Running out of money in a care home is one of the biggest fears families face. A parent or relative may have been paying privately for months or years, but care home fees are high, savings are falling, and the family starts to worry: what happens when the money is gone?
The first thing to know is this: someone should not simply be abandoned without care because their savings run down. If they have eligible care needs, the local authority may have to help with funding once their capital falls below the relevant threshold. But this does not always mean everything continues exactly as before. The council will assess needs and finances, decide what it will pay, and may look at whether the current care home is affordable within its budget.
This guide explains what happens when a self-funder’s money runs out in a care home, when to contact the council, how assessments work, whether someone can be asked to move, how top-up fees fit in, and what families can do to avoid a crisis.
If you are already being asked to pay the difference between a council budget and a care home fee, read our guide to care home top-up fees. If you are still paying privately, our guide to self-funding a care home may also help.
Quick answer: what happens when care home money runs out?
If someone is paying for their own care home and their savings fall below the upper capital limit, the local authority may be able to help with care costs. In England, the upper capital limit is currently £23,250. The council will usually carry out a care needs assessment and a financial assessment before deciding how much it will contribute.
However, families should not wait until the money has completely gone. The NHS advises contacting the local council around three months before savings are expected to fall below the upper capital limit. Councils normally provide support from the date they are contacted, not from the date savings first fell below the limit.
Once the council is involved, one of three things may happen:
- the person stays in the same care home and the council contributes towards the fees;
- the person stays, but a third-party top-up fee is needed because the home costs more than the council will pay;
- the council proposes a move to another suitable care home within its budget.
The outcome depends on the person’s needs, the care home’s fees, the council’s personal budget, whether the current home is suitable and affordable, and whether moving would affect the person’s wellbeing.
Do not wait until savings are completely gone
The most important advice is to act early. Many families wait too long because they feel embarrassed, hope the situation will somehow resolve itself, or assume the care home will automatically tell the council. This can create unnecessary stress and possible arrears.
If you think savings may fall below the upper capital limit within the next few months, contact the local authority where the person is ordinarily resident or where the care home placement is being handled. Ask for a reassessment of care needs and finances.
Early contact gives time for:
- a care needs assessment;
- a financial assessment;
- discussion with the current care home;
- review of whether the current placement is still suitable;
- consideration of top-up fees if needed;
- checking whether NHS funding may apply;
- avoiding unpaid care home fees;
- planning calmly rather than in a crisis.
If you wait until the money has run out, the council may not backdate funding to cover the period before you contacted it. This is why early action is so important.
What is the upper capital limit?
The upper capital limit is the amount of capital someone can have before they are usually expected to pay the full cost of their own social care. Capital can include savings, investments and sometimes property, depending on the situation.
In England, the upper capital limit is currently £23,250. If someone has more than this, they are generally treated as a self-funder. Once capital falls below this amount, the local authority may contribute if the person has eligible care needs, although the person may still have to contribute from income and capital.
There is also a lower capital limit in England, currently £14,250. Capital below that amount is usually disregarded in the financial assessment, although income may still be taken into account.
Rules are different in Scotland, Wales and Northern Ireland. If the care home is outside England, check the relevant national and local rules before making decisions.
What counts as capital?
Capital may include:
- bank and building society savings;
- ISAs;
- stocks and shares;
- investment bonds, depending on the type;
- premium bonds;
- cash;
- second homes or land;
- the value of a main home, unless disregarded;
- some other assets.
Income is assessed separately and may include:
- State Pension;
- private pensions;
- occupational pensions;
- benefits;
- rental income;
- some annuity income.
The council’s financial assessment decides what is counted, what is disregarded and how much the person must contribute.
Step 1: Contact the local authority
If savings are falling, contact adult social services at the local council. Explain that the person is currently self-funding in a care home and their capital is approaching the upper capital limit.
