New Rules for Care Home Payments

There has been a lot of confusion around the new rules for care home payments in 2026, with many families expecting major changes to how care is funded in the UK. While reforms were widely discussed in previous years, the reality in 2026 is more nuanced.

This guide explains what has changed, what hasn’t, and what families should understand when planning care home costs in 2026.

Were New Care Home Payment Rules Introduced in 2026?

Despite earlier proposals, no major new care home payment rules came into force in 2026. The care funding system in England continues to operate largely under the existing means-tested framework.

This means families should not assume that care costs are capped or significantly reduced simply because of changes discussed in previous years.

What Was Expected to Change

Earlier government plans proposed reforms designed to reduce the financial impact of long-term care. These included:

• A lifetime cap on personal care costs
• Higher savings thresholds before someone has to pay for their own care
• Greater protection for people with moderate assets

While these proposals generated significant attention, they were not implemented, and families should plan based on the current system.

How Care Home Payments Work in 2026

Care home fees in 2026 are still assessed using a means-tested approach, particularly in England.

Local authorities consider:

• Savings and investments
• Income from pensions or benefits
• The value of property, in some cases

People with assets above the upper threshold are usually expected to self-fund their care, while those below may receive partial or full support.

Are Care Home Costs Capped in 2026?

No. There is no lifetime cap on care home costs in place in 2026. This means care fees can continue for as long as care is needed, which can result in significant long-term costs for families.

This is why early financial planning remains essential.

Does Your Home Still Count Towards Care Costs?

In many situations, the value of a person’s home may still be included in a financial assessment if they move into a care home. However, there are important exceptions, such as when a spouse, civil partner, or dependent relative continues to live in the property.

Understanding how property is treated is a key part of planning care home payments.

What Counts as Capital for Care Fees?

When assessing care home payments, local authorities look at a person’s capital as well as their income. Capital generally refers to savings, assets, and property that can be used to pay for care.

Capital may include:

• Savings held in bank or building society accounts
• Cash and investments, such as ISAs, stocks, or bonds
• The value of property or land (with certain exemptions)
• Premium bonds or similar financial products

Some assets are not usually counted as capital, including:

• Personal possessions, such as jewellery, furniture, or a car
• The value of a home if a qualifying person continues to live there
• Certain types of compensation payments or trust funds

Because rules can be complex and depend on individual circumstances, it’s important to get guidance before making decisions about selling assets or property. Elder’s care funding guidance can help explain how assessments typically work.

In many situations, the value of a person’s home may still be included in a financial assessment if they move into a care home. However, there are important exceptions, such as when:

• A spouse or partner continues to live in the property
• A dependent relative remains in the home

Understanding how property is treated is a key part of planning care home payments.

What This Means for Families in 2026

If you are planning care in 2026, it’s important to:

• Assume care costs are still means-tested
• Understand that no automatic cost cap applies
• Review savings, income, and property early
• Seek advice before making long-term decisions

Families often explore alternatives to care homes when costs are uncertain or long-term affordability is a concern.

Is Care Home Funding the Same as Home Care Funding?

Care home funding and home care funding are based on similar principles, but they are not the same in practice. Understanding the differences can help families make more informed decisions when planning care.

How funding assessments compare

Both care home and home care funding usually involve:

• A care needs assessment by the local authority
• A financial assessment to determine how much a person should contribute

In both cases, councils look at income (such as pensions) and capital (such as savings). However, the way these are applied differs.

Key differences between care home and home care funding

One of the most significant differences is how property is treated:

• When someone moves into a care home, the value of their home may be included in the financial assessment, unless an exemption applies (for example, if a spouse or dependent relative still lives there).
• When someone receives care at home, the value of their home is not counted at all, because they continue living there.

There are also differences in how income is handled:

• People in care homes are usually expected to contribute most of their income towards care fees, keeping only a small personal expenses allowance.
• People receiving care at home are generally allowed to retain more of their income to cover everyday living costs, such as food, utilities, and housing.

Because of these differences, some people who would need to fully self-fund a care home may still be eligible for local authority support for home care, or face lower personal contributions.

Understanding how funding works across different care settings can help families compare options realistically.

Why Home Care Might Be the Better Option for You

For many people, remaining at home with the right level of support can be a positive and practical alternative to moving into a care home.

Evidence from UK care guidance consistently shows that, where needs allow, care at home can support better wellbeing, independence, and continuity of life, particularly for older people with long-term conditions or dementia.

Familiar surroundings and routines

Staying at home allows people to remain in familiar surroundings, maintain daily routines, and stay connected to their local community. This familiarity can:

• Reduce anxiety and distress
• Support emotional wellbeing
• Be especially beneficial for people living with dementia

One-to-one, personalised support

Care at home typically offers one-to-one care, rather than shared support across multiple residents. This can mean:

• Care that adapts closely to personal preferences
• More consistent routines
• Greater dignity and autonomy

Lower risk of confusion and disruption

Moving into a new environment can be unsettling, particularly for older people with cognitive or sensory impairments. Care at home avoids the disruption of relocation, which has been shown to contribute to confusion, withdrawal, or decline for some individuals.

Financial predictability

As care home costs remain uncapped, care at home can offer more predictable and flexible costs, especially when care needs increase gradually over time. Weekly home care arrangements can be easier to plan around than fixed residential fees.

Flexibility as needs change

Home care can scale up or down as circumstances change, without requiring a move. This flexibility allows families to adjust support while preserving stability.

For many families, these factors make care at home - including options such as live-in care - a compelling alternative to residential care when planning for the future.

How Elder Can Help

Elder supports families by providing live-in care at home, helping older people remain in familiar surroundings while receiving the support they need.

Our care specialists can help you understand care costs, compare options, and plan care that works for your family in 2026 and beyond. You can also explore Elder’s care funding guidance to better understand how care may be paid for.

If you’re unsure how the current care home payment rules affect you, speaking to a care specialist can help you understand your options and next steps with confidence.