State and local authority funding

16 Jul 2021

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We understand that care is expensive. Many people in the UK are eligible for support from their local authority to help pay for care. Without this assistance, a large proportion of elderly people would simply not receive the care they need. However, there are also many people that don’t receive the financial support they are entitled to, simply because they are unaware that it is available to them. It is vitally important that all local authority funding options are understood when assessing how to pay for care.

  1. The first step to take in receiving government funding for care is to demonstrate that there is a requirement for care.
  2. The next step is to prove that you are unable to pay for care for yourself. This is known as a means test and the purpose of the test is to find out how much financial support the government owes you. The level of support you are due depends on the value of your income and assets. If your assets total is less than £23,250 you are entitled to support from your local authority - the value of your home will only be included if you are moving into a residential home. Call our expert family care advisors on 020 3970 9900 to learn how to find out the total amount you may be entitled to.
  3. Local authority funding can be paid directly to care providers, but you also have a right to ask for a direct payment instead of having care arranged by the local council. After the care assessment, the local council will calculate how much care will cost and, once you have chosen an appropriate arrangement, will begin to make regular payments.
  4. Once a local authority has established that a person has needs that meet the national eligibility criteria, it has to make sure that these needs are met. The first step will be to draw up a care and support plan, or in the case of a carer with eligible needs, a support plan.

The Care Act

The Care Act 2014 is a piece of legislation that governs local councils’ duties in relation to assessing your care needs and your eligibility for publicly-funded care and support.

The Act created a single, consistent set of rules about who is entitled to local authority care funding and how the assessment process works to figure this out. It covers all adults with care needs.

It clearly sets out the steps that must be followed.

It begins with an assessment of your needs and decision about where your needs are eligible, including a financial assessment where necessary. This will determine whether you need to pay for your own care.

After this process of assessment is finished, the decision can then be made about whether you’re entitled to care and support arranged by the council.

National Eligibility Criteria

The eligibility threshold for adults with care and support needs is based on identifying how a person’s needs affect their ability to achieve relevant outcomes, and how this impacts their wellbeing.

Local authorities must consider whether the person’s needs:

  • Arise from or are related to a physical or mental impairment or illness
  • Make them unable to achieve two or more specified outcomes
  • As a result of being unable to meet these outcomes, there is likely to be a significant impact on the adult’s well being

An adult's needs are only eligible where they meet all three of these conditions.

The specified outcomes measure include:

  • Managing and maintaining nutrition, such as being able to prepare and eat food and drink
  • Maintaining personal hygiene, such as being able to wash themselves and their clothes
  • Managing toilet needs
  • Being able to dress appropriately, for example during cold weather
  • Being able to move around the home safely, including accessing the home from outside
  • Keeping the home sufficiently clean and safe
  • Being able to develop and maintain family or other personal relationships, in order to avoid loneliness or isolation
  • Accessing and engaging in work, training, education or volunteering, including physical access
  • Being able to safely use necessary facilities or services in the local community including public transport and recreational facilities or services
  • Carrying out any caring responsibilities, such as for a child

Local authorities have a duty to assess a person who appears to need care and support. Individuals can contact the local social services department and ask them to arrange a needs assessment.

Once a local authority has established that a person has needs that meet the national eligibility criteria, it has to make sure that these needs are met. The first step will be to draw up a care and support plan, or in the case of a career with eligible needs, a support plan.

If you have eligible needs, the local authority will check that you normally live in their area. Social care is not free and you may have to contribute towards the cost of meeting your needs. Local authorities will do an assessment to see if you have to contribute and how much that would be.

What is a care needs assessment?

The assessment looks at a person’s physical, mental and emotional needs.

The Care Act 2014 clearly states that everyone has a right to a care needs assessment. You can apply for a care needs assessment here.

The local council has a legal duty to carry out a needs assessment once they become aware of the person’s potential needs. It usually takes four to six weeks. If your case is urgent, be sure to state this in your application.

Assessments can be done over the phone or online, but this should only happen if the person agrees to them. Online or telephone assessments are unlikely to ever be appropriate for people who lack capacity or have difficulties with communication.

What is the financial assessment?

After you’ve had the care needs assessment, and you’ve agreed care and support plan, there will be a financial assessment, sometimes known as the ‘means test’.

The financial assessment is what the council uses to determine whether you’re responsible for paying for your own care. It determines how much caring for your needs will cost and who is going to pay for it.

It is usually a face-to-face meeting which takes place in your own home, or at your local council office if you prefer. During the meeting, a financial assessment officer, who is employed by your council, will review your finances with you. The assessment officer will look at evidence of your income and outgoings and ask you questions about how much money you have and where this money comes from.


