How does the local authority means test treat your home and savings?
In England, capital above £23,250 means you fund your care in full; below £14,250 your capital is ignored entirely and only your income is assessed. Between those two figures a tariff income of £1 a week is assumed for every £250 of capital, which is a far harsher rate than any savings account pays.
- Upper limit: £23,250 — above this you are a self-funder and pay the full cost.
- Lower limit: £14,250 — below this capital is disregarded and only income is assessed.
- Tariff income: £1 a week assumed for each £250 of capital between the two limits.
- The home: counted for residential care unless a spouse, partner or qualifying relative lives there.
01 The two limits and the band between them
The upper capital limit in England is £23,250 and the lower is £14,250, and both have been at those levels for years. Above the upper limit you meet the full cost of care yourself. Below the lower limit your capital is disregarded entirely and the assessment looks only at your income.
Between the two, the council assumes a tariff income of £1 a week for every £250 of capital. Someone with £20,000 is treated as having an extra £23 a week of income, which is an implied rate of about 20% a year on that slice — a long way above anything a savings account pays.
Scotland, Wales and Northern Ireland set their own limits and reliefs, so the figures here apply to England. The structure is similar everywhere; the numbers are not.
Shows: your assessed contribution from capital under the England means test, and whether you are a self-funder. Ignores: your income, the personal expenses allowance, property disregards, and the different limits in Scotland, Wales and Northern Ireland.
On the defaults above, the worked example shows £1,196 a year. A tariff income of £23 a week is assumed on the capital above the lower limit — about 21% a year on that slice.
Source: Social care charging for care and support 2026 to 2027
02 When the home is counted
For care provided at home, the property you live in is disregarded. For permanent residential care it is counted as capital — unless a qualifying person still occupies it, in which case it is disregarded for as long as they do.
Qualifying occupants are a spouse or partner, a relative aged 60 or over, a relative who is incapacitated, or a child of yours under 18. The disregard follows the occupation rather than the ownership, so a partner remaining in the home protects it while they live there.
Where the home is counted, a deferred payment agreement lets the council place a charge on the property and recover the cost later, rather than forcing a sale during your lifetime. It is a loan against the house, with interest, not a waiver.
03 What counts as capital and income
Capital includes savings, investments, second properties and most other assets. Income includes pensions, most benefits and any tariff income from the middle band. Personal injury trusts and certain benefits are disregarded; the statutory guidance sets out the full list rather than leaving it to local discretion.
The interaction with pensions is the one worth understanding early. A pension in payment counts as income; an uncrystallised pension pot may be treated as capital or as notional income depending on the circumstances, which is why the order in which accounts are drawn has consequences well beyond tax.
The assessment leaves you a personal expenses allowance from your income in residential care, a small weekly amount that is not available for care fees.
The tariff income is the part nobody mentions and the part that hurts. Twenty per cent a year is assumed on every pound of capital between the two limits, which means saving your way through that band is close to impossible. What follows from that is unglamorous and important: know which of the three zones you are in before anything else, because the planning that helps in one is irrelevant in the others. And if a partner is living in the home, say so early and in writing — the property disregard is the single largest protection in the whole assessment.
FAQ
Is my home always counted?
Not for care at home, and not for residential care while a qualifying person occupies it — a spouse or partner, a relative aged 60 or over, an incapacitated relative, or your child under 18. Otherwise it is counted as capital for permanent residential care.
What is tariff income?
An assumed income of £1 a week for every £250 of capital between the lower and upper limits. It is not real interest; the council treats you as receiving it whether you do or not, which is why the middle band is expensive.
Do the same limits apply across the UK?
No. £23,250 and £14,250 are the England figures. Scotland, Wales and Northern Ireland set their own capital limits and their own reliefs, and Scotland additionally funds personal care differently.
Sources
Regulator references
- Social care charging for care and support 2026 to 2027 · Department of Health and Social Care · 2026The current year's circular, which is where the capital limits are confirmed or changed.Last verified: 2026-09-07
- Care and support statutory guidance · Department of Health and Social Care · 2025The statutory guidance councils must follow, including the means test and deprivation of assets.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
Run this rule against your situation
See what this rule does to your own projection — month by month, to age 90.
Join the Waitlist
Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.