Many people are concerned about how they will meet the cost of any care they might need in future years.
And justifiably so. Research shows that the average care home fees in the UK range from around £27,000 to £39,000 per annum for a residential care home, figures that can quickly escalate if nursing care is required.
Although the government is looking to introduce a new law that caps at £86,000 the amount individuals need to pay for their lifetime care costs, it is understandable that many of us are worried about how we will finance any future personal care.
Planning in advance is critical. By sorting finances, protecting assets, and making any necessary arrangements in good time, the process becomes more manageable when the need for care arises.
In this blog, our specialist Elderly Client solicitors look at some steps you can take to help fund the cost of care home fees.
How much are care home fees in the UK?
According to the latest figures, the average weekly cost of a residential care home in the UK is £760, while average fees at a nursing home are £960 per week.
The monthly average cost of residential care is £3,290, which equates to £39,520 a year. The cost of nursing care in a care home is higher, costing an average of £4,160 a month, which is almost £50,000 a year.
There is currently no cap on care home fees in the UK, although that is likely to change in October 2025 when the proposed adult social care charging reforms are due to come into force.
The cost of a care home in the UK varies according to:
- Your location (London and southeast England tend to be the most expensive).
- What sort of care you need (nursing care is more expensive than residential care, with any additional specialist care required incurring extra costs).
- The particular care home provider.
- Your financial means.
Do you have to pay for all your own care costs?
Once your care needs have been determined, how that care will be paid for must be ascertained.
Your local authority will undertake a financial assessment (‘means test’) to examine your income and capital. Certain capital assets are disregarded in the means test, including jointly owned property, certain insurance-based investments, and assets within trusts.
Most people will pay some or all of their care fees, either because they have capital that can be used towards the payment of fees or because they have income that can be contributed.
Under the current system in England, if the value of your capital assets is more than £23,250, you must pay for all your own care costs.
If you have assets worth between £14,250 and £23,250, you must pay a proportion of your care costs.
If your assets are worth less than £14,250, the council will pay the cost of your care, although you may be expected to contribute from income that is included in the means test.
What can you do to help fund care home fees?
Care home fees are expensive, and many people are concerned that paying for such care will involve selling their family home or will deplete any potential inheritance they are hoping to leave to their loved ones.
However, there are several steps you can take to protect your wealth from care home fees. Everyone is different, and what works for one person might not suit another. Specialist legal advice that takes into account your particular circumstances is vital before making any changes to your estate.
At Onions & Davies, we provide a personalised, individual service in a clear and friendly way without compromising the quality of advice. To speak to one of our experienced elderly client lawyers, call us on 01630 652405.
Some popular estate management options that people use to help fund care fees include:
- Giving away property or assets. The idea of ‘gifting’ the family home or other assets to a family member so they are not included in the means test is often one of the first options people think of. However, there are complex rules to be aware of, and this must be approached carefully so that you do not fall foul of the deprivation of assets rules.
- Renting out your home. Letting out your property can deliver a stream of income you can use to fund your care home fees. However, being a landlord comes with additional responsibilities, and you must ensure you are protected legally if you are considering pursuing this option.
- Care annuity. A care annuity is a type of insurance policy that provides a regular lifetime income when you pay an upfront lump sum. Income can either be released immediately to help cover care funding or deferred to a later date to cover the cost of future care needs.
- Deferred payment schemes. If you own your own home and are moving into a care home, you can use the value of your property to pay the fees through a deferred payment agreement with your local authority. The loan is secured against your property and paid back after you sell your home or after your death.
- Equity release. Accessing some of the money tied up in your home can be useful if you want to fund care in your own home. There are two main types of equity release: lifetime mortgage arrangements and home reversion plans. Equity release can affect your tax situation and any state benefits or local authority support, and specialist advice is vital.
Care fees funding is a crucial aspect to consider when planning long-term care, whether for yourself or a loved one. The decision on how to fund care depends on several factors, such as your specific care needs, financial resources, and the type of care home you go into.
For those receiving care in their own homes or care homes, it’s essential to understand the options available and plan accordingly.
Elderly Client Solicitors
At Onions & Davies, we specialise in assisting clients with planning for long-term care, sometimes many years in advance. Our director-led team is also experienced in providing advice on funding alternatives when entering care.
Our highly skilled team will help you consider your specific family circumstances and are well-equipped to offer valuable guidance and support.
We can also offer specialist advice regarding drafting key legal documents that should be considered, including wills, advance decisions, and lasting powers of attorney, ensuring you have attorneys of your choice to look after your finances and welfare needs if you lose the mental capacity to do so in the future.
Getting advice early on can help put your mind at ease. If you are looking for care fees planning and funding advice, please contact our specialist elderly client solicitors for more details at sols@onionsanddavies.co.uk, or call us on 01630 652405.