Most people heading into care fees for the first time discover the means test the hard way — usually after a hospital discharge meeting where it's explained in five minutes. This guide unpacks the actual numbers used in England in 2026, what counts as 'capital', the special rules around the family home and how the planned £100,000 reform affects current planning.
England has two thresholds (frozen since 2010): the upper capital limit of £23,250 and the lower limit of £14,250. With assets above £23,250 you're a self-funder paying full fees. Below £14,250 you contribute only from income, with capital ignored.
Between £14,250 and £23,250 is the tariff income zone: each £250 above £14,250 is treated as £1/week of notional income on top of your actual income. Wales has a single threshold of £50,000; Scotland £35,000 (residential) and £25,250 (capital limit). Northern Ireland matches England.
Cash, bank accounts, ISAs, premium bonds, shares and second properties all count. Personal possessions, the surrender value of life policies and pension funds you haven't accessed are usually disregarded.
Some assets are temporarily disregarded: jointly held property where the joint owner still lives there, your main home if a spouse, partner or dependent relative still lives there, and certain compensation awards held in trust.
If you go into a care home and your spouse or civil partner remains living in the home, the home's value is disregarded indefinitely. Same applies if a dependent child or relative aged 60+ lives there.
If no qualifying occupant remains, the home is disregarded for the first 12 weeks of permanent residential care (giving time to sell), then counted in full thereafter. The Deferred Payment Agreement (DPA) lets the council pay your fees and recover them from the home's eventual sale, avoiding a forced sale.
All income (state pension, occupational pension, annuities) is taken into account, less a Personal Expenses Allowance (PEA) of £30.65/week (2025/26) for residential care to cover toiletries, clothes, etc.
If you receive Attendance Allowance, this is included as income for residential care assessment. Pension Credit may be reduced or stopped depending on your assessed contribution.
Giving away assets to qualify for funding is treated as deprivation. There's no statutory time limit (the 7-year rule is for inheritance tax, not care fees), but the council must show a 'significant operative purpose' — that avoiding fees was a primary motivation.
Routine gifts well before any care need (e.g. helping children with deposits in your 60s when healthy) are very unlikely to be challenged. Large transfers when care was reasonably foreseeable are. Get specialist advice before transferring assets if any care need has been mentioned.
Successive governments have postponed the Dilnot reforms. The current position is no implementation date in this Parliament. Plan as if today's rules continue.
Pension funds in drawdown are usually treated as capital. Untouched pensions are usually disregarded but income from them counts.
Treated as 50/50 unless you can evidence otherwise. Half the joint balance counts toward your means test.
How NHS Continuing Healthcare works in 2026, who qualifies, how the checklist and DST assessments work, what's funded and how to appeal a decision.
Read guideHow UK care home fees are funded in 2026: means-tested local authority support, capital limits, third party top-ups, deferred payment agreements and self-funder rights.
Read guideWhat an LPA is, the two types (property and finance, health and welfare), how to register with the OPG, costs and the risks of leaving it too late.
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