If you have capital assets worth £26,500 or more, including the value of your home, you must meet your own care costs in full (over and above any assessed entitlement to free personal and nursing care).
If you have money to pay for your care home fees other than from selling your home, you can use that. If not, you may need to sell your home to pay for your care, but there are circumstances in which your house will not be included in the financial assessment.
The law says that the local council must disregard the value of your home when your partner or a relative who is over 60 or incapacitated still lives there. The council also has discretion to disregard your home in some other circumstances, for example if someone has given up their own home to care for you.
How you arrange to pay your care home fees is dependent on your circumstances. Some people arrange payments to the care home themselves, often by direct debit from the capital they have from the sale of their home. If someone's going into a care home who lacks capacity, the payments to the care home can be handled by a financial guardian or someone with continuing power of attorney.
You can seek advice from your local social care department on how to set up payments to care homes.
For more information on selling your home to pay care home fees, see Treatment of your home
Do I need to sell my home as soon as I move into a care home?
If you don't want to sell your home straightaway, your local council can offer you the opportunity to enter into a Deferred Payment Agreement (DPA). A DPA means the council will pay for your care until your house is sold, at which point the council will recover the amount you owe.
A DPA is a legal contract between the council and the home owner. It can include provisions covering:
- the amounts to be deferred
- arrangements for insuring and maintaining the property
- arrangements for termination of the agreement
You may be able to rent out your home during the period of the DPA and use the rental income to help you to pay your care home fees.
Some local councils use charging orders instead of DPAs. This means they put an order on your deeds so they can recover the cost of the care they've paid when your house is sold.
For more information on DPA, see Deferred payment.
Deprivation of capital or notional capital
The council may consider you have deprived yourself of a capital asset in order to reduce your liability to pay for your residential accommodation.
There may be more than one reason for disposing of an asset, but if the council considers that avoiding care home fees was a significant one, they can conclude that you have deprived yourself of capital.
The council will then calculate the amount you have to pay for your care home place as if you still own that asset.
There is no time limit on when an asset was transferred. If you disagree with the council's decision, you can make a complaint using the council's complaint process.
Deprivation of capital may take a number of forms and could include:
- making a lump-sum payment to a relative or friend
- incurring substantial expenditure, like an expensive holiday
- transferring title deeds to a property to someone else
- placing money in a trust which cannot be revoked
- following an extravagant lifestyle that you would not normally be able to afford
The payment of care home fees is a complex subject and depends on many things which are unique to you.
If you want detailed information or personal advice, ask an experienced independent adviser like:
Advice Direct Scotland – phone 0808 800 9060, 9am to 5pm Monday to Friday.
Age Scotland – its fact sheets have information on paying for care homes, or phone their helpline on 0800 12 44 222.
The information was last updated on: 14th October 2020