A guide to funding elderly care at home

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Live in dementia care-elderly lady with dog

If you or someone you care about is beginning to need extra support, you may be wondering how to finance the additional care required for them to lead a happy and healthy life.

In the UK, social care is available for adults, but funding elderly care depends upon the needs of the individual and their personal circumstances. Read on to discover your options, understand the costs, and how to pay for elderly care in a way that gives everyone involved a positive outcome.

Why plan ahead for elderly care?

With over 9 million people aged 70 or over in the UK, later life care is something more and more families are having to consider. 

However, most people only start looking for full-time care when they are at a crisis point. With so many choices and research to do, planning ahead can feel overwhelming, and thinking about yourself or a loved one in later years even more so.

But it doesn’t have to be. Elderly care can reflect your values, preferences, and dreams for later years. Planned well, this stage of your life can be just as enjoyable as now, simply in a different way.

Preparing early and considering how you might fund elderly care helps you create opportunities for your golden years to be truly golden. You can take steps toward maintaining your independence and quality of life for years to come.

Nursing home vs home care costs

The first thing that usually comes to mind when thinking about care is residential care or a nursing home.

While these can be a helpful option, around 97 per cent (One Poll, 2014) of people don’t want to go into a care home if they become less able to cope. It can be unsettling to move away from friends, a partner, or pets, and the cost of specialist services can be expensive.

Ageing in our own home, in a safe and therapeutic environment, is another option, and one of the oldest and most respected forms of social care. 

The cost of live-in care is often on par with the cost of residential nursing homes, and, in some cases, more affordable. For instance, at Ashridge, our live-in care starts from £1,650 per week. This is more cost-effective than a residential care home, as you’ll get one-to-one care in the comfort of your own home. 

You can also receive help funding elderly care at home, leading to further reduced costs. This means your loved one can remain at home, in a place familiar to them where they’ve lived independently for years, without financial worries.

How to access elderly care funding

Getting access to elderly care funding usually involves two assessments: a care needs and financial (also called means test) assessment. The outcome of these determines whether you’re entitled to financial help from your local council and what benefits you can claim.

 Let’s break these down into more detail.

Care Needs assessment

If you or your loved one has decided that care at home is the right choice, you can contact your local council to arrange a Care Needs assessment. This is a friendly, thorough conversation about daily life and what support would make the biggest difference for the person receiving care.

During this visit, the assessor will ask about the person’s routine, such as how they go about cooking, dressing, and arranging medications. These questions help them determine what level and type of care an external company would need to provide, and if there are any adaptations required to make the home more comfortable. This might include practical aids such as grab rails and ramps, or specialised equipment to make certain activities (like bathing) safer.

Based on this assessment, you’ll receive a personalised care plan that outlines exactly what support is needed, how much it will cost, and (crucially) how much financial help you might be entitled to from your local council.

Financial/means test

In the UK, any financial support for care is means tested. So what you’ll get depends on how much you have in savings or assets. 

The upper limit for 2025/26 is £23,250, while the lower limit is £14,250.

What this means for you:

  • Above £23,250 in assets: You’ll be classed as ‘self-funder’ and will need to pay for your own care.
  • Between £14,250 and £23,250: You’ll receive some council support but may need to contribute towards your care costs.
  • Below £14,250: Your care will be funded by the council, though you may still contribute from your income.

Assets that count towards the means test include:

  • Bank and building society accounts 
  • Investments and savings (including ISAs)
  • Stocks, shared, and dividends income
  • Any properties you own that aren’t your main home

However, if you choose to receive care in your own home, the value of your property won’t be counted as an asset for the means test. 

This is one of the biggest financial advantages of home care – you can keep your house and still receive funding support if your other assets fall below the threshold. Plus, if you receive home care in your own home you will not have to sell your home to fund your care.