This is the value of the assets you hold. If you need to move permanently into a care home, the test may include the value of your property. If you need care in order to stay in your own home, the means test won’t include the value of your property. It’s important to remember that capital includes cash, saving accounts or trust, stock and shares, premium bonds, and life assurance bonds.


This is money you receive on a regular basis from work, investments or your pension. Your income will be considered if the value of your assets is between £23,250 and £14,250. It’s important to think about your state, private or occupational pensions, disability living allowance, personal independence payment, income support attendance allowance, any income from savings.


This is your regular monthly outgoings. Expenses will be used to understand your net income. This will help the assessor build up a well-rounded view of your financial circumstances - mortgage payments, rent - if you pay it, council tax, service charges or ground rent, building insurance, and disability-related expenditure.

As soon as your capital and income drop below £23,250 the council will start paying for your care. £23,250 is known as the upper capital limit. There is also a lower capital limit which is £14,250.

If you have assets between £23,250 and £14,250, the council will pay for your care. However, they’ll also expect you to pay £1 per week for every £250 you have between the limits. This is called the ‘tariff income’.

If you have assets below £14,250, you’ll be expected to pay what you can afford from your income. If you’re in this group, you’ll be expected to contribute any income above £189 per week towards paying for your care.

What is a personal budget?

A personal budget is the amount of money your local council will pay towards any social care and support you need, such as live-in care.

The amount of money in your personal budget is decided by your local council after a needs assessment to work out:

  • What kind of care and support you need
  • How much it will cost
  • How much you’re able to afford yourself

Is your personal budget paid into your bank account?

It can be. There are three main ways your personal budget can be controlled. Or you can arrange a mixture of the three:

Indirect payments: the council manages the budget and will choose and pay for your care services on your behalf.

An individual service fund: you choose the care services you want and the council pays the companies on your behalf.

Direct payments: the council pays your personal budget into your bank account or that of someone nominated by you.

What are direct payments?

Direct payments give individuals greater choice and control over the support they receive and how it’s provided.

Instead of receiving direct support arranged by your council, you have the ability with direct payment to choose and purchase the service you feel you need. They are central to the objective of personalising social care and they have a big role to play in giving back control to the people who matter most - you.

A direct payment is when the council pays your personal budget into your bank account or the bank account of someone nominated by you. Instead of council picking and choosing which care services are right to meet your care needs, you do.

What you can spend direct payments on?

You can use your direct payment to pay for services, equipment, or activities that meet your eligible care needs for example.

Example of things you buy with your direct payment:

  • Pick whatever care agency you like best
  • Purchase specialist equipment
  • Make adaptations to your home
  • Employ a personal assistant to help you
  • Short breaks and leisure activities
  • Pay for social activities or daycare centres

If you get direct payments, how do you actually access the money?

The options will usually vary depending on the arrangements made by each council. The most common options are:

Bank accounts: most councils require direct payments to be paid into a separate account which you only use for direct payments. This usually means you have to open a new account. The simplest and most common way is to open a standard current account.

A third party: an accountant, or an individual service fund (ISF), or payroll services are an option but keep in mind that this will add extra cost that will come out of your personal budget.

Small, one-off deposits without a separate account: some councils offer small schemes where payments up to an agreed limit (e.g up to £500) are paid into your own, original bank account. This way you don’t have to open a new account. This option is more suitable if you are just looking to buy equipment or use a service once.

Vouchers: some councils offer vouchers, but this will likely restrict the products and services you can buy to a limited number of companies. They are not a very popular option.

Prepaid cards: this option is relatively new, but more and more councils are now offering this option. The council gives you a special card and they load payments onto it. You don’t have to have a bank account, but some require you to use systems similar to telephone banking or internet banking.

NHS Continuing Healthcare

NHS continuing healthcare is a package of care arranged and funded solely by the NHS for individuals who are not in hospital and have been assessed as having a “primary health need” who require a lot of nursing support.

Most people with long-term care needs don’t qualify for NHS Continuing Healthcare or Care as the assessment is quite strict. If your loved one is approaching the end of their life, then a “fast track” Continuing healthcare funding assessment may be appropriate.

In England, the NHS can arrange care for you or you can choose to receive a direct payment, known as a personal health budget.

The current ‘eligible’ health needs include:

  • Complex medical conditions that need additional care and support
  • Long-term medical conditions
  • Physical or mental disabilities
  • Terminal illnesses
  • Rapidly deteriorating health
  • Mobility problems
  • Behavioral or cognitive disorders

Despite the strict guidelines, free healthcare could save you thousands of pounds each year, so it’s essential that you find out if you’re eligible. To find out if you’re eligible, you can ask your GP or social worker to arrange an assessment.

The Money Advice Service website provides a comprehensive guide on NHS Continuing Healthcare and how to apply.

Blog Post Author

Tilda Mew

Sales Manager