Paying for Dementia Care (UK): How Care Home Fees and Funding Work in England

One of the first worries many families have after a dementia diagnosis is money. Will we have to pay for care? Will Mum's house have to be sold? Is there any help from the NHS?

The honest answer is that it depends on the person's needs, their savings and property, and where they live. The system is complicated, but understanding the basics puts you in a much stronger position when you talk to the council or the NHS.

This guide covers England only. Scotland, Wales and Northern Ireland have their own rules, capital limits and allowances for paying for care. If the person lives in one of those nations, check with their local council (or health and social care trust in Northern Ireland) or a dementia charity there.

In short: Social care, including most care home fees, is means-tested by the local council. In England, someone with more than £23,250 in capital usually pays the full cost. Some care is free whatever your savings, including NHS continuing healthcare for people with a "primary health need" and the NHS nursing contribution in nursing homes (£267.68 a week in 2026/27).

Step one: get a care needs assessment

Before any decisions about money, ask the local council's adult social care team for a needs assessment. It's free, and anyone who appears to need care and support can ask for one, whatever their income or savings.

The assessment looks at what the person can and can't do safely, and what support would help. It might lead to help at home, day services, equipment, or a recommendation for a care home.

Family carers can ask for a separate carer's assessment of their own needs too.

Some help is free regardless of means, including:

• Equipment and minor home adaptations costing less than £1,000 each, if the council assesses that the person needs them
• Intermediate care or reablement for up to six weeks, for example after a hospital stay

Step two: the financial assessment (means test)

If the council agrees the person needs care it can arrange, it then does a financial assessment to work out how much they should pay towards it. This looks at income (such as pensions and some benefits) and capital (savings, investments and, in some cases, property).

The capital limits in England (2026/27)

The government confirmed these limits are unchanged for 2026/27. They have stayed the same for many years, but always check the current figures with the council.

What the person keeps

Even when the council is paying towards care, the person doesn't hand over all their income.

• In a care home, they keep a personal expenses allowance for things like clothes, toiletries and hairdressing. For 2026/27 this is £31.80 a week in England (up from £30.65 in 2025/26). The government sets it each year, and the council can allow more in some circumstances. Some council web pages still show older figures, so make sure you're looking at the current year.
• For care at home, councils must leave the person with at least a minimum income guarantee to cover everyday living costs. The amount depends on age and circumstances: for 2026/27 it's £241.45 a week for a single person over Pension Credit age, before any extra amounts for disability or caring.

What happens to the family home?

This is the question families ask most. The answer depends on where the care is given and who else lives in the home.

If care is at home, the value of the home where the person lives is not counted.

If the person moves into a care home permanently, the home can be counted as capital, unless it's still lived in by certain people. The council must ignore its value if it has been lived in continuously since before the person went into the care home by:

• their husband, wife, civil partner or partner (unless they're estranged)
• a relative aged 60 or over
• a relative who is incapacitated (for example, because of disability)
• a child of the person who is under 18

Councils can also choose to ignore it in other situations, for example if someone gave up their own home to care for the person and it's now their only home.

The 12-week property disregard

When a care home stay becomes permanent, the council ignores the value of the home for the first 12 weeks. This gives families time to decide what to do with the property. The same 12-week disregard also applies if one of the disregards above ends unexpectedly, for example because the relative living there dies or moves into a care home.

Deferred payment agreements

Selling a home straight away is often not necessary. If someone needs care in a care home, owns a home that isn't disregarded, and has £23,250 or less in other savings and assets, the council must normally offer a deferred payment agreement.

This is effectively a loan from the council, secured against the home. Care fees build up and are repaid later, often when the home is sold or from the person's estate. The council can charge interest, up to a national maximum rate that changes every six months (on 1 January and 1 July), and reasonable administration fees.

Giving money or the house away

It can be tempting to transfer a house or savings to children to protect them. Be careful. If the council decides money or property was deliberately given away to avoid paying for care, it can still assess the person as if they had it. This is called deprivation of assets. In some circumstances, the council can ask the person who received the gift to pay the difference. Get independent advice before making large gifts or transfers.

