Adult Social Care Charging Reform

The care cost cap is a limit on the total amount any individual in England will have to spend on their own personal care costs over their lifetime. Once an individual has spent £86,000 on personal care, the state (local authority) becomes responsible for meeting those costs in full, regardless of the individual's savings or assets. The cap does not apply to accommodation and living costs in a care home — only to the personal care element of the bill.

The cap was proposed by the independent Dilnot Commission in 2011 and was first legislated under the Care Act 2014 (at an initial cap of £72,000). The Health and Care Act 2022 updated the cap to £86,000 and changed the rules around what counts towards it. The purpose of the cap is to protect people from the most catastrophic care costs — in particular, people who develop high care needs at a relatively young age or who need very high levels of care for many years, and who would otherwise exhaust their assets entirely.

The upper capital limit — the savings threshold above which someone receives no council funding towards care — was also to rise from £23,250 to £100,000 as part of the same reform package. This would have dramatically extended state support to people with more modest savings and property. However, all elements of the reform have been subject to the same delays as the cap itself.

The cap applies only to personal care costs — the costs directly associated with providing care and support to meet assessed eligible needs. It does not include:

• Accommodation costs in a care home (room and board, meals, laundry) — sometimes called "hotel costs" or "daily living costs"
• Any top-up payments above the rate the local authority would pay for the care
• Care costs incurred before the cap system comes into force
• Care costs met by NHS Continuing Healthcare funding (which is fully funded by the NHS)

Only costs up to the rate the local authority would pay for equivalent care count towards the cap — not the higher amounts self-funders often pay. In practice, many care homes charge self-funders significantly more than local authority rates for the same room. If you self-fund at a higher rate, only the local authority equivalent portion counts towards the cap. This is one of the most contested aspects of the reform, as it means self-funders may need to spend considerably more than £86,000 in actual payments before their personal care costs are capped at local authority rates.

The tracking mechanism — sometimes called metering — requires self-funders to register with their local council to have their personal care costs tracked towards the cap. You cannot accumulate progress towards the cap passively; you must actively engage with the council's care account system once it is introduced.

The independent personal budget (IPB) is the mechanism by which self-funders will track progress towards the care cost cap. When the cap system is introduced, self-funders with eligible care needs will be entitled to have the local authority assess their needs and set an IPB — an amount that represents what the authority would spend to meet those needs using its own contracted or in-house services.

The IPB is not money that the council pays to the self-funder. It is a notional amount used purely for metering purposes — tracking how much of the £86,000 cap the self-funder has used up. If the self-funder spends more than the IPB on equivalent care in a given period (because care home fees are higher than local authority rates), only the IPB amount counts towards the cap.

This means self-funders who want to progress towards the cap quickly should consider:

• Requesting a needs assessment and IPB from their council as soon as the cap system starts
• Keeping records of all care expenditure to evidence progress towards the cap
• Understanding the local authority's rates for equivalent care so they can assess how quickly they are progressing

Once an individual's care account shows that cumulative eligible personal care spending has reached £86,000, the council must begin meeting the personal care costs. The individual would still be responsible for accommodation and living costs in a care home, which would then be subject to the existing means-test rules for residential accommodation costs.

The care cost cap and associated capital limit reforms were originally due to come into force in October 2023. In July 2023, the then government announced a delay to October 2025, citing implementation costs and local authority readiness. Following the July 2024 general election, the new Labour government has not confirmed a revised implementation date for the cap. As of April 2025, the cap has not come into force and no firm commencement date has been announced.

The reforms require significant changes to local authority social care systems, assessment processes, and IT infrastructure. Some councils had already begun preparatory work for the October 2023 go-live and were frustrated by the delay. The complexity of the metering system — tracking personal care costs across providers and over time for hundreds of thousands of individuals — is one of the key implementation challenges.

For planning purposes, anyone considering their future care costs should be aware that:

• The cap does not apply retrospectively — care costs incurred before the system starts will not count towards it
• The upper capital limit reform (rising to £100,000) is also delayed
• Current means-testing rules (upper limit £23,250) remain in force
• NHS Continuing Healthcare, which provides fully funded care for those with a primary health need, is not affected by the cap reform

Care cost planning should take into account both the current rules and the possibility of future reform. Financial advisers specialising in later life and social care funding can provide personalised advice on managing care costs in the context of changing policy.