Financial Assessment (Care)

A financial assessment (means test) by the local council determines how much a person must contribute to their care costs. For residential care in England in 2026-27, those with capital above £23,250 must fully self-fund; those between £14,250 and £23,250 receive partial council support (with a 'tariff income' of £1 per week for every £250 between the thresholds); those below £14,250 have capital broadly disregarded. Income (including most benefits) is taken into account, but a 'personal expenses allowance' (at least £31.80 a week in England for 2026-27; Scotland, Wales and Northern Ireland all set higher figures) must be left. For non-residential care, rules vary by council but savings above £23,250 typically mean full self-funding. The council must give written reasons for the assessment outcome. A common pitfall is failing to declare all exempt capital (e.g. the family home if a dependent relative lives there). You can challenge a financial assessment by requesting a review through the council's complaints procedure.

What it means in practice. Two separate calculations sit inside a financial assessment: what capital you have, and what income you have. Capital above the upper threshold means self-funding. Capital between the thresholds produces a notional tariff income which is added to your real income. Below the lower threshold, capital is left out of the calculation altogether, though your income is still assessed. For care in a care home, almost all income is taken into account, with a protected personal expenses allowance left for you. For care in your own home, councils must leave you enough to live on and must take account of disability-related expenditure.

A worked example. Margaret moves into a care home with £30,000 in savings and a home she owns. She is above the upper capital threshold, so she self-funds at first. Her savings run down over two years to £22,000, at which point she asks the council to reassess. She is now between the thresholds, so a tariff income is calculated on the capital above the lower threshold and added to her pension income, and the council contributes the balance. Because her home is still owned, she asks about a deferred payment agreement so the property does not have to be sold.

Common pitfalls. The most costly is failing to ask for a reassessment as capital falls — councils do not monitor your savings for you. The second is not claiming disability-related expenditure for non-residential care, which covers extra costs such as specialist laundry, incontinence supplies, or higher heating, and which many people never mention. The third is misunderstanding property disregards: the home is disregarded entirely if a partner, a relative aged 60 or over, or a dependent child still lives there, and there is a mandatory twelve-week disregard at the start of a permanent care home stay.

How it relates to other terms. The financial assessment follows a care needs assessment and never precedes it. If the council thinks assets were given away to reduce charges, it will consider deprivation of assets. Homeowners should look at a deferred payment agreement, and anyone with significant health needs should be screened for NHS Continuing Healthcare, which is not means-tested at all. Attendance Allowance counts as income in a care home assessment.

What to do next. Read our paying for care guide and then the financial assessment in detail to check every disregard has been applied. If a care home place is being arranged, care home fees explains top-ups and what a council must offer at its own rate.