Care that the NHS pays for

NHS continuing healthcare (CHC)

NHS continuing healthcare is a package of care, at home or in a care home, that's fully funded by the NHS. It covers health care, personal care and, in a care home, the fees. It is not means-tested.

It's for adults whose main need for care is because of their health, known as having a primary health need. A dementia diagnosis on its own doesn't qualify someone: Alzheimer's Society says the case has to be argued on the person's health care needs, not their diagnosis. People with more advanced dementia and complex needs may qualify. See our guide to end-stage dementia for the kinds of needs that can develop later on.

The process usually has two parts:

1. A checklist screening, often done by a nurse or social worker, to see whether a full assessment is needed.
2. A full assessment by a team of professionals using the Decision Support Tool, which looks at needs across 12 areas ("care domains"), such as behaviour, cognition, mobility and nutrition.

There's also a fast-track route for people with a rapidly deteriorating condition who may be entering the last phase of life. It's completed by a clinician involved in their care, such as a doctor or registered nurse, and is meant to get care funded without delay. There's no fixed rule about how long the person is expected to live. If health is getting worse quickly, ask whether a fast-track assessment is appropriate.

Alzheimer's Society's tips for families going through CHC include:

• keep a one-page medical history and update it regularly
• note the date, time and contents of every conversation with professionals
• ask for copies of hospital, GP and care records
• go to every assessment and review and take notes
• focus on the person's care needs, not just their diagnosis
• put requests and challenges in writing and ask for written replies

If CHC is refused, you can challenge it. There are three stages: local resolution with the integrated care board (ICB), an independent review by NHS England, and then the Parliamentary and Health Service Ombudsman.

NHS-funded nursing care

If someone lives in a nursing home and doesn't qualify for CHC but needs care from a registered nurse, the NHS pays a flat-rate contribution directly to the home. From April 2026 the standard rate is £267.68 a week in England (up from £254.06). A small number of people on an older, higher band get £368.24. This reduces the fees the person or the council has to pay.

Benefits that can help with care costs

Some disability benefits aren't means-tested and can help pay for care at home. Attendance Allowance (for people over State Pension age) and Personal Independence Payment (for people under it) are both worth checking, as is a council tax discount or exemption. A carer may also be entitled to Carer's Allowance. It's worth making sure the person is getting what they're entitled to before a financial assessment, because benefits count as income. Note that Attendance Allowance usually can't be claimed if the council is paying for a care home place, but it can if the person is paying all the care home costs themselves.

Self-funding: practical tips

If the person is paying for their own care:

• Still get a needs assessment. It helps you understand what care is needed, and means the council already knows the person if they need help later.
• Plan for savings falling. When capital gets close to £23,250, contact the council early so there's no gap in funding. Before moving into a care home, ask whether it accepts the council's rates and what happens if the person's money runs out.
• Get regulated, independent financial advice. Some advisers specialise in care fees. Check they're regulated by the Financial Conduct Authority.
• Make sure someone has legal authority. Paying fees, selling a house or setting up a deferred payment agreement is much harder if nobody has a registered lasting power of attorney for property and financial affairs.

Where to start

Looking at all of this at once can feel overwhelming. A sensible order is:

1. Ask the council for a needs assessment, and a carer's assessment for yourself.
2. Check the person is getting the benefits they're entitled to.
3. Gather details of their income, savings and property for the financial assessment.
4. If their health needs are complex, ask the GP, social worker or ward staff about an NHS continuing healthcare checklist.
5. Get advice before selling property or giving money away.

It also helps to understand how dementia tends to change, so you can plan ahead. Our guides to the stages of dementia and what happens in the middle stage of dementia explain what to expect, and our article on the role of family and friends in dementia care looks at sharing the load.

This is general information for England, not financial or legal advice. Rules, limits and rates change, usually each April, so always confirm current figures with the council, the NHS or a specialist adviser.