Care needs assessments and how a care home is paid for
How council care needs assessments and financial assessments work in England, and how care home fees, deferred payments and top-ups are paid in 2026/27.
What is a care needs assessment?
A care needs assessment is how the council works out what help you need with everyday life, and under section 9 of the Care Act 2014 a council in England must carry one out for any adult who appears to need care and support, whatever it thinks of the level of those needs or of the person's finances. It is free, because the Care and Support Statutory Guidance says councils must not charge for a needs assessment or a financial assessment, and NHS.uk says anyone can ask for one by contacting social services at the local council, by phone or online.
The assessment looks at how your needs affect your wellbeing and the outcomes you want to achieve in daily life, and the council must involve you and your carer, if you have one, as well as anyone you ask it to involve. It can take place face to face, by phone, online or as a supported self-assessment, and NHS.uk suggests describing every task you struggle with, however small, because leaving things out might reduce the care recommended.
What makes your needs eligible for council support?
Your needs are eligible if they meet the national test in the Care and Support (Eligibility Criteria) Regulations 2015, which apply to every council in England. The needs must arise from a physical or mental impairment or illness and leave you unable to achieve two or more of ten specified outcomes, with a significant impact on your wellbeing, or a likely one, as a result.
The outcomes cover everyday tasks such as managing nutrition, maintaining personal hygiene, managing toilet needs, being appropriately clothed and using your home safely, as well as keeping a habitable home, maintaining relationships, taking part in work, training, education or volunteering, using local facilities and caring for a child. You are treated as unable to achieve an outcome if you cannot do it without help, and also if doing it alone causes you significant pain, distress or anxiety, endangers you or others, or takes significantly longer than would normally be expected, and where needs fluctuate the council must look at a long enough period to establish the true level.
The council must give you a written record of its decision and the reasons, and if your needs are not eligible it must still give you written advice on what could help. If they are eligible and the council is to meet them, section 24 requires a care and support plan prepared with you, and section 26 a personal budget, which sets out the cost of meeting your needs and splits it between what you pay, based on the financial assessment, and what the council pays.
How does the financial assessment for a care home work?
If the council intends to charge for meeting your needs, as section 14 of the Act allows, section 17 requires it to assess your income and capital and give you a written record of the result. The Department of Health and Social Care's charging circular for 2026 to 2027 keeps the capital limits for England at their existing levels, so if your capital is above £23,250 you pay the full cost of a care home yourself, capital below £14,250 is ignored, and capital in between is treated as producing £1 a week of income for every £250, which is known as tariff income.
Capital mainly means savings and property, including your home unless it is disregarded, whilst most income, such as pensions and many benefits, is counted. Only your own resources are assessed, not a partner's or your family's, and anything you own jointly is treated as shared equally unless there is evidence of a different split. If the council helps with the fees, you pay most of your income towards them but keep a personal expenses allowance, which the circular sets at £31.80 a week for 2026/27.
Your home is ignored whilst certain people still live there, such as a partner or a relative aged 60 or over, and otherwise for the first 12 weeks of a permanent stay. Our guide to deprivation of assets and care home fees explains those disregards in detail, along with how councils treat gifts made before care was needed.
What is a deferred payment agreement?
A deferred payment agreement lets the council pay your care home fees, or lend you the money for them, and recover it later from the value of your home, so that you are not forced to sell during your lifetime. Section 34 of the Care Act provides for these agreements, and chapter 9 of the Care and Support Statutory Guidance says the council must offer one if your needs are to be met in a care home, your assets other than your home are no more than the upper capital limit, your home is not disregarded and you can give adequate security, which normally means the council registering a legal charge on the property. Agreements are open to people who pay their own fees as well as to those the council supports.
The council can add interest and administration costs, but interest cannot exceed a national maximum that changes on 1 January and 1 July, set by reference to a gilt rate published by the Office for Budget Responsibility plus 0.15%. The total you can defer is capped at the value of the home less 10%, less the lower capital limit and less any mortgage or other debt secured on it, and the debt is repaid when the home is sold or from your estate after your death.
An attorney or deputy can request an agreement for someone who lacks capacity, but the guidance says a council must not enter into one with a person who lacks capacity unless those arrangements are in place, which is one practical reason for making a lasting power of attorney in advance, and our guide to setting up a lasting power of attorney explains how.
How do top-up fees for a care home work?
A top-up is the difference between the amount your personal budget allows for a care home and the cost of a more expensive home that you choose. Annex A of the statutory guidance says the council must make sure at least one suitable home is available within your personal budget, and should make sure there is more than one, so a top-up can only be sought when you have chosen a dearer home, not because the council could not find a place at its usual rate.
The top-up is normally paid by a third party, such as a relative, who signs a written agreement with the council and must be able to keep paying for as long as the placement is likely to last. The agreement has to set out what happens if the home's fees rise or the payments stop, which can include a move to a home within the personal budget. You can pay a top-up from your own money only in limited cases, namely during the 12-week property disregard, under a deferred payment agreement, or where the placement is mental health aftercare under section 117 of the Mental Health Act 1983.
What if you are paying for your own care home?
