Financial Assessment (Means Test) in Detail

The financial assessment distinguishes between capital (assets) and income. Capital includes savings, investments, property (other than your main home in most circumstances), and other assets. The current thresholds are:

• Above £23,250 — You are expected to pay the full cost of your care (self-funder). The council is not required to contribute;
• Between £14,250 and £23,250 — The council contributes, but you also pay a tariff income contribution based on your capital. For every £250 of capital above £14,250, £1 per week is added to your income for the purposes of the financial assessment;
• Below £14,250 — Capital below this amount is disregarded entirely. Only your income is assessed.

These thresholds apply to residential care. For non-residential (home care), only the lower threshold applies — if you have capital below £23,250, it is assessed using tariff income. The council can use discretion to assist people with capital above the threshold in some cases.

Not all assets are counted in the financial assessment. Important disregards include:

• Your main home — Your property is disregarded if you still live there, if a spouse or civil partner lives there, if a dependent relative (under 18) lives there, or if a family member aged 60 or over lives there. The home may also be disregarded where a close relative who has been living with you provides substantial care;
• 12-week property disregard — When you first move permanently into a care home, your property is disregarded in the financial assessment for the first 12 weeks. This gives time to consider your options including selling the property;
• Personal possessions — Furniture, jewellery, and other personal items are disregarded;
• The surrender value of life insurance policies — In many cases;
• Certain benefits — Attendance Allowance and the care component of PIP/DLA are not counted as income in the care financial assessment.

If your main property would need to be sold to fund care home costs, but you do not wish to sell immediately, the council must offer you a Deferred Payment Agreement (DPA). Under a DPA, the council pays your care home fees and is repaid from the proceeds of the property when it is eventually sold (either during your lifetime or from your estate after death).

The council can charge interest on the deferred amount (currently up to 3.97% per year) and an administrative fee. The deferred amount accrues as a legal charge on the property. You must maintain the property while the DPA is in place.

A DPA is useful if you do not want to sell the family home immediately — for example, because a family member still lives there. However, interest accumulates over time and the final amount owed may be significantly more than the original care costs. Take financial advice before entering a DPA.