Fees & Funding > What Are the New Rules For Care Payments?

What Are the New Rules For Care Payments?

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Estimated Reading Time: 7 minutes

In 2021, the government announced changes to the social care system in England, including a new £86,000 care cap. This is the maximum amount anyone would need to spend on their own personal care over their lifetime. They also announced increases to the care thresholds. These changes to care payments were due to be introduced in October 2023, but have since been pushed back to October 2025.

In this article, we’ve explained these new rules, how the care fees cap works, when the regulations are due to come into effect and whether you’ll be affected.

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In this article:

  1. What are the new rules for care payments?
  2. What is the care fees cap?
  3. When do these new rules come into effect?
  4. Will the social care cap affect you?
  5. What these new care payment rules mean for you and your loved ones

What are the New Rules For Care Payments?

In 2021, the government set out their new rules for care payments in their ‘Build Back Better: Our Plan For Health and Social Care’ publication.

The first part of these new rules is increasing the upper and lower thresholds for local authority-funded care in England. The lower threshold is increasing from £14,250 to £20,000, while the upper threshold is increasing from £23,250 to £100,000.

This applies to people living in care homes and those receiving home care.

From October 2025, if your savings and income are:

  • Worth more than £100,000 - You’ll be classed as a self-funder and must pay for your own care

  • Between £20,000 and £100,000 - You’ll pay whatever you can afford, along with a means-tested ‘tariff’ contribution from your assets

  • Less than £20,000 - Your local authority will fund your care. In this case, you might still need to make income-based contributions towards the cost of your care.

A financial assessment will determine the total value of your savings and income (and assets if you require care in a care home).

NHS continuing healthcare and NHS-funding nursing care won’t be affected, and you could still qualify for one of these benefits, depending on your or your loved one’s care needs.

How much can you currently keep before paying for care?

Currently, people in England have to pay for their own care if their savings are greater than £23,250. Assets such as property are also included if care in a care home is needed.

If your savings (and assets if care in a care home is needed) are less than £14,250, your local council will pay for your care. If they're between £14,250 and £23,250, your local council will partially fund your care.

Below, we’ve explained the second part of these rules - the care fees cap.

What Is the Care Fees Cap 2025?

There isn’t currently a cap on care fees in the UK. However, the government has announced that from October 2025, the most anyone will need to spend on their own personal care across their lifetime is £86,000. Once you reach this £86,000 mark, you’ll no longer be required to pay for your care.

The new thresholds mean that if you have savings and income above £100,000, your care will be self-funded until you reach the £86,000 care cap (or the total value of your savings and income drops below £100,000).

This cap was originally due to come into effect in October 2023, but the government has since pushed it back to October 2025.

Nicky Cave - Managing Director at the Eldercare Group - has highlighted that any money spent on your care before the care fees cap is introduced won’t count towards the cap.

What does and doesn’t the care fees cap apply to?

The care cap only applies to money spent on personal care (which encompasses the support provided in residential care homes, nursing care homes and any similar required support). This also includes personal care at home.

Elder care service

Examples of personal care include help with:

  • Getting dressed and undressed
  • Getting in and out of bed
  • Washing and bathing
  • Other personal hygiene tasks
  • Medication management
  • Applying hygiene-related products

However, the care cap doesn’t apply to other costs incurred by receiving care, such as accommodation, utility bills, food and cleaning costs.

If your total savings and income exceed £100,000, once you reach this cap, your local authority will become responsible for meeting your eligible care and support needs. At the same time, you’ll continue paying for accommodation and similar costs.

We’re here to help you find the right care home for you or your loved one. You can request a free list of care homes from our care experts, who will then share homes matching your budget, location and type of care needed. You can also search for a care home through our easy-to-use directory.

When Do These New Rules Come Into Effect?

These new rules for care payments, including the care fees cap, will come into effect in October 2025. They were originally going to come into effect in October 2023 but were pushed back two years by the government.

This was done to steady public spending. Delaying the care fees cap and new thresholds by two years was estimated to save the government around £2 billion.

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How does this cap work in Wales?

These new rules won’t apply to people receiving care in Wales.

However, Wales currently has the most generous thresholds for care-seekers in the UK, with an upper threshold of £50,000 (this increased from £40,000 in 2019) and no lower threshold. This threshold may also change again in April 2024.

How does this cap work in Scotland?

These new rules won’t apply to people receiving care in Scotland.

However, Scotland’s thresholds for local authority-funded care recently increased to £20,250 at the lower limit and £32,750 at the upper limit.

How does this cap work in Northern Ireland?

These new rules won’t apply to people receiving care in Northern Ireland.

The lower threshold will remain £14,250, while the upper threshold will remain £23,250.

Will the Social Care Cap Affect You?

Whether you’re affected by this social care cap depends on the total value of your savings and income (and assets if you need care in a care home).

It could be the case that you previously paid for your own care, but the upper threshold increasing from £23,250 to £100,000 means you now qualify for some level of care funding from your local authority.

A financial assessment will determine whether you qualify for local authority funding and how much.

If you currently pay for your own care and will continue to do so when the new thresholds become active, the £86,000 care cap means that you’ll no longer pay indefinitely, but only until you reach this £86,000 mark.

What These New Care Payment Rules Mean For You and Your Loved Ones

On the face of it, a quadrupling of the upper threshold for care fees (from £23,250 to £100,000) seems incredibly generous.

Our Lottie care experts think it’s important to realise that if your savings and income fall between the thresholds (£20,000 and £100,000), you’ll still be expected to pay a ‘tariff’ contribution. How this is worked out means that people can expect to continue paying large amounts for care without hitting the care cap for quite some time.

Moreover, because of how care costs are worked out, many people can still expect to pay large amounts of money to cover accommodation costs once they reach the £86,000 cap.

We’re on a mission to support individuals and their loved ones throughout each stage of their later living journey. For more information, check out everything Lottie has to offer.

Frequently Asked Questions

What was the cap on care fees in October 2023?

The care fees cap was originally going to be implemented in 2023 before the government decided to push it back two years to reduce public spending in certain areas.

What’s the maximum you have to pay for care home fees?

Currently, there isn’t a maximum amount amount you have to pay for care home fees. Until the care fees cap is introduced, you’ll have to continue paying for as long as you can afford to do so.

You’ll become eligible for local authority funding if your savings, income and assets go below your country’s upper threshold.

Do people with dementia have to pay for care fees?

People living with dementia are expected to pay for some or all of their own care fees if their savings and income are above the lower or upper threshold of their country.

However, some people with dementia may also qualify for NHS continuing healthcare. Your loved one could be eligible for this if they’re assessed as having ‘complex health needs’. If not, they could instead be eligible for NHS-funded nursing care, which is for people who require care in a nursing home.

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Written by our team of experts and designed to help families fund later life care in England.

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