Ask for:
- a care needs assessment or reassessment;
- a financial assessment;
- written information about the process;
- an estimated timescale;
- confirmation of what documents are needed;
- advice on whether the current care home fee is likely to be covered;
- guidance on what happens if there is a shortfall.
Keep a written record of when you contacted the council, who you spoke to and what was agreed. If possible, follow up phone calls with an email.
Step 2: Tell the care home early
You should also tell the care home that the resident’s funds are running down. This can feel awkward, but it is better to be honest early than to build up unpaid fees.
Ask the care home:
- Do you accept local authority-funded residents?
- What happens when a self-funder’s money runs down?
- Would you accept the council’s usual rate?
- Would a top-up fee be needed?
- How much might the shortfall be?
- Could the resident remain in the same room?
- What notice period applies if the placement becomes unaffordable?
- Who should the council speak to at the home?
Some care homes are used to this situation and will help families work through the process. Others may be clear that they cannot accept local authority rates without a top-up. The sooner you know, the more options you have.
Step 3: The council carries out a care needs assessment
The council must understand what care the person needs. This may involve reviewing the current care home placement, speaking with care home staff, family members, the resident, social workers, health professionals or others involved in care.
The assessment may look at:
- personal care needs;
- mobility and falls risk;
- cognition and dementia;
- communication;
- nutrition and hydration;
- continence;
- medication support;
- night-time needs;
- mental health;
- social wellbeing;
- risk of harm;
- whether a care home is still required.
If the person is already settled in the care home, the assessment should consider their current needs and the impact of any proposed move.
Step 4: The council carries out a financial assessment
The financial assessment decides how much the person can afford to contribute towards care. The council will usually ask for evidence of income, savings, pensions, property and other assets.
You may be asked for:
- bank statements;
- savings account details;
- pension information;
- benefit letters;
- property information;
- investment statements;
- details of regular expenses;
- power of attorney or deputyship documents if relevant.
If someone else is managing the resident’s money, such as an attorney or deputy, they should cooperate with the assessment and provide accurate information.
Will the person still have to pay something?
Often, yes. Local authority support does not usually mean care becomes completely free. The resident may still be expected to contribute most of their income, such as pensions and certain benefits, towards care home fees. They should usually be left with a small personal expenses allowance for personal items.
The exact contribution depends on the financial assessment and the rules in the relevant UK nation.
Can the person stay in the same care home?
Sometimes yes, sometimes no. The person may be able to stay if the care home accepts the local authority’s rate, if the council agrees the current fee is necessary to meet needs, or if a third party agrees to pay a top-up fee.
Problems can arise when the current care home charges more than the council is willing to pay. For example:
- The care home charges £1,300 per week.
- The council assesses the personal budget at £950 per week.
- The resident contributes from income.
- There is still a shortfall.
- The home may ask for a top-up fee if the resident is to stay.
This does not automatically mean the resident must move. But it does mean the council, care home and family need to discuss whether the current placement is affordable and whether any shortfall can be lawfully and sustainably covered.
What is a personal budget?
A personal budget is the amount the council says is needed to meet the person’s eligible care needs. If the council is arranging a care home, this budget should be enough to pay for at least one suitable care home that can meet those needs.
This is a key protection for families. If the council says the budget is £950 per week, but there is no suitable care home available for that amount, the budget may need to be reviewed. A family should not automatically be expected to pay a top-up simply because the council’s budget is too low to secure suitable care.
Ask the council:
- What is the personal budget?
- How was it calculated?
- Which care home is available within that budget?
- Can that home meet the person’s assessed needs?
- Does it have a real vacancy?
- Is it suitable for dementia, nursing, mobility or cultural needs?
- Is it close enough for reasonable family contact?
What if the current care home costs more than the council will pay?
If the current care home costs more than the council’s personal budget, there are several possible outcomes.
The care home may accept the council rate
Some care homes agree to reduce the fee or accept the local authority rate, especially if the resident has lived there for some time. This is not guaranteed, but it is worth asking.
