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If you have savings and assets above a certain threshold, you’ll be expected to pay for your own care home costs. The threshold amount varies across countries in the UK. For example, the threshold in England is £23,250.
Some people may consider reducing their assets to qualify for means-tested assistance with care home funding from their local authority. However, if your local authority believes you’ve deliberately deprived yourself of assets, you may have to cover the full cost of your care fees regardless.
Here, we’ve explained how deprivation of assets works and the potential risks involved.
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Deprivation of assets is the act of intentionally reducing your capital, income and assets such as property. Doing this means you don’t technically own these assets anymore, so they can’t be used to pay for your care home fees.
People often gift their possessions to loved ones so they qualify for funding support with paying for care fees, rather than having to pay themselves.
When it comes to the deprivation of assets, people may choose to give away:
When paying for care home fees, the value of assets such as a property will usually decide whether you need to contribute towards the cost of your care.
Whether you have to pay towards the cost of your own care in a care home depends on the total value of your savings, income and any assets such as property.
Before entering a care home, you’ll have a care needs assessment to determine your required care and support. Then, you’ll have a financial assessment (or means test) to review your savings and assets to decide whether you’re entitled to financial assistance from your local authority with paying for care fees.
A deliberate deprivation of assets is where you intentionally deprive yourself of assets to qualify for funding support with care home fees. In England, this means having savings and assets worth less than £23,250.
Deliberate deprivation of assets depends on when you did it. Your local authority will check the timing to see if you were trying to avoid paying for care home fees. For instance, if you reduced your assets when you were likely to need care soon, they might think it was on purpose. But if you were fit and healthy when you did it, they probably won't consider it deliberate.
Another reason that a person might reduce their assets is to avoid inheritance tax on a gifted item, such as a property. The inheritance tax threshold is currently £325,000, so having assets below this amount means you won't have to pay any inheritance tax.
Deliberately depriving yourself of assets can have consequences. For example, if your local authority decides that you’ve intentionally reduced your assets to avoid paying care costs, they may still calculate your fees based on the value of these assets (as if you still owned them, even though you don’t anymore).
There are three ways that your local authority can take action:
Some people may use deprivation of assets to try and avoid paying for care home fees. Many would rather not use their life savings and valuable assets such as property to pay for care home fees.
Whether you qualify for funding support with care home fees depends on how much savings and assets you have, along with where you live in the UK.
In each case, if your savings and assets exceed the upper threshold, you’ll be classed as a self-funder and must pay your own care costs. If your savings and assets are below the lower threshold, you’ll qualify for full funding support from your local authority. You'll qualify for partial funding support if they’re between the upper and lower thresholds.
Here are the UK saving thresholds for care home fees in 2034/24:
|Country||Upper Threshold||Lower Threshold|
Along with giving away a significant asset such as your property, there are other ways to deprive yourself of assets. Whether or not each of these is viewed as a deliberate deprivation of assets is decided by your local council on a case-by-case basis.
When your local authority calculates how much you need to contribute towards care costs, they’ll decide whether you’ve committed an intentional deprivation of assets.
They’ll consider whether you’ve given away any savings or assets to avoid paying for care. If they think you’ve intentionally done so, the value of these assets may still be included in the financial assessment.
If you have any questions about deprivation of assets, it’s best to contact your local authority first. Your local authority or council will make the final decision regarding deprivation of assets, so it’s best to learn everything you can from them first.
Your local council may also be able to provide other assistance with your care funding, such as through a deferred payment agreement.
If you disagree with a decision made by your local authority, we’d recommend seeking expert legal advice. For example, a specialist in community care law will give you or your loved one the best chance of understanding and challenging a decision.
If you’re worried about the costs associated with challenging a decision made by your local authority, you can check if you qualify for legal aid to support with any associated legal fees.
Lottie matches care seekers with the best care homes for their needs. You can request a free care home shortlist from our care experts, who will 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.
It’s a criminal offence to intentionally give away your assets to try and avoid paying care costs. However, deprivation of assets can also be circumstantial, which is why local authorities will often work with people to try and resolve any issues on an individual basis.
A local authority may find you giving away assets such as a property suspicious if you do it just before a financial assessment. This could lead to them believing you’ve deliberately given away assets.
Any assets you’ve deprived yourself of will be reviewed by asking the following questions:
If you disagree with a decision about yourself or a loved one, a complaint can be made to the Local Authority Ombudsman.
If you gift somebody a large amount of money, a property or a similar asset, the recipient will have to pay inheritance tax if you pass away within seven years of gifting these assets.
This has led many people to believe that the deprivation of assets doesn’t apply to any money or assets given away more than seven years ago. However, this isn’t the case.
A local authority can look as far back as they wish when deciding whether you’ve deliberately deprived yourself of assets.
Written by our team of experts and designed to help families fund later life care in England.