New rules for care home payments
Many families search for the new rules on care home payments expecting a big change. Here is what actually changed, what was scrapped, and the rules that apply in 2026.
There are no major new rules for care home payments in 2026. The 86,000 pound lifetime cap on personal care costs, originally due in October 2023 and then October 2025, was scrapped by the government in July 2024 and has not been replaced. The means test still applies: in England for 2025/26 you usually self-fund above 23,250 pounds of capital and the council helps below it. An independent commission into adult social care is reviewing longer-term reform, so the rules may change again, and we update this guide when they do.
At a glance
- The 86,000 pound capScrapped in July 2024, not in force
- Upper capital limit23,250 pounds (England, 2025/26)
- Lower capital limit14,250 pounds (England, 2025/26)
- Your homeStill counts in some cases, disregards apply
- What is changingAn independent commission is reviewing reform
- Last reviewedJune 2026
Were new care home payment rules introduced?
No. Despite years of headlines, the system for paying for a care home in England in 2026 works the same way it has for some time. The reform most people remember reading about, a lifetime cap on care costs, never came into force. The government confirmed in July 2024 that the planned cap and the associated more generous means test would not go ahead, and no replacement has been legislated since.
That matters because many families plan on the assumption that their care costs will stop at a fixed figure. At the moment they do not. What you pay is decided by the means test, and a long stay in a care home remains an open-ended cost unless you cap it yourself with a product such as an immediate needs annuity.
What happened to the 86,000 pound cap?
A cap of 86,000 pounds on lifetime personal care costs was legislated under the Health and Care Act 2022. It was due to start in October 2023, was delayed to October 2025, and was then scrapped altogether in July 2024 when the incoming government decided not to fund it. Alongside it, plans to raise the upper capital limit to 100,000 pounds and the lower limit to 20,000 pounds were also dropped.
Even as designed, the cap only counted spending on personal care at the rate the local authority would pay. Accommodation and food in a care home, often called hotel costs, and any premium for a more expensive home would not have counted toward it. Treat any future cap with the same caution and read what it actually covers.
The rules that actually apply in 2026
| Your capital (England, 2025/26) | What happens |
|---|---|
| Above 23,250 pounds | You self-fund your care fees in full |
| 14,250 to 23,250 pounds | The council contributes, you pay a tariff income from capital |
| Below 14,250 pounds | The council pays, most of your income still goes to fees |
Capital means savings, investments and sometimes property. Income such as pensions is assessed separately, and you keep a small personal expenses allowance each week. The value of your home is ignored in some situations, for example while a spouse or partner still lives there, and for the first 12 weeks of a permanent stay in some cases. Our guide to the care home fees means test covers the detail.
Does your house still count toward care costs?
In many cases, yes. If you move into a care home permanently and nobody in a protected category still lives in your former home, its value can be counted in the means test. There are real protections: the property disregard while a spouse, partner or dependent relative lives there, the 12-week disregard when you first move in, and deferred payment agreements that let you postpone fees against the property instead of selling. None of that changed in 2024 or since.
What might change next
The government has set up an independent commission into adult social care to recommend longer-term reform, with its first phase expected to report in 2026. Possible outcomes range from a new cap to changes in the means test or how care is organised, but nothing is law yet. Be wary of planning around rumoured rules. We keep this page under review and update it when the position changes.
- No cap on care costs is in force in 2026
- The capital limits have been frozen at their current levels for several years
- An independent commission is reviewing the funding system
- Any reform would need legislation and lead time before it took effect
New rules for care home payments: common questions
What are the new rules for care home payments?
There are no major new rules in 2026. The planned 86,000 pound lifetime cap was scrapped in July 2024 and the means test still decides what you pay: above 23,250 pounds of capital in England you usually self-fund, below it the council contributes on a sliding scale.
Is there an 86,000 pound cap on care home fees?
No. The cap was legislated but never started. It was due in October 2025 and was cancelled in July 2024. No replacement cap is currently in force in England.
How much money are you allowed to keep when you go into a care home?
The means test leaves your capital untouched below the lower limit of 14,250 pounds in England for 2025/26, and you keep a small weekly personal expenses allowance from your income. Between 14,250 and 23,250 pounds you contribute a tariff income from capital. Above 23,250 pounds you self-fund.
What assets are exempt from care home fees?
Some things are disregarded in the means test, including a home where your spouse, partner or a dependent relative still lives, personal possessions, and certain compensation or pension arrangements. The rules are detailed, so confirm your situation with the council or a specialist adviser.
Will care home fees wipe out my children's inheritance?
A long self-funded stay can run down an estate, because there is currently no cap on lifetime care costs. Options that protect against the open-ended risk include an immediate needs annuity, which caps the cost for life, and a deferred payment agreement, which avoids a forced house sale. Both have trade-offs and regulated products need FCA-authorised advice.
Are the first 12 weeks in a care home free?
No. England operates a 12-week property disregard, which ignores the value of your former home in the means test for the first 12 weeks of a permanent stay in some circumstances. Other capital and income are still assessed, so it is a disregard of the house value, not free care.
Related guides
Need help with your own situation?
We can introduce you to an FCA-authorised care funding specialist who will look at your circumstances and the options.