How Are Care Homes Paid For?

Across the UK, almost half of care home residents fund their own care, while the rest are supported wholly or partly by their local authority or the NHS (Lottie, 2025).

If you’re considering care for yourself or a loved one, it’s important to understand the different ways care can be funded and what factors affect the cost.

 

Ways to Pay for Care

Care homes can be funded in three main ways:

• Local authority funding – Your local council may pay some or all of your care costs, depending on your needs and financial situation. A family member or friend can also contribute an additional “top-up fee” if you choose a home that charges more than the council’s standard rate.

• Self-funding – If you have savings, assets, or income above the financial threshold, you (or your family) will usually pay for care in full.

• NHS funding – In certain circumstances, the NHS may cover the cost of care for people with significant medical needs.

 

How Much Do Care Homes Cost?

Care fees vary depending on where you live, the type of care you need, and the facilities provided. For example, in early 2025:

• The average weekly cost of a residential care home in the South West of England was £1,390, and £1,582 for Nursing care.

• Nursing care and specialist dementia care are typically more expensive than standard residential care.

• Fees for self-funders are usually higher than the rates paid by local authorities.

Source: Lottie, February 2025.

You can view detailed regional averages in Lottie’s care cost comparison guide on their website lottie.org

 

Local Authority Support

If you need help with costs, your local authority will carry out two assessments:

1. Needs assessment – to establish what type of care you require.

2. Financial assessment (means test) – to determine how much you can afford to contribute, based on your savings, income, and property.

 

Capital thresholds (2025/26):

• England: Upper limit £23,250 | Lower limit £14,250

• Scotland: Upper limit £35,000 | Lower limit £21,500

• Wales: Flat limit £50,000

• Northern Ireland: Upper limit £23,250 | Lower limit £14,250

(Source: UK Government, 2025)

If your assets are above the upper limit, you will be expected to pay in full. Between the limits, you may pay a “tariff income” of £1 per week for every £250 in savings.

 

NHS Funding

Some people may qualify for NHS-funded support:

• NHS Continuing Healthcare (CHC): Covers the full cost of care for those with complex health needs.

• NHS-funded Nursing Care (FNC): A contribution towards nursing home fees if you’ve been assessed as requiring nursing care.

These schemes are not means-tested, but eligibility is strict. Find out more via the NHS Continuing Healthcare guidance.

 

Self-Funding

You may need to pay for your own care if:

• Your savings and assets exceed the capital limit.

• You have sufficient income to cover fees.

• You don’t meet the criteria for local authority or NHS funding.

Even if you expect to self-fund, it’s still worth requesting a needs assessment, as this creates a record of your care needs and helps with future planning.

 

Deferred Payment Agreements

If most of your wealth is tied up in your home, you may be able to arrange a Deferred Payment Agreement (DPA) with your local authority. This works like a loan secured against your property, allowing you to delay selling your home until later.

More details are available via Age UK – Paying for a care home.

 

Can You Avoid Care Home Costs?

While most people contribute to their care, less than half of residents pay the full cost themselves. Options that may reduce your contribution include:

• Qualifying for local authority or NHS funding.

• Staying in your own home with care support for as long as possible.

It’s important to avoid deliberately giving away assets to qualify for funding, as this can be classed as “deliberate deprivation of assets”, which may affect eligibility.

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Further Resources

• Gov.uk – Social care - charging for care and support 2025 to 2026

• NHS Continuing Healthcare

• Age UK – Paying for care

• Lottie – Care home costs