Arranging elderly care as a self-funder

If your assessment determines that you’re classed as a self-funder (with assets above £23,250), don’t worry – you still have excellent options for getting the care you need. Being a self-funder actually gives you more control and flexibility over your care choices. 

You have two main pathways to arrange your care: arranging care yourself or through the council.

Arrange care yourself

Many self-funders prefer to take charge of their arrangements directly. With a regulated company (like Ashridge), you remain in control of your care package, but are supported by your own appointed care manager. This means you can choose your preferred care provider, agree rates, and have the flexibility over the type and timing of care you receive, without the burden of managing all the details yourself. 

Council-arranged care

Alternatively, some local councils will arrange your care for you, even if you will be paying for it yourself. In this case, the council will source appropriate care providers and handle all the arrangements, with payments made directly to the care providers. However, this option can involve longer wait times and less flexibility, and some people find the process more challenging compared to managing their care independently or through a dedicated care manager. 

What benefits am I entitled to?

Even if you’re funding your own care, you may still be entitled to benefits that can help reduce your care costs. 

These benefits are designed to support people with additional needs, regardless of their savings or assets, and can make a significant difference to your monthly care budget.

Personal Independence Payment (PIP)

Personal Independence Payment (PIP) is designed to help with the extra costs of living with a long-term health condition or disability. It’s available for people between 16 and State Pension age and is not means-tested, so your savings won’t affect your entitlement.

PIP has two components. You may qualify for one or both depending on how your condition affects your daily life.

  • Daily living component: £73.90 (standard rate) or £110.40 (enhanced rate) per week. This is for help with everyday tasks like washing, dressing, preparing food, or managing medication.
  • Mobility component: £29.20 (standard rate) or £77.05 (enhanced rate) per week. Used for help with getting around, whether that’s walking short distances or planning and following journeys.

PIP is usually paid every four weeks directly into your bank account and can be used however you choose, including contributing towards your care costs.

Attendance Allowance

If you’re over State Pension age (currently 66, but due to gradually increase from May 2026), you can apply for Attendance Allowance instead of PIP. This benefit recognises that you need help with personal care because of an illness or health condition (physical or mental).

The lower rate is £73.90 per week – this means you’ve been assessed as being able to do certain things for yourself and only require care for part of the day or night.

The higher rate of £110.40 is for people who need help or supervision during both day and night, as well as for those who are terminally ill.

You don’t have to have someone caring for you in order to claim Attendance Allowance and, like PIP, it’s not means tested, so your savings won’t affect what you get.

Carer’s Allowance 

If a family member or friend is providing you with substantial care (at least 35 hours per week), they may be entitled to Carer’s Allowance. This benefit pays £83.30 per week and can help support the person caring for you, reducing the financial pressure on your family. Carers can earn up to £196 per week (after tax and National Insurance) and still claim Carer’s Allowance.

Pension Credit

Pension Credit is designed to provide extra money for people over State Pension age who are on a low income. Even if you don’t think you qualify, it’s worth checking – many people who are entitled to Pension Credit don’t claim it.

There are two parts to Pension Credit:

  • Guarantee Credit – tops up your weekly income to a minimum level. 
  • Savings Credit – provides extra money if you’ve saved some money towards your retirement (being phased out for new claims).

You can also get extra Pension Credit, Housing Benefit, or Council Tax Reduction if you get Attendance Allowance, making it even more worthwhile to explore what benefits you’re entitled to.

NHS continuing healthcare 

If you or your loved one has very severe or complex health needs, you may qualify for NHS continuing healthcare (sometimes called NHS CHC). This is completely free, ongoing care that’s fully funded by the NHS, regardless of your financial situation.

NHS continuing healthcare is for people whose primary need is for healthcare rather than social care. This might include individuals with: 

  • Complex health conditions that need constant monitoring
  • Severe dementia with challenging behaviours
  • End-of-life care needs
  • Multiple health conditions that require intensive, coordinated care

In some areas of England, you can arrange your NHS continuing healthcare through a personal health budget, giving you more control over how your care is delivered.

