An introduction to Long-term Care

In the UK, we are enjoying increasingly longer life expectancy because of higher living standards and advances in healthcare. Combined with a declining birth rate, this means our population is ageing. According to the Office for National Statistics (ONS), in mid-2022 there were 1.7 million people in the UK aged 85 years or over. By mid-2047, that number is projected to nearly double to 3.3 million, accounting for 4.3% of the total population¹. While many older people can now expect to live to an advanced age in good health, it is inevitable that a proportion of this group will require additional care as they grow older – which comes at a cost.

With frequent legislative changes and rising care costs to think about, planning for your long-term care needs now is essential to protect yourself and your family down the line.

The cost of staying in a care home depends on where you live and the type of care you need. Recent (2024) figures from Laing Buisson show the average cost of a residential care home in the UK has grown to £949 per week in 2023/24, an increase of nearly 20% from 2021/22. The average cost for a nursing home bed has risen to £1,267 per week, an 18% increase². Costs can be even higher for full-time care at home, so it may make financial sense to move into a care home.

These costs may not be all-inclusive – day trips, entertainment and other services may cost extra, so be sure to check with the care home exactly what’s included in their fee.

For those considering at-home care, this could cost between £23 to £34 per hour (meaning that two hours of care a day at £30 an hour could cost around £20,160 per year)³.

However, you may be entitled to support from your local authority to help you with these costs.

Government funding for care varies across the UK. The amount you receive will depend on the capital you have, but the capital limits are different depending on where you live. Your capital will be assessed by your local authority, who will take into account:

If you require residential care in a care home, you may also be eligible for NHS-funded nursing care which from 1 April 2024 was increased from the standard weekly rate of £219.71 to £235.88⁴. If you live in Northern Ireland, your local Health and Social Care (HSC) trust will make payments of £100 per week, paid directly to the care home⁵.

Personal home care in Northern Ireland is free if you have been assessed as needing it, irrespective of your financial circumstances.

The capital limits differ in Scotland, as shown below:

However, if you are aged over 65 and require residential care in a care home, you may also be eligible for the following NHS-funded nursing care. For 2024/25 these are:

Like Northern Ireland, personal home care is free in Scotland if you have been assessed as needing it, irrespective of how much capital you have.

In Wales, the capital limit varies depending on whether you’re paying for non-residential or residential care.

Non-residential care: if you have less than £24,000, you won’t be expected to use this to pay for your care. If you have assets over this limit, your local authority can charge you in full for the cost of your care up to the maximum weekly charge of £100.

Residential care : if you’re going into permanent residential care, the capital limit increases to £50,000. As you are leaving your property, this may well be included in your means-tested assessment unless certain criteria are met.

In Wales, local authorities must ensure you have at least £43.90 per week for personal expenses, known as the Minimum Income Amount⁶.

If you are entitled to NHS-funded nursing care, the rate in Wales for 2024/25 is £201.74.

Some people with long-term complex health needs qualify for free social care arranged and funded solely by the NHS. This is known as NHS continuing healthcare and can be provided in a variety of settings outside hospital, such as your own home or in a care home.

Your property may be included as capital in your local authority’s assessment, but according to LaingBuisson, the average cost of residential care home is between £27,000 and £39,000, rising to between £35,000 and £55,000 annually when nursing care is included⁷. For those receiving home care, the value of your home will not be counted. If you require residential care, your home will be discounted from the means test if:

If you do need to sell your property, this 12-week deferment gives you time to find a buyer for your property and complete the transaction before you have to start paying fees. During this period, your local authority should assist with your care fees.

If you are thinking of giving your home away, for example to your child or another relative, it may still be counted in the means test. This is because your local authority may count it as ‘deprivation of assets’ – i.e. they may decide you have deliberately gifted your property for the sole purpose of discounting it from their assessment. As a result, you may then have to pay for your care as though you still owned your home.

Long-term care is an expensive necessity, especially if you are paying the entire cost yourself. Paying for care fees can have an impact on the inheritance you’re able leave behind for your family, particularly if your property is included as capital in your means-tested assessment.

Putting in place a power of attorney can give you peace of mind that someone you trust is in charge of your affairs. There are two types of LPA; a personal welfare LPA and a property and financial affairs LPA.

As well as local authority funding, you may be able to get free NHS continuing healthcare (CHC) if you have a disability or complex medical problem. If you have medical needs that you believe may qualify for this support, you should get an assessment to find out if you’re eligible.

There are certain non-means-tested benefits that you may be able to apply for to help you fund your care. Attendance Allowance, which helps to pay the extra costs of having somebody to look after you if you are disabled, as well as the Personal Independence Payment (PIP), could both help you with care costs if your health needs are great enough.

If you are self-funding your care, it’s important to understand all the options available to you so you can make an informed decision. Downsizing or equity release can provide you with a lump sum to fund your care, for example, while you may also be able to use money from savings and investments. Another option could be entering into a ‘deferred payment agreement’ with your local authority, whereby they will lend you the money you need, which you can delay repaying until you decide to sell your property, or until you die.

Before rushing into making arrangements for funding your care, you should check whether you may be able to claim on an existing insurance policy, for example critical or terminal illness cover or a long-term care policy (these are no longer available but you may have taken one out in the past).

We have provided a very rough estimate in this guide, but there are huge regional differences in care costs, and the type of care you require will have an impact what you will ultimately have to pay. Understanding what your care might cost where you live will help you to more effectively plan for your future.

Nobody likes to think about the possibility of requiring long-term care in later life but putting money aside just in case is a sensible option. We can work with you to put together a robust plan for funding your future, including potential care needs, so that you can rest assured that yourself and your family will be protected.

The value of investments and income from them can go down as well as up. You may not get back the original amount invested. Past performance is not a reliable indicator of future performance.

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission