How Care Home Funding Works in the UK
Topic cluster: Care Home Costs & Funding | Reading time: 7 min
Understanding how care is funded is one of the most important things you can do when planning for an elderly parent's care — and one of the most confusing. This guide explains the full system clearly, from the means test through to NHS-funded routes, for each part of the UK.
The Starting Point: A Care Needs Assessment
Before any funding is considered, your parent needs a care needs assessment from their local council. This is free for everyone. It establishes what level of care is needed and whether a care home is appropriate.
If a care home is recommended, the council then carries out a financial assessment (means test) to work out how much they will contribute — if anything.
The Financial Assessment: How It Works
The financial assessment looks at your parent's:
- Savings and investments — current accounts, savings accounts, ISAs, shares
- Income — State Pension, private/workplace pension, most benefits
- Property — if moving into a care home and no eligible person remains in the property (spouse, civil partner, certain dependent relatives over 60 or with disability), the property value is usually included
The total is compared against the thresholds for your parent's country of residence.
England: Funding Thresholds 2026/2027
| Total assets and savings | Funding |
|---|---|
| Above £23,250 | Self-funder — pays in full |
| £14,250 – £23,250 | Partial local authority funding |
| Below £14,250 | Full local authority funding |
Partial funding explained: If your parent's assets fall between £14,250 and £23,250, they pay a 'tariff contribution' of £1 per week for every £250 they have above £14,250. For example, assets of £18,250 = £16 per week contribution from your parent's capital, on top of their income contribution.
Personal Expenses Allowance: When the council funds care, residents keep a minimum personal allowance from their income — at least £31.80 per week in England — for personal spending.
Scotland: Funding Thresholds 2026/2027
Scotland is more generous than England. The upper threshold is £35,000 (lower threshold: £21,500).
Scotland also provides free personal care for all eligible adults regardless of income:
- Personal care contribution: £248.70/week
- Nursing care contribution: £111.90/week
This means even people who are self-funding receive a contribution from the council to cover the personal care element of their fees.
Wales: Funding Thresholds 2026/2027
Wales has a single upper threshold of £50,000 for care home fees. If your parent's total assets are below this, the council will contribute. There is no lower threshold — partial support applies to everyone below £50,000.
Wales also caps the weekly amount a person can be asked to contribute towards non-residential care costs.
Northern Ireland: Funding Thresholds 2026/2027
Northern Ireland uses the same thresholds as England: upper £23,250, lower £14,250.
What the Council Pays
When your parent qualifies for council funding, the council arranges and pays for care through a personal budget. This may be delivered as:
- Managed by the council — the council arranges the care home and pays directly
- Direct payment — money paid to your parent (or their representative) to arrange their own care
- Individual Service Fund — a third organisation manages the budget on your parent's behalf
The personal budget must be sufficient to pay for at least one suitable care home in the area. If your parent wants a more expensive home, a top-up fee can be paid by a third party (family member, trust, or charity) — but your parent cannot pay their own top-up from their personal allowance.
NHS Funding Routes
NHS Continuing Healthcare (NHS CHC) For people with a 'primary health need' — complex, intense, and unpredictable care needs where healthcare is the dominant need. If eligible, the NHS funds all care costs, including accommodation. This is available regardless of income or assets.
NHS-Funded Nursing Care (NHS FNC) If your parent is in a nursing home and has been assessed as needing registered nursing input, the NHS pays a flat-rate contribution to the home:
- Standard rate (England, 2026/2027): £267.68/week
- Higher rate (England): £368.24/week Not means-tested — available to self-funders and council-funded residents alike.
When Self-Funders Run Out of Money
Self-funders who spend down to the threshold (£23,250 in England) become eligible for council support. At this point:
- Contact the local authority's adult social care team proactively — do not wait until funds are exhausted
- Request a financial assessment
- The council will take over (partial or full) funding of care
The transition can take time to arrange. Planning ahead matters.
Getting Help with Care Funding Planning
Independent financial advisers (IFAs) specialising in care Look for advisers who hold the Later Life Adviser Accreditation (LLAA) or the Certificate in Long Term Care Insurance (CELTCI). They can model your parent's care funding situation and explore all available options.
Free guidance:
- Age UK helpline: 0800 678 1602
- Citizens Advice: citizensadvice.org.uk
- MoneyHelper: moneyhelper.org.uk
Find care homes within your budget at homeformum.com
Related articles: Care Home Costs UK 2026 | Self-Funding Care: What You Need to Know | Financial Assessment for Care Fees | NHS Continuing Healthcare Guide