Navigating the Care Fees Maze

As an accredited later life adviser (accredited by the Society of Later Life Advisers) the most frequent plea for help I receive is in navigating the financial aspects of the care fees maze.

Many of the enquiries I receive are about protecting the family’s inheritance by sheltering assets from the means-test. However, there are strict rules around “Deliberate Deprivation” which make this difficult, if not impossible. Fundamentally, the moment has passed if the need for care is “foreseeable”. The Local Authority, if asked to provide financial support, will investigate past financial transactions and any after a relevant diagnosis, dementia, for example, or the payment of Attendance Allowance (or a similar disability benefit) will be deemed to be deliberate deprivation. Capital and/or income disposed of in such circumstances will be deemed to still be available to meet care costs.

It stands to reason, therefore, that the sooner planning is started, the less likely it is to fall foul of the deliberate deprivation rules. With use of the sophisticated financial planning systems available to your Wren Sterling Financial Planner, it can be demonstrated what you can and can’t afford to dispose of during your lifetime. If, at the same time, this also reduces any potential Inheritance Tax issue, then so much the better.

Having said this, I do caution clients not to take this too far. According to the Office for National Statistics, in 2021 only 2.5% of the UK population over 65 was living in a residential care environment. So, is it worth compromising your standard of living on the off chance of being one of that 2.5%? Also, the more fundamental question is, do you want to live in the care home the Local Authority is prepared to pay for, or do you want something more comfortable?

There are some preventative measures I do discuss the following with all my married clients:

  • Don’t leave everything to each other on the first death. If the survivor does not need the assets of their deceased partner, everything is available to pay for that care. A trust in each Will ringfences the assets of the first to die, including a half-share of the matrimonial home if the joint tenancy is severed, away from the means-test.
  • If your traditional Wills with all assets going to each other are still in place when one partner goes into care, the other partner can consider changing their Will just in case they die before the partner in care. They could also sever the joint tenancy on the matrimonial home so that a half-share passes under the terms of the new Will, and not by survivorship to the partner in care.

These options will not necessarily be appropriate for everyone, but together my clients and I discuss a number of scenarios, and their options in each case.

Will my local authority pay for my care?

It would be hard enough if we were dealing with just one set of rules, but we’re not. Following devolution, care funding is different in England, Wales, Scotland, and Northern Ireland, although some of the basic principles are common to all four. I’ve highlighted the terms ‘financial thresholds’ and ‘savings’ above, as they deserve some special attention now that we’ve covered the basics.

The obvious difference is with the financial thresholds, which are currently:




N. Ireland

Upper threshold





Lower threshold





Coupled with this are some further regional variations, including:

  • Wales. Regardless of the level of savings, domiciliary (care at home) costs are capped at £100 per week.
  • Scotland. Everyone in a residential care environment receives a contribution of £233.10 per week.
  • Northen Ireland. All domiciliary care is free at the point of delivery.

Subject to the financial thresholds and regional variations, the cost of care can become exorbitant.

The common basic principles of means-testing include:

  • Eligibility. Any funding from the Local Authority requires an assessment, and only those with “eligible care needs” receive funding, subject to the financial thresholds.
  • Tariff income. A “Tariff Income” is applied between the lower and upper thresholds at an eye-watering £1 per week per £250 savings exceed the lower threshold. For example, in England, anyone with £23,250 in savings is deemed to have an income of £36 per week – a return of 20.8% per annum! (This does not include Wales.)
  • Means test. Generally, all other sources of income are included in the means-test; for most of pension age, this will be State, Occupational, and/or Personal Pensions. There is a “Personal Expenditure Allowance” to cover sundries which in 2023/24 is £24.90 per week. In a care environment, this quickly gets swallowed up by hairdressing, chiropody, etc. For couples, with only one in care, up to 50% of any Occupational and/or Personal Pension (but not State) is excluded from the means-test if that amount is being paid to the partner at home. This is the only financial help the partner at home receives towards the running costs of their home.

If you are holding out hope that the Government will implement some of Andrew Dilnot’s recommendations to reduce the financial burden you may be disappointed. Any consideration of this has been deferred until after the 2024 General Election and, even then, the potential cost of implementation is likely to be prohibitive.

What counts as ‘savings’ for the care fees means test?

The definition of “savings” is regularly misunderstood but includes:

  • All cash on deposit and the value of investments (including second/buy-to-let properties) in the individual’s sole name and 50% of any jointly held items, regardless of the original contributor.
  • The value of life assurance policies, including Investment/With Profit Bonds are generally disregarded.
  • The value of the home (if a disregard does not apply.) If the property is not occupied by a relevant family member, there is an initial 12-week disregard, after which the value is taken into account. If the property is occupied by a relevant family member, particularly a spouse, then the disregard is for the entirety of their occupation. There is a wide definition of “family” but, to be “relevant” they must be under 18, over 60, or registered disabled.z
  • The value of personal possessions are not included unless they are clearly held as an investment.
  • No capital and/or income of the partner at home is considered.

The Financial Conduct Authority does not regulate tax advice.

Clive Barwell
About the Author

Clive has been providing financial planning advice and guidance to private clients since entering the profession in 1971, joining Wren Sterling in 2008. Throughout his long career, Clive has specialised in advising clients at and in post-retirement and later life, and this remains his key area of expertise. Clive is a member of SOLLA (the Society of Later Life Advice) and his uses his expertise to support his clients and their families. Clive describes himself as a “financial planning satellite navigation system”, as he maps out the route to his clients’ goals and then helps them avoid the financial obstacles en route. Clients are delighted that with Clive’s help and guidance, whilst on their financial journey, they never have to stop to ask a stranger for directions.