The council may increase the personal budget
If the current home is the only suitable option, or if moving would create serious risk, the council may need to consider whether the personal budget should be higher. This depends on the person’s assessed needs and available alternatives.
A third-party top-up may be requested
If the family chooses a more expensive home when a suitable cheaper option is available, a third-party top-up fee may be requested. This is usually paid by someone other than the resident, such as a relative.
A move to another suitable home may be proposed
If the current home is more expensive than the council will fund and no top-up is available, the council may propose a move to another care home that can meet the person’s needs within budget.
Can a care home force someone to leave when money runs out?
A care home cannot simply remove someone without following the contract and relevant legal and safeguarding processes. However, if fees are not being paid and no funding arrangement is agreed, the home may give notice under the contract.
This is why early action matters. If the council is contacted early, there is more time to assess needs, discuss funding, negotiate with the care home and avoid arrears.
If the care home threatens notice, ask:
- What does the contract say?
- How much notice is being given?
- Has the local authority been informed?
- Is there a safeguarding concern?
- Has the resident’s mental capacity been considered?
- Where would the person move to?
- Can the move be delayed while funding is assessed?
If the resident is vulnerable and at risk, contact the local authority urgently.
Can the council move someone to a cheaper care home?
The council may propose a move if the current care home costs more than the personal budget and a suitable alternative is available. But a move should not be treated as a simple financial decision.
The council should consider:
- the person’s assessed care needs;
- whether the alternative home can meet those needs;
- the person’s wellbeing;
- mental capacity and best interests if relevant;
- dementia and distress caused by moving;
- family contact;
- continuity of care;
- risks to health or safety;
- the person’s wishes and feelings where known.
If your relative has dementia, advanced frailty, end-of-life needs or strong attachments to staff and routines, explain clearly why a move may be harmful. Ask for this to be considered in the assessment.
What is a care home top-up fee?
A care home top-up fee is an extra payment made when the chosen care home costs more than the council’s personal budget. It is usually paid by a third party, such as a family member.
For example, if the council budget is £950 per week and the care home charges £1,150, the £200 difference may be treated as a top-up fee.
Top-up fees can be useful if they allow someone to stay in a preferred home. But they can also become a long-term financial burden. They may increase over time, and if the payer can no longer afford them, the placement may be reviewed.
Before agreeing to a top-up, read our guide to care home top-up fees.
Can the resident pay their own top-up?
Usually, a top-up fee must be paid by someone other than the resident. This is because the resident’s income and capital have already been assessed. There are limited exceptions, such as during a 12-week property disregard or through some deferred payment arrangements, but these rules are specific.
If the care home or council says the resident can pay their own top-up, ask for the explanation in writing.
What if nobody can pay a top-up?
If nobody can pay a top-up, the local authority must still meet the person’s eligible care needs. It may try to find a suitable care home within its personal budget. If no suitable care home exists at that rate, the council may need to increase the budget.
Families should not feel forced into unaffordable payments. If you cannot pay a top-up, say so clearly and in writing.
You can ask:
- What suitable care home is available without a top-up?
- Can it meet the person’s assessed needs?
- Is there a vacancy?
- How would a move affect the person?
- Has the personal budget been reviewed?
- Has the current care home been asked whether it can reduce the fee?
What if the person owns a home?
Property can make care funding more complicated. If someone moves permanently into a care home, the value of their home may be included in the financial assessment unless a disregard applies.
A property may be disregarded in some situations, such as when a spouse or civil partner still lives there. Other disregards may apply depending on who lives in the property and their circumstances.
If the property is counted but has not been sold, a deferred payment agreement may be relevant.
What is a deferred payment agreement?
A deferred payment agreement is an arrangement where the local authority helps pay care home fees and the money is repaid later, often when the person’s property is sold or after death. The council may charge interest and administration fees, and the property is usually used as security.
