Self-Funding vs Local Authority Funding: How the Care Assessment Works

In England, if your capital is above £23,250 you'll usually pay for your own care in full. Below £14,250, the council will fund your care based on your income. In between, you'll pay a contribution. Here's exactly how the local authority works that out.

Figures below are correct as of September 2026 and apply to England. Scotland, Wales and Northern Ireland use different limits, so always confirm current figures with your local authority before making a decision.

How the financial assessment works, step by step

1. Ask for a care needs assessment first. The financial assessment only happens once your local authority has confirmed your relative has eligible care needs. If they're leaving hospital, the hospital's discharge team can usually start this for you.
2. The council reviews their capital. This includes savings, investments and, in some cases, property. It doesn't include personal possessions or most life insurance policies.
3. They check where that capital sits against two national limits. Above £23,250, you're expected to self-fund. Below £14,250, the council steps in based on income. Between the two, you'll pay a tariff contribution.
4. They assess income separately. Pension, benefits and other income are added up, and a Personal Expenses Allowance of £31.80 a week is set aside for your relative to keep, whatever else is happening.
5. You get a written decision. This sets out what, if anything, the council will contribute, and what you're expected to pay.
6. You can ask for a review. If the figures look wrong or your circumstances change, you're entitled to ask the council to look again.

What counts as capital, and what doesn't

• Counts: savings, ISAs, shares, and in some cases the value of your home
• Doesn't count: personal belongings, most life insurance that hasn't paid out, and the first £14,250 of your capital, which is disregarded completely

The property question

This is usually the biggest worry, and the most misunderstood part of the process.

• Your home is disregarded for the first 12 weeks of a permanent stay, whatever else is happening
• It's disregarded long term if a spouse, civil partner, dependent child under 18, or a relative who is 60 or over or incapacitated still lives there
• After the 12 weeks, if none of those apply, its value may be counted, but you can't be forced to sell it immediately. A deferred payment agreement lets the council cover costs against the property's value until it's sold

If your capital sits between the two limits

The council applies what's called tariff income. For every £250 of capital above £14,250, you're assessed as having an extra £1 a week of income.

For example, capital of £20,000 sits £5,750 above the lower limit, which adds roughly £23 a week to the assessed income used to work out your contribution.

Two things families often miss

Attendance Allowance is usually counted as income during the assessment, even though it's meant to help with care costs, which catches a lot of families out. And NHS Continuing Healthcare is a separate, entirely different track: if your relative's needs are primarily medical, this can cover the full cost of care and isn't means-tested at all. It's always worth checking whether they qualify before assuming they'll be paying privately.

Our Opinion

Most families we speak to expect this process to be straightforward, and it rarely is. The confusion usually isn't about the big number, everyone understands £23,250. It's the smaller details: whether the house counts, whether a benefit counts as income, what happens if the figures sit right in the middle. Asking the right questions early saves a lot of stress later, and a good local authority financial assessment officer will talk you through it properly if you ask.

If your chosen home costs more than the council rate

Councils fund care at their own standard rate, which is sometimes lower than a home's actual fees. If that's the case, a family member can usually agree to pay the difference as a third-party top-up. It's worth understanding this gap before you choose a home, not after.

Common questions

Will I have to sell my relative's house straight away? No. Even once it's counted, a deferred payment agreement means the council can cover costs against the property's value rather than forcing an immediate sale.

What if we're not sure whether we'll be fully or partly self-funding? That's exactly what the financial assessment is for. Most families don't know until it's actually carried out, so it's worth requesting one early rather than guessing.

Does this apply to all of the UK? No. These figures are for England. Scotland, Wales and Northern Ireland set their own limits, which are higher in some cases.

Talk to us about the practical side

Every family's figures look different, and getting this wrong can be costly. If you'd like to talk through what this means for your relative's situation, or find out more about residential care at one of our homes, get in touch and we'll help however we can.