Few subjects generate more misinformation than care fees and the family home. People are told, often confidently, that a trust will protect the house, or that a gift is safe after seven years, or that the council cannot touch a property at all. Some of that is a distortion of a real rule. Some of it is simply wrong, and acting on it can leave a family worse off than doing nothing.
This article sets out what the official rules actually say, with links to the source documents so you can check them yourself. A note on scope first: charging for adult social care is devolved, and the figures and rules below are England's, taken from the Department of Health and Social Care's annual circular and statutory guidance. Wales operates its own charging rules with different capital limits, so if the person needing care lives in Wales you will need to check the Welsh position separately.
The Capital Limits for 2026 to 2027
The Department of Health and Social Care's local authority circular on charging for care and support for 2026 to 2027, published on 17 February 2026, states that 'the capital limits will remain at their current level: £23,250 for the upper capital limit and £14,250 for the lower capital limit'. They did not change from the previous year.
Those two figures drive the whole means test.
- For permanent care-home charging, capital above the upper capital limit of £23,250 generally means the person is expected to meet the full cost from their own resources. For care outside a care home, a local authority may set a higher capital limit.
- Capital between £14,250 and £23,250: the statutory guidance provides that a 'tariff income' applies, assuming that for every £250 of capital, or part thereof, a person can afford to contribute £1 per week towards the cost of their eligible care needs.
- Capital at or below the lower capital limit of £14,250: no tariff income is applied, although income is still assessed separately.
- For 2026 to 2027 the circular states that the personal expenses allowance for people in a care home will increase from £30.65 to £31.80 per week.
The mechanics are set out in Annex B of the Care and support statutory guidance. The guidance also confirms that where a local authority is going to charge, it must carry out a financial assessment of what the person can afford to pay and give them a written record of it, although in some circumstances a lighter-touch assessment is permitted.
When the Home Is Not Counted at All
This is the part most people do not know, and it matters more than any planning idea. The statutory guidance sets out circumstances in which the value of a person's main or only home must be disregarded in the financial assessment. Annex B, paragraph 34 lists them.
- Where the person is receiving care in a setting that is not a care home. In other words, if care is being provided at home, the home's value is not counted.
- Where the stay in a care home is temporary and the person either intends to return to that property and it is still available to them, or is taking reasonable steps to dispose of it in order to acquire a more suitable property to return to.
- Where the person no longer occupies the property but it is occupied, in part or whole, as their main or only home by their partner, former partner or civil partner, except where they are estranged.
- Where it is occupied by a lone parent who is the person's estranged or divorced partner.
- Where it is occupied by a qualifying relative who is aged 60 or over, is a child of the resident aged under 18, or is incapacitated.
There are conditions attached. For the partner, former-partner, civil-partner and qualifying-relative occupation cases, the person whose presence supports the disregard must have occupied the property continuously as their main or only home since before the resident entered the care home. 'Relative' is defined in the guidance and includes parents, children, in-laws, step-relatives and siblings among others. This continuous-occupation condition does not apply across every category in the list above.
A local authority also has discretion to apply a property disregard in other circumstances, for example where the home is the sole residence of someone who gave up their own home to care for the person now in a care home. The guidance is equally clear that the discretion has limits: it states that a disregard 'would not be appropriate, for example where a person moves into a property solely to protect the family inheritance'.
The 12-Week Property Disregard
The statutory guidance explains the purpose of this rule in its own words: 'An important aim of the charging framework is to prevent people being forced to sell their home at a time of crisis.' Where the person's non-housing assets are below the upper capital limit of £23,250, Annex B, paragraph 45 provides that a local authority must disregard the value of their main or only home for 12 weeks in two situations.
- When they first enter a care home as a permanent resident.
- When a property disregard other than the 12-week property disregard unexpectedly ends because the qualifying relative has died or moved into a care home.
In addition, the guidance gives local authorities discretion to apply the disregard where there is a sudden and unexpected change in the person's financial circumstances, giving a fall in share prices or an unanticipated debt as examples.
Two things are worth being honest about. The disregard is twelve weeks, not permanent: at the end of that period, unless another disregard applies, the value of the home is taken into account. And it is breathing space rather than a solution. What it buys a family is time to take advice and make a decision without a house being put on the market in the first fortnight after a crisis.
Deferred Payment Agreements
A deferred payment agreement is the mechanism designed to stop a home having to be sold during someone's lifetime to pay for care. Chapter 9 of the statutory guidance states that the scheme 'is universally available throughout England', that a deferral 'can last until death', and that many people instead use one as a bridging loan to give them time and flexibility to sell when they choose.
The guidance sets out the criteria a person must meet at the point of applying for a local authority to be required to offer one.
- The person is ordinarily resident in the local authority's area, or present there with no settled residence, or ordinarily resident elsewhere but the authority has determined it would meet their needs if asked.
- The person has needs which are to be met by the provision of care in a care home.
- The person has less than, or equal to, £23,250 in assets excluding the value of their main or only home.
- The person's home is not disregarded, for example because it is not occupied by a spouse or dependent relative as defined in the charging regulations.
- The person is able to provide adequate security. The guidance states that local authorities must accept a first legal mortgage charge against the property on the Land Register as adequate security.