This can help someone avoid selling their home immediately, but it does not remove the cost of care. It delays payment.
Ask the council:
- Is a deferred payment agreement available?
- How much will the council pay?
- Will it cover the current care home fee?
- Will it cover any top-up amount?
- What interest is charged?
- What fees apply?
- When must the money be repaid?
- What happens if the property takes time to sell?
Should the family sell the property?
Selling a property to pay for care is a major decision. It may be the right option in some cases, but it should not be rushed without understanding alternatives.
Before selling, consider:
- whether the property is included or disregarded in the financial assessment;
- whether a spouse, partner or qualifying relative lives there;
- whether a deferred payment agreement is available;
- whether renting the property is realistic;
- tax and legal issues;
- power of attorney or deputyship authority;
- family disagreements;
- long-term affordability.
If property is involved, consider getting specialist financial or legal advice before making major decisions.
Can money or property be given away before funds run out?
Families sometimes wonder whether savings or property can be given away to avoid care fees. This is risky. If the local authority believes someone deliberately reduced their assets to avoid care charges, it may treat them as still having those assets. This is often called deprivation of assets.
Examples may include:
- giving away large sums of money;
- transferring a house to family;
- selling property for less than market value;
- making unusual gifts when care needs are foreseeable;
- moving money into someone else’s account.
Not every gift is deprivation. People are allowed to spend their own money and make ordinary gifts. But if avoiding care fees is a significant reason, the council may investigate.
Do not make large transfers without advice.
Could NHS funding apply instead?
Before assuming the only options are private payment, council funding or family top-ups, consider whether NHS funding may be relevant.
NHS Continuing Healthcare
NHS Continuing Healthcare, often called CHC, is a package of care arranged and funded by the NHS for some adults with significant ongoing health needs. It is not means-tested. Savings and property do not decide eligibility.
If someone qualifies for CHC, the NHS may pay for the full care package, including care in a care home. CHC may be relevant where needs are complex, intense, unpredictable or primarily health-related.
It may be worth asking about CHC if the person has:
- advanced dementia with complex needs;
- severe mobility problems;
- complex nursing needs;
- rapidly deteriorating health;
- severe behavioural distress;
- complex medication needs;
- end-of-life needs;
- multiple serious health conditions.
You can read our full guide to NHS Continuing Healthcare.
NHS-funded nursing care
If someone lives in a nursing home and needs care from a registered nurse, but does not qualify for full NHS Continuing Healthcare, they may be eligible for NHS-funded nursing care. This is a contribution paid by the NHS directly to the nursing home.
Ask whether NHS-funded nursing care has been considered, especially if the person is in a nursing home or moving from residential care into nursing care.
What if the person lacks mental capacity?
If the resident cannot understand, weigh up or communicate decisions about care and finances, mental capacity becomes important.
Families should check whether there is:
- a Lasting Power of Attorney for property and financial affairs;
- a Lasting Power of Attorney for health and welfare;
- a deputy appointed by the Court of Protection;
- a need for a best interests decision;
- a social worker involved;
- a need for advocacy.
If the person lacks capacity and a move is being considered, the decision should be made in their best interests. This should include their wishes, feelings, needs, risks, family views and the likely impact of moving.
What if family members disagree?
Money running out can create family conflict. One person may want to pay a top-up to keep a parent in the current home. Another may feel it is unaffordable. Someone else may want to sell a property, while another wants to rent it out.
Try to separate emotional concerns from practical decisions:
- What does the resident need?
- What can the council fund?
- What does the care home charge?
- Is a top-up affordable long term?
- Who has legal authority to manage finances?
- Would moving harm the resident?
- What advice has been received?
If there is a power of attorney, the attorney must act in the person’s best interests, not in the interests of the wider family or inheritance.
What documents should you gather?
When contacting the council, it helps to prepare documents early.
