Because being below the capital threshold doesn't mean your care is free.
This is one of the easiest parts of care funding to misunderstand.
In England, the upper capital limit is £23,250 for 2026/27.
If your capital is below this amount, you may be eligible for financial help from your local authority with your care home costs.
But the council will still carry out a financial assessment to work out how much you can afford to contribute yourself.
And that assessment doesn't just look at your capital.
It also looks at your income.
So the simplest way to think about it is:
The capital threshold helps determine whether the council may contribute towards your care.
Your financial assessment determines how much you may have to contribute yourself.
That is why someone can be below the £23,250 capital threshold and still receive a bill for several hundred pounds a week.
[Note: This answer covers England and uses the rules and figures for 2026/27. Different rules apply in Wales, Scotland and Northern Ireland.]
Q: What are the capital thresholds in England?
For 2026/27, there are two important figures:
Above £23,250
If your assessable capital is above the upper capital limit of £23,250, you will generally be responsible for the full cost of your care home placement.
Between £14,250 and £23,250
The council may help with the cost.
However, you'll normally be expected to contribute from your assessable income and the council will also calculate an amount called tariff income from your capital.
£14,250 or below
Capital at or below the lower capital limit of £14,250 isn't used to calculate tariff income.
However — and this is the important bit — you may still have to contribute from your income.
Q: What is 'tariff income'?
If your assessable capital is between £14,250 and £23,250, the council treats it as though it provides you with some additional weekly income.
This is called tariff income.
For every £250, or part of £250, that you have above £14,250, the council adds £1 a week to the amount you're treated as having available.
For example, if you had £16,250 in assessable capital, that's £2,000 above the lower capital limit.
That would result in tariff income of £8 a week.
This doesn't mean your savings are actually earning £8 a week. It's simply the formula the financial assessment uses.
Q: What income might I have to contribute?
When the council carries out its financial assessment, it looks at the income that the rules say should be taken into account.
This can include things such as:
- your State Pension
- occupational or private pensions
- Pension Credit
- certain benefits and other income
Not every type of income is treated in the same way. Some income must be fully or partly disregarded, and the treatment of benefits can depend on the person's circumstances.
But for many care home residents, a significant proportion of their pension income will go towards their care fees.
Q: Can you give me a simple example?
Imagine Margaret has moved permanently into a care home.
Her assessable capital is below £14,250.
Her daughter Sarah knows that this is below both capital limits and assumes:
“That's good. Mum won't have to pay for her care.”
Then the council carries out its financial assessment and tells Margaret that she must contribute much of her weekly pension income towards the care home fees.
Sarah thinks something has gone wrong.
But it hasn't necessarily.
Margaret's capital means she won't have to contribute tariff income from her capital.
But her income is assessed separately.
So Margaret may still have to contribute from her pension, while the council contributes towards the remaining eligible cost of her care.
That's the crucial distinction.
Being below the capital threshold does not mean paying nothing.
Q: Does the council take all of my income?
No.
For someone whose care and support in a care home is arranged by the local authority, the financial assessment must leave them with at least a minimum amount for their own personal expenses.
This is called the Personal Expenses Allowance, or PEA.
For 2026/27 in England, the PEA is £31.80 per week.
This is money for the resident's own personal use.
Depending on the person's circumstances, there may also be other amounts that are disregarded.
For example, some people who qualify may benefit from the Savings Credit disregard. For 2026/27, this can be up to £7.30 a week for an individual.
Importantly, this doesn't mean every resident automatically gets an additional £7.30. Whether it applies, and how much is disregarded, depends on the person's circumstances.
Q: So what does it mean when the council says it is 'funding' my care?
It doesn't necessarily mean the council is paying the whole care home bill.
It can mean that the local authority is financially supporting the placement, while you also make a contribution based on your financial assessment.
For example, imagine the eligible cost of someone's care is £900 a week.
Their financial assessment might determine that they can afford to contribute £350 a week.
The local authority would then fund the remaining eligible amount, subject to the applicable arrangements.
So it's perfectly possible for both of these statements to be true:
“The council is helping to fund my care.”
and
“I have to pay towards my care.”
They're not contradictory.
Q: What if I own my home?
This is where things can become more complicated.
A home is a form of capital, but its value isn't always included in the financial assessment.
There are circumstances where the value of a person's main or only home must be disregarded — for example, depending on who continues to live there.
