Self-Funding Care: What It Means and How It Works

Topic cluster: Care Home Costs & Funding | Reading time: 7 min

If your parent's savings and assets exceed their country's funding threshold, they will be classed as a self-funder — meaning they pay for their own care. This guide explains what self-funding involves, the options available for paying care fees, and the support that may still be available even when funding yourself.

What Is a Self-Funder?

A self-funder is anyone who pays for their own care because their total savings and assets exceed the local authority's upper threshold for financial assistance.

England thresholds (2026/2027):

Above £23,250 in savings and assets: self-funder

If your parent owns their home, its value is usually included in the financial assessment when they move into a care home — making it very common for homeowners to be classed as self-funders, at least initially.

Being a self-funder does not mean you are entitled to no support at all. It means you pay the full weekly fee, but several benefits and NHS contributions may still be available.

Benefits Still Available to Self-Funders

Attendance Allowance For self-funders who have reached State Pension age with a disability that requires extra care and support. Worth £76.70/week (lower rate) or £114.60/week (higher rate) in 2025/2026. This is not means-tested — income and savings do not affect eligibility.

You can continue to claim Attendance Allowance in a care home if you are paying for your own care. If the local authority begins funding your care, Attendance Allowance stops 28 days after you move in.

NHS-Funded Nursing Care If your parent is in a nursing home, the NHS may pay a flat-rate contribution (£267.68/week in England, 2026/2027) regardless of your parent's financial situation. Check eligibility — this is not means-tested.

NHS Continuing Healthcare If your parent has a primary health need (complex, intense healthcare requirements), the NHS funds all care costs in full. This is not means-tested. All self-funders in care homes should be assessed for NHS CHC eligibility.

Pension Credit If your parent's income is below the guaranteed minimum (£238.00/week for a single person in 2026), Pension Credit tops up their income and unlocks access to other means-tested benefits.

How Self-Funders Pay for Care

Savings and Investments

The most straightforward route — using existing savings, cash ISAs, investment portfolios, or premium bonds. Drawdown can be planned to match expected weekly care fees.

Income

State Pension, private or workplace pension, rental income, and any investment income all contribute towards care fees. In practice, most people's income alone does not cover care home fees — it covers a portion, with savings making up the difference.

Selling the Family Home

If your parent owns their home and moves into a care home, selling the property is often how the bulk of care fees are paid. This is a major decision with tax and inheritance implications. Get independent financial advice before proceeding.

If your parent needs time to sell — or prefers not to sell — a Deferred Payment Agreement may be available.

The 12-Week Property Disregard

In the first 12 weeks of a permanent care home admission, the value of your parent's former home is disregarded in the financial assessment. This means the council may temporarily fund care (if savings excluding property are below the threshold) while the property is prepared for sale.

Deferred Payment Agreement (DPA)

An arrangement where the local council pays your parent's care fees upfront and recoups the money from the property when it is sold — either during your parent's lifetime or after they pass away. Interest applies.

Immediate Needs Annuity (Care Annuity)

A specialist insurance product where a lump sum is paid to an insurer in exchange for a guaranteed weekly payment for life to cover care fees. The payment is tax-free when paid directly to the care provider. Suitable for people who want certainty of care funding for life regardless of how long they live.

Managing the Transition to Council Funding

Self-funders who spend down toward the threshold (£23,250 in England) become eligible for council support. This process should be initiated before funds reach the threshold:

Contact the local council's adult social care team
Request a care needs assessment (if not already completed) and a financial assessment
The council will assess eligibility and begin contributing when the threshold is met
Ensure the care home is approved by the council — some homes only accept private rates

Proactive planning avoids a rushed transition at a stressful time.

Self-Funding as a Couple

If one partner moves into a care home while the other remains at home, the home's value is disregarded in the financial assessment — because a spouse or partner continues to live there. Only savings and income are assessed.

This means couples where one partner remains at home may face a lower care bill than expected from the financial assessment, as the property is excluded.

Getting Professional Advice

Care funding is complex and consequential. An independent financial adviser with care funding expertise can:

Model how long your parent's assets will last at current care costs
Identify all benefits and NHS contributions available
Advise on the best approach to drawing down assets
Explore whether an immediate needs annuity is cost-effective
Help structure finances in the most tax-efficient way

Look for advisers accredited by the Society of Later Life Advisers (SOLLA): societyoflaterlifeadvisers.co.uk

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