You may need:
- care home contract;
- current weekly fee statement;
- recent invoices;
- bank statements;
- savings and investment details;
- pension statements;
- benefit letters;
- property information;
- power of attorney documents;
- care plans or assessment notes;
- medical information relevant to care needs;
- records of falls, hospital admissions or changes in condition.
Keeping clear records can speed up assessment and reduce confusion.
What should you say to the council?
You can use wording like this:
“My relative is currently self-funding in a care home. Their savings are expected to fall below the upper capital limit within the next few months. We need a care needs reassessment and financial assessment, and we need to understand whether the local authority can help fund the current placement.”
Then ask for the next steps in writing. If the situation is urgent, explain why. For example, the care home may be asking for confirmation of funding, fees may soon become unaffordable, or the person may be at risk if the placement breaks down.
What should you say to the care home?
You can say:
“The resident’s savings are reducing and we have contacted the local authority for a financial assessment. Please confirm whether you accept local authority-funded residents, whether you would accept the council rate, and whether any top-up fee may be needed.”
Ask for the care home’s position in writing. This helps avoid misunderstandings later.
Common mistakes families make when care home money runs out
Waiting too long to contact the council
This is the biggest mistake. Contact the local authority before savings fall below the upper capital limit, not after the money is gone.
Assuming the current care home will automatically be funded
The council may not agree to pay the full current fee unless it considers the cost necessary to meet needs.
Agreeing to a top-up without checking affordability
Top-ups can last for years and increase. Do not agree unless you understand the long-term commitment.
Ignoring NHS funding
If the person has complex health needs, ask whether NHS Continuing Healthcare or NHS-funded nursing care should be considered.
Letting arrears build up
If fees are becoming unaffordable, speak to the care home and council early. Arrears can make the situation more stressful.
Transferring assets without advice
Giving away money or property to avoid care fees may be treated as deprivation of assets.
Checklist: what to do before money runs out
- Work out roughly when savings may fall below the upper capital limit.
- Contact the local authority around three months before that point.
- Request a care needs assessment or reassessment.
- Request a financial assessment.
- Tell the care home that funds are running down.
- Ask whether the home accepts local authority funding.
- Ask whether a top-up fee may be needed.
- Check whether NHS Continuing Healthcare may apply.
- Check whether NHS-funded nursing care may apply.
- Gather bank, pension, property and care home documents.
- Do not sign any top-up agreement unless you understand it.
- Get financial or legal advice if property, top-ups or capacity issues are involved.
Questions to ask the local authority
- When should we apply for support?
- What assessments are needed?
- What documents do you need?
- What is the person’s personal budget?
- How was the budget calculated?
- Will you fund the current care home?
- If not, why not?
- Which suitable care home is available within budget?
- Would a top-up fee be needed?
- Can the personal budget be reviewed?
- Has NHS Continuing Healthcare been considered?
- What happens if the care home gives notice?
Questions to ask the care home
- What is the current weekly fee?
- Are there any arrears?
- Do you accept local authority-funded residents?
- Would you accept the council’s rate?
- Would a top-up fee be needed?
- How much would the top-up be?
- Could the top-up increase?
- What happens if no top-up is available?
- What notice period applies?
- Would moving rooms reduce the fee?
- Who should the council contact?
When to get advice
Consider getting advice if:
- the care home fee is much higher than the council budget;
- a large top-up fee is being requested;
- the resident has dementia and a move is proposed;
- the care home has given notice;
- there are arrears;
- property is involved;
- family members disagree;
- mental capacity or power of attorney is unclear;
- you think NHS Continuing Healthcare may apply;
- you feel pressured to sign something.
Possible sources of help include Age UK, Citizens Advice, a specialist care fees adviser, a solicitor experienced in community care law, or a regulated financial adviser experienced in later-life care funding.
Final thoughts
When money runs out in a care home, the situation can feel frightening, but there is a process. The local authority may be able to help once savings fall below the relevant threshold, but you must contact it early. Do not wait until the money is gone.
