Local authority funding for home care is money the council pays towards your care after two assessments: a free assessment of your needs, then a financial assessment, known as the means test. In England, whether the council helps depends mainly on your capital, with an upper limit of £23,250 and a lower limit of £14,250. Your home is not counted while you receive care in it.
The means test is the part of the care system families most fear and least understand. The good news is that the rules are clear once they are laid out, and a great many people qualify for more help than they expect. This guide explains exactly how council funding for home care works in England, and it pairs with our wider guide to paying for care in the UK if you want the full funding picture.
What is local authority funding for home care?
Local authority funding is financial support from your council towards the cost of care that helps someone stay safely in their own home. It comes from the adult social care budget and is governed in England by the Care Act 2014. The council may pay all, part or none of the cost, depending on your needs and your finances. If the main need is health rather than social care, the NHS may pay instead; our guide to NHS Continuing Healthcare explains who qualifies.
Two separate assessments decide the outcome. The first looks at what care you need, and the second looks at what you can afford to pay. It is important to understand that these are distinct: qualifying for support on the grounds of need does not automatically mean the council pays, because the means test then decides your contribution. You can read the government's plain-English overview on GOV.UK.
Home care funded this way is often called non-residential or domiciliary care, and the rules that govern it are deliberately more generous than those for a permanent move into a care home. The single biggest difference, which reassures most families, is how your home is treated. Because you continue to live in it, its value is completely left out of the calculation. That means the fear people carry of "having to sell the house" simply does not apply to care delivered at home. Keeping this distinction in mind makes the rest of the means test far easier to follow.
Why does the free needs assessment come first?
The needs assessment comes first because it establishes whether you are eligible for care and support at all, before money is even discussed. Anyone can request one from their local council, free of charge and regardless of income. A social worker or occupational therapist looks at how well the person manages everyday tasks and what would help.
The assessment considers things such as managing personal care, preparing meals, staying safe at home, keeping up relationships and maintaining a home. If you are found to have eligible needs, the council has a duty to help meet them, which then leads to the financial assessment. The NHS and Age UK both explain what to expect and how to prepare. It is well worth requesting this assessment even if you expect to self-fund, because it confirms your needs and can open doors to other support.
How does the means test work?
The means test, or financial assessment, looks at your capital and income to decide how much you contribute. In England the capital thresholds are fixed and have been frozen for several years. Above the upper limit you pay in full; below the lower limit your capital is ignored; between the two you pay a tariff based on your savings.
The table below sets out the England capital limits and what each band means for home care.
| Capital (England) | How you are treated |
|---|---|
| Above £23,250 | Self-funder. You pay the full cost of your care. |
| £14,250 to £23,250 | Sliding scale. You pay a tariff income of £1 a week for every £250 above £14,250, plus your assessed income contribution. |
| Below £14,250 | Capital ignored. You are assessed on income only. |
Capital means savings, investments, most property (other than your main home when you receive care in it) and some other assets. These thresholds are confirmed in the government's charging guidance for 2026 to 2027 (GOV.UK charging guidance). Wales, Scotland and Northern Ireland use different figures and rules, so always check the position where the person lives. A word of caution: deliberately giving money away to fall below a threshold, known as deliberate deprivation of capital, can be challenged, and the council may treat you as still holding it.
The tariff income in the middle band is worth seeing in numbers. Suppose someone has £20,000 in savings. That is £5,750 above the lower limit of £14,250. The council divides that by £250, giving 23, and treats them as having an extra £23 a week of income to put towards care. This is added to their actual income, such as pensions, and the total is then used to work out their contribution, always subject to leaving them the protected minimum. As their savings are spent, the tariff reduces, and when their capital drops below £14,250 it stops entirely and only their real income is assessed. Understanding this gradual slope helps families plan, because the change is rarely sudden.
What counts as income, and what is the Minimum Income Guarantee?
Income includes most pensions and certain benefits, and the council uses it to work out your contribution once your capital is below the upper limit. Not everything counts, though, and the rules are designed to leave you enough to live on. This protection is called the Minimum Income Guarantee.
The key points on income are:
- What is counted. State and private pensions, and some income-related benefits, are usually included in the assessment.
- What is protected. After charging, the council must leave you with at least the Minimum Income Guarantee, a weekly amount set nationally to cover everyday living costs.
- Disability-related expenses. If you receive a disability benefit, you can ask for extra costs linked to your condition, such as higher heating or specialist equipment, to be disregarded, which reduces what you pay.
Because disability-related expenditure is often overlooked, it is one of the most useful things to raise. Impartial guidance from MoneyHelper and Carers UK can help you make sure every allowable cost is claimed.
One further reassurance: whatever the assessment concludes, your contribution can never be more than the actual cost of the care you receive. The means test decides how much you can afford to pay towards care, but if that figure is higher than the care itself costs, you simply pay the lower amount. Disability benefits such as Attendance Allowance are also treated carefully, and some, like the mobility component of Personal Independence Payment, are ignored altogether. These protections exist so that charging for care remains fair and never leaves someone worse off than the rules intend.
Is your home counted in the means test?
No, not for care in your own home. The value of the property you live in is completely disregarded while you are receiving care there. This is one of the biggest reassurances we give families: choosing home care does not put your house at risk in the way people often assume.
Your property is only assessed when care involves a permanent move into a residential care home, and even then it is not always counted. Disregards apply, for example, where a spouse or partner, a relative aged over 60, or a dependent child still lives in the home. There are also protections such as the 12-week property disregard and deferred payment agreements, which let people delay selling. The rules on property are genuinely complex, and the consequences last for years, so take regulated financial advice before selling, transferring or borrowing against a home to pay for care.
What happens after the financial assessment?
After the assessment, the council sets a personal budget, the amount it agrees is needed to meet your eligible needs, and tells you how much you must contribute. You then decide how the care is arranged. There are usually three options, and you can mix them.
- Council-arranged care. The local authority organises the care on your behalf and pays the provider directly.
- A managed budget. A third party holds and manages the budget for you while you retain choice over the care.
- Direct payments. The money is paid to you so you can arrange your own care, including choosing your own provider or employing a personal assistant.
Whichever option you choose, the council must give you a written care and support plan setting out your needs, the personal budget agreed to meet them, and how the money will be used. If you disagree with the amount, you can ask the council to explain how it was calculated and challenge it through the complaints process, and ultimately the Local Government and Social Care Ombudsman. It is also worth reviewing the plan whenever needs change, as an increase in need should mean a matching increase in the budget. Care funding is not meant to be set once and forgotten; it should track the reality of the person's life. Our guide on how to arrange home care covers what happens once the budget is agreed.
Our pages on home care in Hackney, Luton and Medway set out the services we can arrange in each area.
Many families use their personal budget to buy care from a regulated provider they trust, which combines council funding with real choice. Taken as a direct payment, the money is paid into a separate account, you agree in the care plan what it will be spent on, and the council asks for simple records of how it was used. If your capital is above the limit you will be funding the care yourself, in which case it pays to plan early, keep a clear record of what you spend, and ask for a needs assessment anyway so the council already knows you when your savings approach the threshold. Our home care services can be arranged under either route. Protocol Healthcare Services Ltd is registered with the Care Quality Commission to provide personal care (provider ID 1-6591402702), and has not yet been inspected, so there is no published rating. Whatever your situation, you are welcome to talk it through on our paying for care page or simply get in touch for straightforward, no-pressure advice.