Paying for care: the means test explained

How the local authority financial assessment (means test) decides who pays for care, what counts as capital and income, the family home, and where to get advice.

Published 2026-07-08 · A general guide, not legal, medical or financial advice.

After a needs assessment, a financial assessment, commonly called the means test, decides whether the council helps with care costs and how much the person contributes. The rules are detailed and the thresholds are updated periodically, so this is a general overview: always check the current figures on GOV.UK and take advice before making any decisions, particularly about property.

How it works

• The council looks at the person's capital (savings, investments, and often property) and their income (pensions and some benefits).
• Above the upper capital threshold, the person usually pays their own fees in full, though the council must still offer advice.
• Below the lower threshold, the council contributes most of the cost, and the person keeps a protected amount of income for personal use.
• Between the two thresholds, the person contributes on a sliding scale, with an assumed "tariff" income calculated from their capital in that band.

The family home

For permanent residential care the value of the person's home is often counted as capital, but there are important exceptions, for example where a spouse or partner, or in some cases another relative who is older or disabled, still lives there. A "deferred payment agreement" can let someone delay paying from the value of their home, with the council recovering the cost later, usually from the eventual sale. There is also a twelve-week property disregard at the start of a permanent stay. This is one of the most complex areas, and worth getting right with advice.

Common pitfalls

• Deliberate deprivation: giving away money or property to fall below the threshold can be treated as if you still held it. Do not do this without advice.
• Forgetting to ask about NHS Continuing Healthcare, which is not means-tested and could cover the entire cost where needs are primarily health-related.
• Assuming the council rate will cover any home you like; it may not, and a third-party top-up has to be genuinely affordable and sustainable.
• Overlooking non-means-tested benefits such as Attendance Allowance.

Where to get help

The Money Helper service, Age UK and Citizens Advice all offer free, impartial guidance, and a regulated financial adviser who specialises in care fees can advise on making savings last. CareRadar shows the quality of the homes you are weighing up, so cost and care can be considered side by side rather than one in isolation.