The council will assess care needs and finances, then decide what it will contribute. The resident may stay in the same care home, a top-up fee may be needed, or a move to another suitable home may be discussed. If the current home is essential to meet the person’s needs, or if moving would cause serious harm, make that clear during the assessment.
Families should be careful with top-up fees, property decisions and contracts. Ask questions in writing. Keep records. Check whether NHS funding may apply. Get advice if you feel pressured or unsure.
Most importantly, act before the crisis point. Early planning gives the resident the best chance of continuity, dignity and safe care.
For more help, read our guides to care home top-up fees, self-funding a care home, care home fees and NHS Continuing Healthcare.
Frequently asked questions
What happens when savings run out in a care home?
If savings fall below the upper capital limit, the local authority may be able to help with care home costs after carrying out a care needs assessment and financial assessment. The person may still have to contribute from income, and there may be a discussion about whether the current care home is within the council’s budget.
When should I contact the council if care home money is running out?
Contact the council around three months before savings are expected to fall below the upper capital limit. Do not wait until the money has gone, because funding may not be backdated to cover earlier periods.
Will the council pay the full care home fee?
Not always. The council will calculate a personal budget based on assessed needs. This should be enough for at least one suitable care home, but it may be less than the current care home’s fee. If the current home costs more, a top-up fee or move may be discussed.
Can my relative stay in the same care home when money runs out?
Possibly. They may stay if the care home accepts the council’s rate, if the council agrees the higher fee is necessary, or if a third party pays a top-up fee. If none of these apply, the council may look for another suitable care home.
Can a care home evict someone when they run out of money?
A care home cannot simply remove someone without following the contract and proper process. However, if fees are unpaid and no funding arrangement is agreed, the home may give notice. Contact the council early to avoid this situation.
Can the council move someone to a cheaper care home?
The council may propose a move if the current home is more expensive than the personal budget and another suitable home is available. However, it should consider the person’s needs, wellbeing, mental capacity, dementia, family contact and the risks of moving.
What if no one can pay a top-up fee?
If no one can pay a top-up, the local authority must still meet the person’s eligible care needs. It may need to find a suitable care home within budget or review the personal budget if no suitable home is available at that rate.
Can the resident pay their own top-up fee?
Usually not, because their income and capital have already been assessed. There are limited exceptions, such as during a 12-week property disregard or some deferred payment arrangements. Ask the council for written clarification.
What if the person owns a house?
The property may be included in the financial assessment if the person moves permanently into a care home, unless a disregard applies. A deferred payment agreement may allow care fees to be paid and recovered later, often when the property is sold.
Do we have to sell the house immediately?
Not always. Depending on the circumstances, there may be a property disregard, a deferred payment agreement, or the option of renting the property. Get advice before selling, transferring or renting a property.
Can we give money away before care fees are assessed?
Be very careful. If the local authority believes assets were deliberately given away to avoid care charges, it may treat the person as still having them. This is known as deprivation of assets.
Does NHS Continuing Healthcare help if money runs out?
NHS Continuing Healthcare is not based on money. It is based on health needs. If someone qualifies, the NHS may fund the full care package, including care in a care home. It is worth asking about if the person has complex, intense or unpredictable health needs.
What if the care home has already built up unpaid fees?
Contact the care home and local authority urgently. Ask for a breakdown of arrears, explain the funding situation, and request assessments as soon as possible. Get advice before signing repayment agreements or accepting personal liability.
Should I sign a top-up agreement to keep my parent in the same home?
Only if you understand the agreement and can afford it long term. Top-up fees can increase and may last for years. Ask whether a suitable home is available without a top-up and what happens if you can no longer pay.
Where can families get help when care home money is running out?
Start with the local authority adult social care team. You can also seek advice from Age UK, Citizens Advice, a specialist care fees adviser, a regulated financial adviser, or a solicitor experienced in community care law if the situation is complex.