Local authorities may be more generous than these criteria at their discretion, including where someone is narrowly outside them. They may also refuse in defined circumstances, for example where adequate security cannot be provided.
A deferred payment is a debt, and the guidance is explicit about the cost. Interest can be charged on the amount deferred, must not exceed a nationally set maximum, and is compounded. The guidance states that the national maximum interest rate changes every 6 months, on 1 January and 1 July, and tracks the market gilts rate in the most recent Office for Budget Responsibility report plus a 0.15 percent default component. Local authorities may also pass on reasonable administration charges, which must not exceed the actual costs they incur, and must maintain a publicly available list of them. Interest can continue to accrue after death until the deferred amount is repaid.
One timing point is useful to know: the guidance says local authorities should aim to have a deferred payment agreement finalised and in place by the end of the 12-week disregard period where that applies, or within 12 weeks of the person approaching the authority about deferred payments in other cases.
Deliberate Deprivation of Assets: The Honest Position
This is where we have to be direct, because it is the point on which families are most often misled. Nobody can promise you that giving away a home, or transferring it into a trust, will protect it from care fees. We will not make that promise, and we would treat any firm that does with real caution.
Annex E of the statutory guidance defines the rule: 'Deprivation of assets means where a person has intentionally deprived or decreased their overall assets in order to reduce the amount they are charged towards their care. This means that they must have known that they needed care and support and have reduced their assets in order to reduce the contribution they are asked to make towards the cost of that care and support.'
The guidance then lists common ways a person can deprive themselves of capital. The list includes, in its own terms, a lump-sum payment to someone else such as a gift, substantial and out-of-character expenditure, the title deeds of a property having been transferred to someone else, and assets having been put into a trust that cannot be revoked. In other words, the two arrangements most often marketed as care fee protection are named in the guidance as things a local authority should look at.
Several features of the rule are worth understanding properly.
- There is no fixed look-back period in the guidance. The seven-year rule people have heard of is an Inheritance Tax rule about gifts, not a care fees rule, and it does not apply here.
- The test is about intention and foreseeability. The guidance asks whether avoiding the care and support charge was a significant motivation in the timing of the disposal, and whether at that point the person could have had a reasonable expectation of needing care and of having to contribute to its cost.
- It does not catch everything. The guidance states it would be unreasonable to decide someone disposed of an asset to reduce care charges if at the time they were fit and healthy and could not have foreseen the need for care.
- Where deprivation is found, the local authority can charge the person as if they still owned the asset. This is called notional capital, and the guidance says the authority should seek to charge the person as if the deprivation had not occurred.
- The person who received the asset can be pursued. Where an asset was transferred to a third party to avoid the charge, that third party is liable for the difference between what would have been charged and what was charged, capped at the benefit they received from the transfer. Where funds went to several people, each is liable in proportion.
- Debts can be recovered through the county court, although the guidance says this should follow only after other avenues are exhausted.
The guidance is also fair to families, and that is worth saying. It states that 'deprivation should not be automatically assumed, there may be valid reasons why someone no longer has an asset and a local authority should ensure it fully explore this first', and that people 'should be treated with dignity and respect and be able to spend the money they have saved as they wish'. The rule is aimed at deliberate avoidance, not at ordinary life.
What Actually Helps
If schemes that promise to shelter a house are not the answer, what is? In our experience it is a set of much less dramatic things, done early.
- Find out whether one of the existing property disregards already applies to your situation. Families sometimes pay for planning to solve a problem they did not have.
- Ask for a needs assessment and a financial assessment, and ask for the written record of the financial assessment that the guidance requires.
- Use the 12-week disregard as it was intended, as time to take advice rather than as a countdown to a quick sale.
- Compare a deferred payment agreement against selling, with the interest and administration charges written down, before deciding.
- Put a registered lasting power of attorney in place while capacity is not in doubt, so that whoever is helping can actually deal with a property, a bank or a care home. GOV.UK states that an attorney cannot start acting until the LPA is registered, and that registration takes weeks rather than days.
- Keep a clear record of how a home is owned and of any financial arrangements between family members, because evidence is what a financial assessment turns on.
- Make or review a Will, so that whatever does pass on passes to the people you intended.
How AIB Estate Planning Can Help
We are a will writing and estate planning firm in Blackpool working with clients across England and Wales. We do not provide regulated financial advice or reserved legal services, and we do not sell care fee avoidance schemes.
We can explain the published rules in plain English, help you identify questions to put to the local authority or an appropriately qualified care-fees, legal, tax or financial adviser, and help you get your Wills, lasting powers of attorney and ownership records in order. We do not carry out a council financial assessment or promise that a particular arrangement will protect a home.
If care costs are on your mind, either for yourself or for a parent, call AIB Estate Planning on 0800 048 7320 for a straightforward conversation.
This article is general information about the charging rules in England, based on Department of Health and Social Care guidance current at the date of publication. It is not legal, financial or care advice about your own circumstances, and it is not a statement that any particular arrangement will or will not protect an asset. Figures and rules change, so check the source documents and seek appropriately qualified advice before acting. To discuss our Will-writing and LPA process, call AIB Estate Planning on 0800 048 7320.
Worried about care costs and the family home? Let's look at where you actually stand before anyone suggests a scheme.
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