My understanding is that (in England) between the upper threshold (£23,250) and the lower threshold (£14,250) the person makes a contribution from their income and a tariff against any savings (capital) that are above the lower limit. Below the lower threshold the person still makes a contribution from their income but there is no tariff applicable.
A person with assets above the upper capital limit is responsible for the full cost of their care in a care home (self-funding). A person with assets between the capital limits will pay what they can afford from their income, plus a means-tested contribution from their assets. A person with assets below the lower capital limit will pay only what they can afford from their income.
This is from my Local Authority's guidance on charging and financial assessment:
- Where the adult has capital valued at between £14,250 and £23,250, the financial assessment will include an amount of tariff income. This tariff income will be calculated at a rate of £1 of additional income for every £250 (or part thereof) of capital between £14,250 and the actual value of the adult’s capital
- Where the adult has capital valued at less than £14,250, the entire value of that capital will be wholly disregarded for the purpose of financial assessment
Certain things are disregarded from the calculation, notably a house that a spouse or partner still lives in, half of occupational pension that has been gifted (or deemed to have been gifted) to the partner or spouse, a statutory amount for the Personal Expenses Allowance and a small amount in lieu of Savings Credit.
Personal Expenses Allowance (PEA) is set aside from income. Income could include state pension, any private pension and any benefits. While the lion’s share of these will go towards paying for care, PEA is taken from it for the person to spend as they please. PEA is disregarded from income when calculating how much a person should pay towards care home fees.
When the calculation was done for my wife I wasn't aware of the disregard of 50% of occupational pension but the finance officer deemed that it had been gifted to me. Hence her contribution is her entire state pension plus half of her occupational pension plus a tariff on that portion of her savings that are above the £14,250 threshold less the disregards mentioned above.
The tariff payable if capital is at the upper threshold can be no more than £36 per week (ie 23,250-14,250 = 9,000; 9,000 / 250 = 36) and will reduce as the total capital reduces.
This circular linked below, applies to England for 2024/25. In summary:
- capital limits remain at their current level (lower capital limit £14,250 and upper capital limit £23,250)
- personal expenses allowance (PEA) for local authority-supported care home residents increases in line with inflation
- minimum income guarantee (MIG) for people receiving local authority-arranged care and support other than in a care home increases in line with inflation
- Savings Credit disregards increase in line with inflation. These rates apply to individuals receiving care in a care home, their own home or another setting
Information for local authorities on charging for care and support.
www.gov.uk