Paying for a care home – your comprehensive guide

Posted on 5 July 2019

Care home costs can vary greatly, and will depend on a variety of factors – from the area you live in to the level of care your loved one needs. Currently in the UK, over half of those living in residential or nursing care pay for the care themselves; however, there are alternative finance options you can explore, to help ease the costs.

With this in mind, we’ve put together this comprehensive guide to help you understand the options and your eligibility for each:

The three main options overview  

Care homes are paid for in the following ways in the UK:

  • Local authority funding: the local authority funds some or all of the care, but a relative or friend of a resident can also contribute what is commonly referred to as a ‘third-party top-up fee’.
  • Self-funding: the person being cared for (or their family or a friend) pays all the costs for their care.
  • NHS funding: in some circumstances, the NHS may also contribute to the cost of some or all of the care.


Local authority funding

To qualify for authority funding, your local authority will need to carry out what’s known as a ‘needs assessment’ – this is completely free and allows your local authority to work out what level of care your loved one needs. If your loved one is assessed as having ‘eligible needs’ the local authority will then need to carry out a ‘financial assessment’ to work out how much funding you’re eligible for – also known as your ‘personal budget’.

We would still recommend getting a ‘needs assessment’ even if you don’t think you’ll qualify for funding, as this can help you to better understand the level of care a loved one needs and therefore determine the best course of action for choosing an appropriate care home.

There are thresholds for savings and assets (known as ‘capital limits for care’) – if your savings and assets are worth more than the capital limit in your area you will need to pay for care yourself. The upper limits for a care home financial assessment in 2019-20 are:

  • England and Northern Ireland: £23,250
  • Scotland: £28,000
  • Wales: £50,000

Third-party top up fees

If you qualify for some authority funding, but not all of it, you can apply for what is known as a ‘third-party’ top up fee. The third-party is usually a friend or relative, but can occasionally also be a charity.

Third-party top up fees are also a popular option when relatives decide to go for a more expensive home than their personal budget allocates for their loved one.

There are obviously risks associated with third-party top up fees, so it’s important to seek financial advice first before agreeing to borrowing money.


As mentioned earlier, in most cases people are required to cover their own care home fees. You will have to arrange self-funding for a care home if you:

  • Have savings and assets in excess of the capital limits for care
  • Don’t qualify for local authority funding because your needs weren’t found to be sufficient following a needs assessment.

People often choose to self-fund their care home fees through their state benefit, private income etc. but it’s highly advised that you seek financial advice based on your individual situation.

We hope you have found this guide useful; however, should you have any more questions and/or want to find out more about the services we offer at Oaklands, call us on 02380 845759 or email us at