Local Authority Financial Assessment for Care in England

After the council completes a Care Needs Assessment and confirms your parent is eligible for support, the next step is the financial assessment — the means test that determines how much your parent pays toward their care. This assessment looks at every source of income and every asset your parent holds, and it follows strict statutory rules under the Care Act 2014.

Understanding exactly what the council measures, what is excluded, and what protections exist prevents nasty surprises on the bill.

What the Council Assesses

The financial assessment has two components: capital (savings and assets) and income (pensions and benefits).

Capital includes bank accounts, building society accounts, ISAs, premium bonds, stocks and shares, investment properties, and — in many cases — the family home. The council applies two thresholds:

• Above £23,250: Your parent is a self-funder and must pay the full cost of care
• Between £14,250 and £23,250: Partial council funding, with a tariff income charge
• Below £14,250: Capital is disregarded entirely

Income includes State Pension, occupational pensions, private pensions, annuity income, and most benefits. Attendance Allowance is included as income if your parent receives council-funded care (though it is suspended after 28 days in a care home with council funding). Pension Credit is included. War disablement pensions and their associated supplements are fully disregarded.

How Tariff Income Works

For parents with capital between £14,250 and £23,250, the council adds a notional "tariff income" to their actual income. The calculation: £1 per week for every £250 (or part thereof) above £14,250.

A parent with £18,000 in savings: (£18,000 - £14,250) = £3,750 ÷ £250 = £15 per week in tariff income. This is added to their pension and benefit income to calculate the weekly contribution.

The Personal Expenses Allowance

Every care home resident whose fees are paid or part-paid by the council is entitled to keep at least £31.80 per week from their income as a Personal Expenses Allowance (PEA). This money is for personal spending — toiletries, clothing, newspapers, phone calls — and the council cannot include it in the care fee calculation.

The PEA is a floor, not a ceiling. If the council believes the standard amount is insufficient for your parent's needs (for example, if they have specific disability-related expenses), they have discretion to increase it.

The Minimum Income Guarantee for Home Care

If your parent receives care at home rather than in a care home, the financial assessment uses the Minimum Income Guarantee (MIG) instead of the PEA. For a single person of Pension Credit age, the MIG ensures they retain at least £241.45 per week to cover housing costs, food, utilities, and daily living.

This is a significantly higher protection than the care home PEA, and it means that many people receiving domiciliary care pay a much smaller assessed contribution — sometimes nothing at all.

What to Prepare Before the Assessment

The council's financial assessment officer will request:

• Bank statements for all accounts (typically three to six months)
• Evidence of pension income (State Pension letter, occupational pension statements)
• Details of savings, investments, and ISAs
• Property ownership documents
• Details of any property transfers or gifts made in recent years (to check for deprivation of assets)

Before the assessment, review every account and asset your parent holds. Identify any that should be disregarded — joint accounts where only a share belongs to your parent, personal injury compensation held in a personal injury trust, and certain types of ex-gratia payments.

Disability-Related Expenditure Deductions

If your parent lives at home and receives council-funded care, they can claim deductions for disability-related expenditure (DRE). These are costs directly attributable to their disability that would not be incurred by a non-disabled person — specialist transport to medical appointments, community alarm systems, privately purchased incontinence supplies, or additional heating costs.

The rules on what qualifies as DRE vary between councils. Some accept a wide range of expenses; others apply strict limits. Request the council's DRE policy in writing before the assessment so you can prepare receipts and evidence.

The England Care Funding Guide includes a Financial Assessment Checklist that itemises every category the council will review, plus a section on DRE deductions with example claim schedules.

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