There is no cap and no contribution required from the individual. CHC can also fund care delivered at home through a CQC-regulated home care provider — see our domiciliary care funding guide for how the £32/hour UK average compares to the residential alternative. If you're choosing between a care home and a 24-hour live-in carer specifically, our live-in care vs care home guide covers the cost comparison for singles and couples, plus the care-quality factors that matter most.

See our step-by-step CHC appeal guide →

How to apply: You cannot apply directly. The first step is a CHC Checklist screening, which can be requested by a GP, hospital, care home, social worker, or by you as a family member. If the Checklist indicates possible eligibility, a full DST assessment is arranged. Read our complete CHC guide for a step-by-step walkthrough.

Funded Nursing Care (NHS contribution)

Funded Nursing Care (FNC) is a flat-rate NHS payment that goes directly to the nursing home to cover the cost of care provided by registered nurses. It applies to everyone living in a nursing home who does not qualify for full CHC. It is not means-tested — everyone in a nursing home is entitled to it, regardless of how wealthy they are.

How much: The FNC rate in England in 2025/26 is £219.71 per week. This is deducted from your care home bill. If you are a self-funder paying £1,200/week for a nursing home, FNC reduces your bill to around £980/week. It is not a huge amount, but it is automatic and worth claiming.

Who qualifies: Anyone living in a registered nursing home (one with on-site registered nurses). It does not apply to residential care homes that do not provide nursing care. The care home usually arranges this directly with the local Integrated Care Board (ICB).

Important: FNC is often confused with CHC. They are entirely different. FNC is a small weekly contribution; CHC covers the full cost of care. If you are told your loved one “gets NHS funding” but is still being charged thousands per week, they are almost certainly receiving FNC, not CHC. It is always worth checking whether they might qualify for full CHC instead. See our Funded Nursing Care guide for more detail.

Local authority funding (means-tested)

If your loved one does not qualify for CHC, the next question is whether the local authority (council) will fund their care. Under the Care Act 2014, the council has a duty to carry out a needs assessment for anyone who appears to need care and support. If the person meets the eligibility criteria (broadly, they have needs arising from a physical or mental condition that mean they cannot achieve two or more specified outcomes), the council must arrange care.

However, local authority funding is means-tested. The council carries out a financial assessment to determine how much the person can afford to contribute. This is where the capital thresholds and income rules come in (see the means test section below).

How much:If you qualify for full council funding, the council pays the care home directly at a rate it has negotiated. You contribute most of your income (pension, benefits) but are allowed to keep a “Personal Expenses Allowance” of £28.25 per week in England (2025/26) for personal spending.

Key limitation: The council pays at its own rate, which may be lower than the care home's standard fee. If the home you want costs more than the council will pay, someone must pay a “top-up” fee to cover the difference. We cover this in the top-up fees section below.

The means test and capital thresholds

The local authority financial assessment — commonly called the means test — determines how much you must contribute towards your care home fees. It looks at two things: your capital (savings, investments, property) and your income (pensions, benefits, other income).

Capital thresholds in England (2025/26)

What counts as capital?

Capital includes bank savings, building society accounts, ISAs, shares, investment bonds, and property. It does not include personal possessions, the value of your furniture, or the surrender value of a life insurance policy being used to pay for a funeral plan. Property is included unless a qualifying person still lives there (see below).

When is your property included?

Your main home is disregarded (excluded from the means test) if any of the following people still live there: your spouse or civil partner, a dependent child under 18, a relative aged 60 or over, or a relative who is incapacitated. If none of these apply, the property is included in the capital assessment — but you do not have to sell it straight away. See the sections on the Deferred Payment Agreement and 12-week property disregard below.

For a full walkthrough of the means test process, see our dedicated care home means test guide.

Self-funding: what happens to your savings and property

If your capital exceeds £23,250 (in England), you are classified as a self-funder. This means you pay the full cost of your care home fees. The local authority is not required to arrange your care, though you can ask them to do so under section 18(3) of the Care Act 2014 — and there are good reasons to do this (the council may negotiate a better rate with the home).

Self-funding can be extremely expensive. At average fees of £1,000-£1,200 per week, a three-year stay in a care home can cost £156,000-£187,000. Many families are shocked at how quickly savings are depleted.

