What Is The 7 Year Rule For Care Home Fees?

This article was reviewed by Sara Chapin, Director of Finance at Lottie, on 26th November 2024, to ensure accurate and trustworthy information for care seekers. Sara Chapin has been a Certified Public Accountant with the National Association of State Boards of Accountancy since 2017. Next review due November 2025.

It’s a common misconception that after seven years, any savings or assets you’ve given away will no longer be considered by your local authority during a financial assessment. However, this isn’t the case, as your local authority doesn’t take the amount of time that’s passed into consideration.

This article explains everything you need to know about the 7-year rule for care home fees.

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What Is the 7-Year Rule For Care Home Fees?

Many people believe that if you gift any of your savings or assets (such as a house) at least seven years before moving into a care home, your local authority will not consider them during a financial assessment.

However, this isn’t the case. Actually, your local authority can look as far back as they wish when deciding whether you’ve deliberately given away savings or assets to meet your country’s funding threshold.

You may have given away savings or assets one year ago, ten years ago or even longer. Your local authority won’t take the amount of time that’s passed into consideration. Instead, they review every case on an individual basis before making a decision.

Financial assessments and care funding thresholds

A financial assessment for care in a care home determines the total value of your savings, income and assets. If you choose to receive care within your own home, assets such as your house aren’t included in the assessment.

The results of this assessment will determine whether you qualify for financial assistance from your local authority to pay for care, or if you’ll need to pay for care yourself.

A financial assessment immediately follows a care needs assessment, and you can arrange a care needs assessment by social services here.

England, Scotland, Wales, and Northern Ireland all have their own savings thresholds. If the total value of your savings and assets is above the upper threshold, you’ll be classed as a self-funder and will need to pay for your own care. If the total value is between the upper and lower threshold, you'll qualify for partial funding support. If the total value is below the lower threshold, you’ll qualify for full funding support from your local authority.

Here are the savings thresholds for 2024/2025:

England

Upper threshold: £23,250

Lower threshold: £14,250

Scotland

Upper threshold: £35,000

Lower threshold: £21,500

Wales

Upper threshold: £50,000

Lower threshold: N/A

Northern Ireland

Upper threshold: £23,250

Lower threshold: £14,250

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.

The 7-Year Rule For Care Home Fees in England, Scotland, Wales and Northern Ireland

The 7-year rule for care home fees is the same throughout the UK. In England, Scotland, Wales and Northern Ireland, a local authority won’t consider how long ago you gave away your savings or assets.

They may still treat this as a deliberate deprivation of assets, regardless of how long ago you gave them away and your whereabouts in the UK.

The 7-Year Rule and Inheritance Tax

Every person in the UK can pass on £325,000 of tax-free inheritance. An additional £175,000 is added if you own a property that you’ll be leaving to your children, stepchildren or grandchildren, for a total of £500,000. Anything above this is taxed at 40%.

People with savings and assets above this amount won’t want their families to receive a large inheritance tax bill and lose a portion of these as a result, so they gift some of their savings and assets to their loved ones, often their children.

When it comes to inheritance tax, the 7-year rule means that no tax is due on any assets or savings you’ve given away if you live for seven years after gifting them. Instead, the assets or savings are treated as belonging to the person you gifted them to.

If the total value of your savings and assets aren’t high enough for inheritance tax to be involved then the 7-year rule doesn’t apply.

We recommend seeking expert and professional advice before making any decisions related to inheritance tax. A financial adviser can provide you with tailored advice.

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You can use our free service to find a care home near you.

We list different types of care homes throughout the UK, including:

Residential care homes - For people who need a little extra support on a daily basis with tasks like getting in and out of bed, getting dressed, washing, bathing and taking certain medications
Nursing homes - For people who need around-the-clock assistance from registered nurses, often due to a medical condition
Dementia care homes - For people living with dementia who aren’t able to live independently at home anymore. Specialist residential dementia care and nursing dementia care are both available

Our care experts have vetted every home we list, so you and your loved ones can feel confident about receiving a fantastic standard of supportive and compassionate care.

Lottie matches care seekers with the best care homes for their needs. You can request a free list of care homes from our care experts, who will share homes that match your budget, location, and type of care needed. You can also search for a care home through our easy-to-use directory.