Call us01689 822554

Care Home Fees

The current position

  • A person with capital over £23,250 is self-funded.
  • A person with capital between £14,250 and £23,250 receives some State assistance.
  • A person with less than £14,250 has their care paid for by the State unless this can be met from their income.
  • A Local Authority pays at least £100 – £200 less per week for a care home than a privately paying resident.
  • The capital value of a property is completely disregarded if it is occupied by a spouse or civil partner, or relative who is over 60 – there are other disregards.

The new proposals

  • Are not yet law and could therefore change.
  • Are not due to come in until 2020, owing to fears voiced by local authorities about the potential cost of the cap and that the private insurance market had not developed products as expected to help individuals fund the initial £72,000 as they progressed towards the cap.
  • Propose to cap care home fees at £72,000 per person – but this is based on the notional amount a local authority will pay.
  • The ‘cap’ does not cover board and lodging costs which will have to be paid on an annual basis – probably around £12,500 p.a.
  • The State will provide some financial assistance to people with capital between £17,000 and £123,000.
  • Are unlikely to be retrospective.

Steps to consider if a relative is likely to need care

  • Request an assessment from the Local Authority.  The Local Authority has a duty to assess social and medical needs before they carry out a financial assessment.  This may result in your relative receiving a non-means tested contribution to nursing costs.
  • Make sure they are in receipt of all relevant benefits – particularly Attendance Allowance (non-taxable and is not means tested).
  • Do they qualify for continuing care?  If so, care costs are fully covered by the NHS.  Very few people receive this but consider asking for a re-assessment if your relative’s condition deteriorates.
  • If they are to be self-funded, consider taking taking financial advice – explore the costs of a care plan which can ‘cap’ the capital cost of care. This would involve purchasing an annuity to make up the shortfall between income and cost of care. The income produced can be tax free.
  • Check that they have made a Will and Lasting Powers of Attorney.

We can advise you as to the steps you can take to reduce the impact of care home fees on your estate.

We will talk to you about the risks involved in transferring assets to your children and make sure that you understand the consequences of your decisions.

Using a trust to beat care home fees — be careful !

The following question was taken from the Daily Mail of 15th November 2016 and the reply is by their financial expert Tony Hazell.  The link to their website can be found at the end of this article.

Question — My friends put their house into a company trust to beat care fees, is this wise? 

Some friends have changed their wills to put their house into a trust fund run by a company, which now owns the house. The house is willed to their children.

They told me they have done this so that, if they end up in a care home, their house cannot be used to pay for care. They can also add savings to this fund.

This cost them around £2,000 to set up and they pay a yearly fee for the firm to store the documents. I find this arrangement very hard to believe, as it does not seem right to me.

Response —  by Tony Hazell of This is

This is an extremely complex and legally contentious area, and my advice is to be very wary.

Local authorities are wise to such schemes and have experts in place to tackle them. They are looking for any clues that you are deliberately seeking to deprive yourself of assets that could be used to pay for your care.

Much will depend on the terms of the trust and the circumstances under which it was set up.

For example, did your friends have a reasonable expectation that they would need care?

There are other potential consequences of putting a home in trust. What if you wish to move home or need access to equity?

A trust could also end up being more expensive than the cost of care, both in terms of fees and the consequences for inheritance tax.

Patricia Mock, tax director at accountant Deloitte, warns: ‘Without the full facts, it is difficult to say exactly how the trust fund works. But my initial reaction is that this arrangement is unlikely to save significant amounts of tax and may actually increase it.’

Let’s assume your friends have transferred their property into a trust, but continue to live in it. Ms Mock says that, if this was done in the past ten years or so, this might have resulted in an IHT charge on the transfer, depending on the value of the house.

I repeat: it’s a complex area and, if your friends own the house jointly and it was worth less than £650,000, it might be covered by exemptions. However, if a house is given away, but the original owners continue to live in it, there are anti-avoidance measures targeted at such planning.

Depending on the precise details of the trust arrangement, the gift might be ineffective for inheritance tax purposes, and the house would be treated as remaining in their estate for IHT and be taxed at 40 per cent on death, depending on available exemptions and reliefs, in addition to a 20 per cent charge when the house went into the trust. 

Alternatively, an annual tax charge might apply based on the rental value of the property. The trust itself is also likely to have an IHT bill every ten years at up to 6  per cent, depending on the value of the property and other assets in it.

Ms Mock concludes: ‘Even if the trust has reduced tax, it has brought complexity to their affairs.

‘It is also worth noting that an additional IHT exemption of up to £350,000 for couples for residential property is gradually being introduced, which might not be available to them with the arrangements they’ve put in place.’

In a nutshell, the scheme your friends have entered into will undoubtedly make money for the lawyers and company that set it up — but it could well not do what they hope, and may even leave them and their children worse off.

If you want further information, Age UK has an excellent factsheet dealing with deprivation of assets and means-testing for care home provision.

Please click here for This is Money website with Tony Hazell.

For more information and advice please call our Wills & Probate Team on 01689 822554 or

Wills, Probate & Powers of Attorney

Enquiry now

  1. required
  2. required
  3. required
  4. required
  5. Please confirm you have read and understood the Terms of Use and Privacy Policy.

What our clients say about us:

  • “We have both been impressed with your diligent and thorough conveyancing, highlighting issues with the property that had been missed during the previous sale”.

  • “Catherine Westcott truly helped us beyond her duty and was always there for us, going that extra mile made all the difference”.

  • “All very satisfactory, efficient and approachable. We now look upon Thomas Dunton as our solicitors”.

  • “Extremely satisfied with the service that you have provided. We will be recommending Thomas Dunton to our family and friends”. 

  • “Great patience and great deal of thought to ensure our Will achieved our complicated requirements. Thank you”.

  • “I found the staff I dealt with professional, practical and patient…helping to clarify matters and enabling me to take better informed decisions”.

  • “Wonderful and understanding of my circumstances. Guided me through the process and presented all the options in a way that I could understand”.

  • “Thank you for all your hard work. You have been amazing. I will forever be thankful that you were my solicitor”.

  • “The service was exceptional —  friendly, welcoming and sympathetic. I do not think that I could have received a better service anywhere else“.

  • “No words to express my gratitude to your amazing work and patience”.

  • “Thank you very much for the courtesy, care and efficiency which we have received from you and everyone we have dealt with at Thomas Dunton”. 

  • “Thank you so much for all your help for my family and I.  I am so very  grateful.  You’re  my little Christmas angels”

  • “What you all do for people is amazing. You should all be proud of yourselves for putting a little bit of light back in my life and I’m most certain that of others”

  • “The firm give their clients very detailed and clear advice in plain English.”

  • “Extremely friendly, did not feel that anything was too much trouble”.

  • “I received a very prompt, professional and caring service from you at a very sad and distressing time”.


  • “Thank you all for your amazing support throughout last year.  You really are a fabulous team”.


  • “It really was a hideous experience, but every time I got to the point I couldn’t breathe and I spoke to one of you, I felt instantly strong again”.

  •  “You made me giggle and reassured me whenever I was about to cry or hide in a cupboard, often picking up the phone to check I was ok – so very kind”.


  • “Vernon Hadida is by far the best solicitor I have ever dealt with.”

  • “Extremely satisfied with the service which I considered excellent value for money.”

  • “I was very happy with the service. I was always able to speak to somebody that could help me when I telephoned.”

  • “Thank you for all your work on my claim. I am extremely grateful for your assistance.”

  • “Thomas Dunton exceeded my expectations in terms of both service quality and value for money.”