Who will pay for care home fees?

Around half of care home residents, aged 65 and over fund themselves and are referred to as self-funders. Meanwhile, the other half of older people needing residential care are state-funded and are paid for by the local authority.

Figures from the ONS (Office for National Statistics) show that between 2022 and 2023, the highest number of self-funders were care in homes providing care for older people, at 49%. Whereas the lowest number of self-funders were in care homes for younger adults, at 2%. 

Last year, South East England had the highest proportion of self-funders at 48%, and the North East had the lowest at 26%.

The amount you pay towards your care and how much the state will pay depends on where you live in the UK and the value of your savings, investments, and property.

‍Paying for care – self-funding

The local council will assess your loved one's care needs and financial situation to determine whether or not you need to contribute to residential care. 

In England, those with an income and capital over £23,250 must pay for all of their care. An income between £14,250 and £23,250 means part of the care must be paid for. 

‍Claiming support as a self-funder

Although self-funders must pay for their own care, certain benefits are available to them. Plus, they can still claim their state and private pensions. 

Self-funders aged 65 and over who need care and support can claim an Attendance Allowance of £72.65 per week. If a self-funder resident needs extra help during the day and night or is terminally ill, they will receive £108.65 per week. This amount is tax-free and is not based on the person’s income. 

In England, Wales, and Northern Ireland, self-funders may be eligible for extra help with nursing care costs through Funded Nursing Care (FNC) or Continuing Healthcare Funding (CHC); neither is means-tested. FNC is a flat-rate contribution towards the cost of nursing care, paid by the NHS directly to the care home. CHC pays for the cost of a person’s care, funding their health and social care needs together with their accommodation. 

Often, self-funders sell their homes or rent them out to pay for their care. People who sell their homes can pay their care home fees by investing the money, putting it into a high-interest account, or buying a care fee annuity.

‍When will the local authority pay for care home fees?

Local authorities look at a person’s income and capital, for example, their house value, as part of their financial assessment. In England, if a person’s income and capital is less than £14,250, they will not have to pay anything. 

When a person is eligible for state funding, their benefits, such as a state or private pension, will be used to help pay for their care costs. However, to ensure they are still getting an income each week, they will receive the Personal Expenses Allowance, which is a set amount each week. The current rate in England for the 2024-25 tax year is £30.15 per week.

‍Top-ups for local authority-funded care home residents

If a person is eligible for state funding and would like to stay in a home that is more expensive than the original home chosen by their local authority, they might still agree to pay for it. However, this is usually provided by a third party, such as a family member, friend, or charity, which covers the extra costs. The resident cannot pay this additional amount, often referred to as a top-up fee.