If your main asset is your property, you have several options to avoid an immediate sale:

Attendance Allowance, Pension Credit, and other benefits

Attendance Allowance

Attendance Allowance is a tax-free, non-means-tested benefit for people aged 65 and over who have a physical or mental disability and need help with personal care or supervision. There are two rates:

Important: Attendance Allowance stops after 28 days in a care home if the local authority is paying for your care. However, if you are a self-funder, you can continue to receive it. This makes it an important benefit for self-funders — £110.40/week is over £5,700/year towards care costs.

Pension Credit

Pension Credit is a means-tested benefit that tops up your weekly income to a minimum level (the “guarantee credit” of £218.15/week for a single person in 2025/26). It can also include additional premiums — notably the “severe disability premium” of £81.50/week if you receive Attendance Allowance and live alone (or with no one claiming Carer's Allowance for you).

Pension Credit is important because it is a “gateway benefit” — receiving it can unlock other help such as full Housing Benefit, council tax reduction, and help with NHS costs. Even a small Pension Credit award can make a significant difference.

Other benefits to check

Depending on your circumstances, you may also be entitled to: Disability Living Allowance (if awarded before age 65), Personal Independence Payment (if under State Pension age), Carer's Allowance (for the person providing care — £81.90/week in 2025/26), or Council Tax disregard (the property may be exempt from council tax if the person has moved permanently into a care home).

Deferred Payment Agreements and the 12-week property disregard

The 12-week property disregard

When someone first enters permanent residential care, the value of their property is disregarded for the first 12 weeks. This means the local authority must treat them as if they do not own the property when calculating their contribution. For those 12 weeks, the council should fund care (minus any income contribution) regardless of the property's value.

This gives families breathing space to make decisions about the property — whether to sell, rent, or arrange a Deferred Payment Agreement. The 12-week clock starts from the date the person enters permanent care (not temporary or respite care). Read our full 12-week property disregard guide for details, and our respite care funding guide if a short stay is on the table before a permanent decision.

Deferred Payment Agreements (DPAs)

A Deferred Payment Agreement is essentially a loan from the local authority, secured against your property. Instead of selling your home to pay for care, the council pays the care fees on your behalf and places a legal charge on your property. When the property is eventually sold — usually after you pass away — the council recovers the money it has paid, plus interest and an administration charge.

Under the Care Act 2014, local authorities must offer a DPA to anyone whose home is taken into account in the means test and who would otherwise need to sell it to pay for care. The council can charge interest — the DHSC-set rate from 1 January 2026 is 4.75% APR, applied on a compound basis — plus a one-off administration fee. For the full 2026 family guide including how DPAs interact with NHS Continuing Healthcare and a worked-example cost calculation, read our Deferred Payment Agreement guide.

Top-up fees and choosing a care home

If the local authority is arranging your care, it will pay the care home at a rate it has agreed — often called the “usual cost” or “standard rate”. If you choose a care home that charges more than this rate, the difference is called a top-up fee(formally, an “additional cost”).

Under the Care Act 2014, you have the right to choose your preferred accommodation. But if it costs more than the council will pay, a third party (usually a family member) must agree to pay the top-up. The top-up agreement is a legally binding contract — the third party is personally liable for the payments. If they stop paying, the council may move your loved one to a cheaper home.

Key rules about top-ups:

Choosing a care home

Whether you are self-funding or council-funded, choosing the right care home is one of the most important decisions you will make. Key factors to consider include:

CQC rating: Check the home's latest Care Quality Commission inspection report at cqc.org.uk. Look at ratings for safety, effectiveness, caring, responsiveness, and leadership. Location: Is it close enough for family to visit regularly? This matters enormously for the resident's wellbeing. Specialist needs: If your loved one has dementia, nursing needs, or behavioural challenges, does the home have specialist expertise? Fees and transparency: Ask for a full fee breakdown including any extra charges for laundry, hairdressing, activities, or continence products — some homes add significant surcharges.

The Care Act 2014: your local authority's duties

The Care Act 2014 is the main legislation governing adult social care in England. It gives individuals important rights and places clear duties on local authorities. Understanding these duties can make a significant difference when negotiating with the council — see our Care Act assessments family guidefor the full picture on needs, carer's, and financial assessments and how they fit together.

Frequently asked questions about care home funding

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