If your capital is above the upper limit you are a self-funder and can choose and contract with a care home yourself, although a needs assessment is still useful because it records your needs and gives you access to the council's information and advice. You can ask the council to arrange a care home place for you, but the statutory guidance says that for care homes it may do so and is not required to, unlike other kinds of care such as care at home, which it must arrange if you ask. Section 18 of the Act does require the council to arrange care, including a care home place, where you lack capacity to arrange it and nobody has authority or is otherwise able to do so for you, and if the council agrees to arrange a care home place for a self-funder it must not charge an arrangement fee.
Age UK's April 2026 factsheet on paying for residential care suggests asking for a fresh assessment a few months before your capital is likely to fall to the upper limit, since arranging council funding takes time, and notes that a top-up may then be needed if the home costs more than the council would pay. GOV.UK confirms that you can still claim Attendance Allowance if you pay all your care home costs yourself, and our guide to Attendance Allowance explains how it works. For decisions about how to use your home or other assets to pay the fees, MoneyHelper describes specialist care fees advisers, who are regulated by the FCA, and names the Society of Later Life Advisers as one place to find an accredited adviser.
When does the NHS pay instead of the council?
The NHS pays the whole cost where your needs are mainly health needs and you qualify for NHS continuing healthcare, which is not means-tested and can cover a care home place in full, and our guide to NHS continuing healthcare and the checklist explains how that decision is made. The statutory guidance says councils must not charge for any service the NHS has a duty to provide, and the National Framework for continuing healthcare expects a checklist to be completed whenever someone needs a long-term place in a care home with nursing.
If you do not qualify but need care from a registered nurse in a nursing home, the NHS pays NHS-funded nursing care directly to the home, which NHS.uk says is available whoever pays the rest of the fees, and the council's financial assessment then applies to the remainder.
Is there a cap on care home costs in England?
No. A cap on care costs had been planned for October 2025, but GOV.UK records that, following an announcement by the Chancellor of the Exchequer on 29 July 2024, the adult social care charging reforms inherited from the previous government will not be taken forward in October 2025. The list of changes published with the statutory guidance was updated in September 2024 to record the same decision, so the means test described above is the system that applies in England for 2026/27.
How is it different in Wales, Scotland and Northern Ireland?
Wales: Councils follow Welsh charging rules, and the Welsh Government's guide to charging for social care uses a single capital limit for residential care rather than two, whilst its charging code of practice also provides for deferred payment agreements.
Scotland: Personal care and nursing care are free for adults assessed as needing them, so in a care home the council pays a flat weekly amount towards those parts of the fees, and Care Information Scotland explains that you still contribute towards accommodation and living costs, which are means-tested.
Northern Ireland: Health and Social Care Trusts carry out the needs and financial assessments, and MoneyHelper notes that there is no formal deferred payment scheme. Our deprivation of assets guide gives the current capital limits for all three nations.
What to do next when a care home is being considered
Ask the council's adult social care team for a needs assessment, even if you expect to pay for the care yourself.
If health needs are significant or a nursing home is likely, ask whether a continuing healthcare checklist has been completed.
Gather details of your income and capital before the financial assessment, and check that every benefit you are entitled to is being claimed, since Age UK says councils can treat unclaimed Pension Credit as if it were being paid.
Ask for the written records of each assessment and of the personal budget, and if you disagree, use the council's complaints procedure and then the Local Government and Social Care Ombudsman.
Ask about a deferred payment agreement if your home is the main asset, and about any top-up before choosing a home that costs more than the personal budget.
Make sure someone has legal authority to deal with your finances if capacity may become an issue, and consider regulated advice before selling or transferring property.
When someone dies, their executors have to repay any deferred payment and tell every bank, utility, insurer and subscription, which is far simpler when there is a clear record of what the person held, and if that work does fall to your family, Legacy Trail's free notification service can contact the private-sector companies for them.
Frequently asked questions
In England you keep a personal expenses allowance of at least £31.80 a week in 2026/27, meant for personal items such as clothes, and Age UK says you should not be asked to put it towards the cost of your care. Councils can allow a higher amount in individual cases, for example where you still need to pay towards keeping up your former home.
Not as a general rule, because in England the financial assessment counts only the income and capital of the person receiving care. The exception is where a parent transferred an asset to a child to avoid care charges, when section 70 of the Care Act 2014 lets the council recover the shortfall from the child, capped at the benefit they received. A relative can also choose to pay a top-up for a more expensive home, but that is optional and made under a written agreement with the council.
It can happen if a top-up stops being paid, because the top-up agreement must explain that you may then be moved to a home your personal budget covers, and Age UK says the council should first assess what a move would mean for you. The council cannot ask for a top-up at all where it has been unable to find a suitable home at its usual rate.
It usually stops if the council is paying for your care home, which Age UK says happens 28 days after council funding begins. If you pay the full fees yourself you can keep claiming it, and Age UK says that applies under a deferred payment agreement too, because you are then treated as a self-funder.
The amount owed, including interest and charges, falls due 90 days after the death, and interest keeps running until it is repaid. Your executors usually repay it from the estate, for example from the sale of the home, and the council can take legal action if no real steps are being taken to repay it.
This article is for general information only and does not constitute legal advice. Individual circumstances vary. If you are dealing with an estate, consider taking advice from a solicitor who specialises in probate. For other guidance specific to your circumstances, speak to a funeral director, Citizens Advice, or a regulated financial adviser.