Ways to self-fund elderly care

How you pay for your care very much depends on your individual circumstances, your assets, the social care assessment and any pensions or benefits you receive. Many people agree families find that the cost of live-in and at-home care is far outweighed by the peace of mind and comfort that comes with of remaining in your own home.

Let’s explore the main ways people fund elderly care.

1. Savings or cash in the bank

The most straightforward approach is to draw on savings or cash you’ve accumulated over the years. If you have readily available funds, you can get immediate access to care without having to navigate financial products or arrangements. It’s simple, direct, and puts you in complete control of your care decisions.

2. Investments

Some people choose to maximise their capital and invest in diversified portfolios to generate ongoing income that funds their elderly care costs. While this can provide better long-term returns than cash savings, it does come with investment risks – always get advice from a trusted financial advisor.

3. Care fee annuity

Care fee annuity products are specifically designed for those with long-term care needs, and work in a similar way to insurance polices. You pay an upfront sum, and in return, you receive guaranteed payments to cover your care for life. 

This option provides peace of mind about future costs, but it’s important to be certain about the support you’ll need in the future – if your circumstances change, you may not get the best value from your investment.

4. Equity release

Equity release has become an increasingly popular way of funding elderly care. It involves unlocking the value of your home without having to sell it – you release a portion of your property’s equity to fund your care while continuing to live there.

Some people also choose to downsize to a smaller property and use the difference to fund their care, giving them both a more manageable home as well as the funds they need.

Getting help from financial experts

Navigating elderly care funding doesn’t have to be a journey you take alone. There are several trusted sources of advice and support available to help you make better decisions about your live-in care funding – knowing where to turn can make all the difference.

Your local council should always be your first port of call. They can provide valuable guidance on funding options, local services, and what support you might be entitled to. Most councils have dedicated adult social care teams who understand the local landscape and can point you in the right direction. 

You should also speak to a financial adviser that specialises in later-life care. These professionals can provide unbiased, tailored advice on complicated funding arrangements, help you understand the pros and cons of different options, and ensure your financial decisions align with your overall retirement plan.

Other organisations that can provide advice on funding elderly care include:

Professional support makes all the difference

Every year thousands of families run out of money when paying for care. Our job at Ashridge Home Care is to do everything we can to stop that happening. 

Many only find themselves struggling with costs simply because they didn’t know about all the options available to them. We want to make sure our clients are well informed and empowered to make the best decisions for their circumstances.

Speaking to our experienced team about your situation can provide valuable guidance and direction, helping you explore all the funding options that might be available to you.

Ready to discuss your elderly care funding options? Get in touch today – a member of our knowledgeable team will be happy to help.

FAQs on funding elderly care

Do I need to sell my home to pay for care?

You don’t need to sell your home if you receive care at home and continue living in it. Your property isn’t counted as an asset in the financial assessment for elderly care funding – a major advantage of choosing home care. If you move into residential care, however, your home may be included in the means test. That said, you won’t have to sell it immediately. You might be eligible for a  deferred payment agreement to delay selling your home until after you’ve passed away. In some cases, your local council can also disregard your home’s value, such as if your spouse or a dependent relative continues living there.

Can I give some of my money away?

You need to be very careful here. Local councils can investigate gifts made to reduce care costs through deprivation of assets rules. If you give away money or assets specifically to avoid care fees, the council may still count them when assessing your finances. 

However, reasonable gifts for occasions like birthdays or Christmas are usually acceptable. Always seek professional advice before making significant financial gifts if you might need to fund elderly care in the future.

What happens if my savings run out? 

If your savings fall below £23,250, you’ll become eligible for local council support with your care costs. The council will reassess your finances and may start contributing towards your care fees. If your assets drop below £14,250, you’ll likely receive full council funding (though you may still need to contribute from your income).

For more information on funding home care, visit our costs page and download the Live-In Care Costs Guide.