Many people believe that there is a 7 year rule for care home fees – the idea being that if you transfer money or property 7 years before moving into a care home, your assets will not be considered when calculating care home fees. This guide explains why that is not the case, clarifies exactly what the 7 year rule really means, and explains what a deprivation of assets is and how it relates to care home fees.
The 7 year rule for care home fees is a common misconception around the transfer or assets to avoid care home fees. Some people think that you can transfer money or a property, or offer it as a gift, 7 years before you are likely to move into a care home. They think this means that the property cannot be considered when calculating assets that contribute to care home fees.
This is, in fact, not the case, and can lead to financial consequences. There is no such 7 year rule for care home fees. The 7 year myth likely arose from confusion relating to inheritance tax rules, which do have a 7 year provision.
In the UK, everyone has a tax-free inheritance allowance of £325,000*. Homeowners leaving their property to direct relatives get an additional £175,000, totaling £500,000. Any inheritance above this threshold is taxed at 40%.
The 7 year rule for inheritance tax relates to gifting. Sometimes, to reduce potential inheritance tax, people may choose to give their assets to loved ones. Any gifts given 7 years before death are tax-free and are seen as the recipient’s property.
While there is no such rule for care home fees, this 7 year rule on property and inheritance tax is likely where the confusion stems from.
For care home fees, the relevant concept is actually called a ‘deprivation of assets’, which has some similarities to the 7 year rule, but is a different piece of legislation altogether.
*information correct as of January 2026
Deprivation of assets occurs when someone intentionally reduces their wealth as a way of avoiding care home fees.
The following count as assets:
Care home fees are determined by the total value of a person’s assets. Having fewer assets means more of the fees will be subsidised by local councils.
A deliberate deprivation of assets is a criminal offence. Local authorities can look into such actions, no matter when they occurred. If a council or local authority decides the intention was to avoid care home fees, then they can still treat a property or other assets as if you still own them. They may refuse to subsidise nursing home costs or expect you to still self-fund them, even if you don’t have the physical means to do so.
A deprivation of assets is less about the action taken and more to do with the intention behind that action. If you only give your house to your children to reduce care home fees, this is an intentional deprivation of capital.
Deprivation of assets may include:
Deliberate deprivation of assets is determined by the following:
Authorities will examine the reasoning and circumstances of any change or transfer of finances. As part of their investigation, they may look at bank statements, property records, medical or care records, and your gifting history.
They must establish that there was indeed a disposal of capital, whether the purpose of the disposal was to avoid care home fees, and that the individual had reasonable expectations of needing future care.
Although there are no deprivation of assets loopholes, not every aspect of your spending will be scrutinised or land you in trouble with the authorities. Deprivation of assets does not typically take into account:
There is no limit to how much money you can give away before moving into a care home, provided you have legitimate reasons for distributing your capital. If you weren’t trying to avoid care fees or qualify for benefits, and your actions are deemed to be normal, reasonable and made before care was likely to be needed, the risk of it being declared a deprivation of assets is reduced.
If you have been challenged by authorities for deprivation of assets, but you do not believe that you have intentionally tried to avoid care home fees, you can dispute the decision.
To challenge the decision, you can take the following steps:
The onus is on the authorities to prove deprivation, not you. If intent cannot be clearly shown, the decision may be invalid.
Instead, it’s essential to understand the care funding thresholds in your local region. The thresholds determine how much you may need to contribute towards your care fees. By familiarising yourself with the relevant financial limits in your area, you can better plan for your care costs and avoid unexpected expenses.
|
Country |
Assets Total |
What It Means |
|
England |
Over £23,250 |
You usually pay care home fees in full |
|
£14,250 – £23,250 |
You contribute part of the care costs |
|
|
Below £14,250 |
Maximum support from the local authority |
|
|
Scotland |
Over £35,000 |
You pay care costs in full |
|
£22,000 – £35,500 |
You contribute based on “tariff income” |
|
|
Below £22,500 |
Eligible for maximum funding |
|
|
Wales |
Over £50,000 |
You usually pay all care costs yourself |
|
Below £50,000 |
Council funding available |
|
|
Northern Ireland |
Over £23,250 |
You pay all care fees yourself |
|
£14,250 – £23,250 |
You contribute based on tariff income |
|
|
Below £14,250 |
Costs covered by HSC Trusts |
In 2026, in England, if you have savings and assets that exceed £23,250, you’re typically expected to pay for your care home fees in full.
If your capital falls between £14,250 and £23,250, you will need to contribute to a portion of your care home costs.
Individuals with less than £14,250 will receive maximum government support from their local authority.
In Scotland, if your capital, including savings and assets, is below £22,500, you can qualify for the maximum government support.
If your savings fall between £22,000 and £35,500, the council calculates a contribution you must pay towards based on your capital and income. This is referred to as “tariff income” and is calculated as £1 for every £250 of savings between £22,000 and £35,500.
If your assets exceed £35,000, you will have to pay for your care in full.
In Wales, the main capital threshold for residential care is around £50,000. If you have more than this, you usually pay all costs yourself; if your capital is worth less, the council will help, but you will also contribute from your income.
If your assets fall below £50,000, you can apply for government funding after completing a care home fees assessment.
For those receiving care at home, the threshold in Wales is set at £24,000.
In Northern Ireland, if your assets exceed £23,250, you will have to pay for all your care fees yourself.
For assets between £14,250 and £23,250, you contribute based on “tariff income”. In Northern Ireland, this is determined as £1 of weekly income for care costs for every £250 over £14,250 you have.
If your savings are below £14,250, Health and Social Care (HSC) Trusts cover the costs.
If, having assessed the care home thresholds, you are eligible for funding to help with care home fees, you will need to apply for a financial needs assessment. This is done by your local authority after a care needs assessment.
Following the assessment, you will find out if you are eligible for any benefits and how much this will amount to.
When moving into a care home permanently, the value of your property will usually be included in the means test. If your partner continues to live there, or if a relative lives in the property, then it may be exempt.
Dunham Care Homes offers exceptional care provided by experienced team members in luxury surroundings. We are here to make the transition into a care home as seamless as possible, and can help you or your loved ones to understand care home fees and how they are paid.
Through our residential, dementia, nursing and respite care, our focus is on making the next stage of your life comfortable, with thoughtfully planned interiors, enriching activities, and a care home that feels just like home. Contact Dunham Care Homes today to talk about next steps and how we can support you to move into one of our premium care homes.