There is also an important protection known as the 12-week property disregard.
Q: What is the 12-week property disregard?
If someone enters a care home permanently and their former main or only home would otherwise be counted as capital, its value must normally be disregarded for the first 12 weeks, provided their other capital is below the upper capital limit and the relevant conditions are met.
This is designed to give people some breathing space rather than forcing an immediate decision about their home at a time of crisis.
But here's the important point:
The house being disregarded doesn't mean the care is free for 12 weeks.
The council ignores the value of the qualifying property when assessing capital during the disregard period.
It can still assess the person's income and require them to make an affordable contribution towards their care.
So:
“My house is disregarded for 12 weeks”
doesn't mean:
“The council pays for everything for 12 weeks.”
Q: Can you give me an example?
Let's go back to Margaret.
Suppose Margaret owns her home and has moved permanently into a care home.
She has relatively little capital apart from the house, and she qualifies for the 12-week property disregard.
For those 12 weeks, the council doesn't include the value of the house when assessing her capital.
But Margaret still receives her pension.
The council can therefore assess that income and ask Margaret to contribute an appropriate amount towards her care.
The local authority contributes towards the eligible balance.
That's why a family can receive an assessment saying:
“The property has been disregarded”
while also receiving a bill for the resident's weekly contribution.
The two aren't inconsistent.
Q: What happens after the 12 weeks?
If no other property disregard applies, the value of the property may then be included in the financial assessment.
If this takes the person's assessable capital above the upper capital limit, it can change how their care is funded.
However, that doesn't necessarily mean the property has to be sold immediately.
Depending on the circumstances, a Deferred Payment Agreement may be available.
This is an arrangement with the local authority that can allow an eligible person to defer some of their care costs, with the amount usually repaid later — for example, when the property is eventually sold or from their estate.
Deferred Payment Agreements have eligibility rules and can involve interest and administration charges, so it's important to ask the local authority for full details.
Q: What happens to Attendance Allowance?
This depends on how the care is being funded.
Attendance Allowance can generally continue if someone is paying the full cost of their care themselves.
However, if the local authority is contributing towards the person's care home costs, Attendance Allowance will normally stop after 28 days of local-authority-funded care.
There are exceptions and the rules can depend on the person's circumstances, so don't assume that Attendance Allowance will automatically continue or stop simply because someone has entered a care home.
It's worth checking with the Department for Work and Pensions when someone's funding arrangements change.
Q: How can I check whether the council has calculated the contribution correctly?
Ask the council for a written breakdown of the financial assessment.
Don't be afraid to ask what each figure means.
In particular, you may want to check:
- how much assessable capital the council has recorded
- whether any capital has been disregarded
- what income has been included
- whether any income should be disregarded
- whether tariff income has been included
- whether the correct Personal Expenses Allowance has been applied
- whether a Savings Credit disregard applies
- how the final weekly contribution has been calculated
If you don't understand something, ask the council to explain it.
A financial assessment can contain a lot of figures, but you should be able to understand how the council arrived at the amount you're being asked to pay.
Q: Are these rules the same throughout the UK?
No.
The figures and rules explained in this PodAnswer apply to England for the 2026/27 financial year.
Adult social care is devolved, so Wales, Scotland and Northern Ireland have their own systems and charging rules.
If you or your family member lives outside England, don't rely on the £23,250 and £14,250 figures without checking the rules that apply there.
Q: What's the one thing I should remember?
Remember this:
Being below the capital threshold doesn't mean your care is free.
The capital thresholds help determine whether you're eligible for financial support from the local authority.
If the council is helping to fund your care, you may still be expected to contribute from your income and, if your capital is between the lower and upper limits, from tariff income too.
So when you hear:
“I'm below the capital threshold.”
Try not to translate that as:
“I don't have to pay.”
A better way to think about it is:
“I may be eligible for help from the council, but the council will still assess how much I can afford to contribute.”
That's the distinction that makes the rest of the financial assessment much easier to understand.
Important
This PodAnswer provides general information about the adult social care charging system in England. It isn't individual financial or legal advice. Care funding can be complex, and the treatment of income, benefits, property and other capital depends on individual circumstances.
The figures above apply to 2026/27 and can change in future financial years. If you're making decisions about someone's care, check the latest guidance and ask the relevant local authority for an individual financial assessment.