What is capital and how will the local authority assess this?

Capital can include buildings, land, premium bonds, shares and savings that you own. You may own a property with someone else. Unless this is land, the local authority treats you as owning half of it, even if you did not pay that much towards it. This will change if there is evidence that you don’t own half.

The rules on what counts as capital and what doesn’t can be complicated. Some capital can always be left out or left out for periods of time depending on the circumstances.

Your main home will not count as capital if you need to stay in a residential care home for a temporary period.

If you need to move to residential care permanently, the value of your former home will be considered as capital and taken into consideration for part of the financial assessment.

However, it will not count as capital if any of the following people are living there permanently before your move into a care home:

• Your partner
• Your ex-partner (as long as you were a couple when you moved into the care home)
• Your ex-partner if they are a lone parent
• A family member aged 60 or over
• Your child who is aged under 18, or
• A family member who is incapacitated.

If your capital does not count, this is known as being ‘disregarded’.

How does my capital affect how much I have to pay?

If the local authority works out you have capital more than £23,250 you will have to pay for all of your residential care accommodation. If they run the service where you will be living, they will set a standard fee. If they don’t, they will charge you what the service charges them.

If your capital is between £14,250 and £23,250 the local authority will include it when deciding how much you will have to pay. For every £250 over £14,250 you own, they will assess you as being able to pay £1 a week towards the cost of your eligible care needs. This is called ‘tariff income’.

If you have assets which are slightly above the £23,250 upper limit, the local authority should think about how long this may last. They need to plan when your assets will be below that limit when working out your charges.

If you have capital below £14,250 it will not count. Depending on your financial assessment you may not have to make any payment towards your care home costs.

What does ‘notional capital’ mean?

Notional capital is capital that may be included in the means-test even though you do not have it.

Notional capital may be capital which:

• You could have if you applied for it, such as a pension
• Is paid to someone else instead of you, or
• You have got rid of yourself, to reduce how much you have to pay (‘deprivation of capital’)

 Examples of deprivation of capital can include:

• Giving money away as a gift
• Going on expensive holidays
• Living an extravagant lifestyle, if you did this to deliberately to take advantage of the system.