Assessment of Financial Resources
Scope of this chapter
This chapter is a summary of the legal requirements in relation to financial assessment. Please note that the information in this chapter reflects the Care Act and not local policy, particularly in relation to the charging of carers and other circumstances where the local authority has discretion.
Amendment
In May 2024, a scope box was added to this chapter to remind users that the information it contains reflects the Care Act and not local policy, particularly in relation to the charging of carers and other circumstances where the local authority has discretion. Following recent Ombudsman decisions, need to know boxes were also added to Section 6, Financial Assessment of People in a Care Home and Section 7, Financial Assessment of People Living in the Community or Other Setting.
The purpose of a financial assessment is to determine whether a person or carer is able to fully fund their own Care and Support / Support and, if not, how much they should contribute towards the cost.
There are 3 possible outcomes following a financial assessment:
- The Local Authority will provide no financial support. In this case the person or carer is self-funding, meaning they must meet the full cost;
- The Local Authority will provide some financial support, but not enough to cover the full cost. In this case the person or carer will be required to contribute the difference; or
- The Local Authority will provide full financial support. In this case the person or carer will not have to make any contribution.
Sections 14 and 17 of the Care Act provide a single legal framework for charging in relation to Care and Support provided in a care home, Care and Support provided in the community and Support provided to carers. As such there are some general principles that apply:
- All financial assessments must be completed in accordance with The Care and Support (Charging and Assessment of Resources) Regulations 2014;
- The detailed guidance in the Care and Support Statutory Guidance should be followed unless there is a good reason to depart from it;
- No person or carer must be charged more than they can reasonably afford to pay;
- People must be provided with specific information and advice about financial assessment (for detail of this advice see Specific Requirements on the Provision of Information and Advice around Finances);
The Care and Support Statutory Guidance also sets out some other important principles about the approach to charging:
- Financial assessments must be comprehensive, to reduce variation in the way that people and carers are assessed and charged;
- Financial assessments must be clear and transparent, so people and carers know what they will be charged;
- The outcome of a financial assessment must promote Wellbeing, social inclusion, and support the vision of personalisation, independence, choice and control;
- The outcome of a financial assessment must support carers to look after their own health and Wellbeing and to care effectively and safely;
- Financial assessments must be completed in a person centred and proportionate way that best meets the needs and situation of the person or carer being assessed;
- The local charging rules must be applied equally so those with similar needs or services are treated the same and anomalies minimised;
- The outcome of a financial assessment should encourage and enable those who wish to stay in or take up employment, education or training or plan for the future costs of meeting their needs to do so;
- The outcome of a financial assessment must be provided in writing to the person or carer in a way that they can understand and they must be made aware of their right to complain; and
- Any financial assessment policy must be sustainable for the Local Authority in the long-term.
The Local Authority must complete a financial assessment when it intends to:
- Meet a persons or carers eligible needs following assessment; or
- Meet a persons or carers urgent needs without an assessment or determination of eligibility; and
- Provide a service that it has the power to charge for; and
- Exercise its power to charge.
Under the Care Act financial assessment takes place after the needs or carers assessment has been carried out and after a determination has been made about both eligibility and ordinary residence.
The Care Act does allow for a financial assessment to take place earlier but if done so the outcome of any financial assessment must not have a bearing on the outcome of the needs/carers assessment or subsequent determination of eligibility for Care and Support/Support services.
The following are the services that a Local Authority is not permitted to make a charge for and therefore should not carry out a financial assessment for:
- Intermediate care for the first 6 weeks (with a power to continue providing with no charge beyond this where the preventative benefits are clear);
- Reablement for the first 6 weeks (with a power to continue providing with no charge beyond this where the preventative benefits are clear);
- Aids and adaptations costing £1000 or less;
- Aftercare services provided under section 117 of the Mental Health Act 1983;
- All Care and Support services provided to a person with a diagnosis of Creutzfeldt-Jacob Disease; and
- Assessment, Care and Support/Support Planning, Review or Advocacy.
Charging rules apply equally to people who live in prison.
A financial assessment should only be carried out for the person who is receiving the chargeable service. This means that where a carer is being supported through the provision of a service to the person, for example respite, it is the person that should be financially assessed, not the carer.
All financial assessments must consider the capital resources and the income elements of the person or carer being assessed. Examples of capital resources include property or money held in a savings account or other investment. Examples of income include private pensions and money paid in benefits.
A standard financial assessment involves the assessor gathering comprehensive information about every element of capital and income before making a determination about the amount someone can afford to pay towards the cost of Care and Support services.
Examples of when a standard assessment will be required include:
- When the person is not clear about their level of resource;
- Where the Local Authority has cause to question the level of resource being declared; and
- Where the levels of capital resource falls somewhere in between the minimum and maximum financial limits, meaning the level of financial support that the Local Authority can provide cannot be accurately determined without a full assessment.
In appropriate circumstances, the Local Authority is not required to carry out a standard assessment and may instead carry out a Light Touch assessment. A light touch assessment is a more proportionate way of establishing whether a person is eligible for financial support from the Local Authority. It does not involve gathering comprehensive information but gathering sufficient information to satisfy the Local Authority that the person or carer is either:
- Eligible for no financial support from the Local Authority; or
- Eligible for full financial support from the Local Authority.
The main circumstances in which a light touch financial assessment may be carried out are:
- Where a person or carer knows they have significant financial resources, does not wish to undergo a full financial assessment and is willing to pay the full cost;
- Where a person or carer has limited capital financial resource and is in receipt of benefits which demonstrate they would not be able to make any contribution to their Care and Support costs; or
- Where the service to be provided has only a nominal charge that a person is able and willing to meet, and whereby doing so would not leave them with an income below the minimum income guarantee limit.
The Care Act permits the Local Authority to conclude that the person or carer's financial resource exceeds the financial capital limit, making them ineligible for financial support from the Local Authority where they have:
- Refused a financial assessment and have the capacity to do so; or
- Refused to co-operate with the financial assessment process and the Local Authority has been unable to complete the assessment adequately.
Where a person subsequently refuses to pay their financial contribution the Local Authority can seek reimbursement of costs owed, but cannot refuse to provide services because it has a duty under the Act to meet eligible needs. See Deprivation of Assets and Enforcement of Debts.
Where the Local Authority feels that the person undergoing the financial assessment lacks the mental capacity to do so, it must consider whether there is another individual who should be involved.
If there is an Attorney (Lasting or Enduring) or a Deputy appointed by the Court of Protection, they must be involved.
Where there is no Attorney or Deputy, but the person is receiving support to manage their finances (either through Appointeeship or informally), it will usually be appropriate to involve that individual in the financial assessment.
If the person receives no support with their finances, or where there is doubt about the suitability of the support they receive, the Local Authority should consider whether there is a need for the appointment of a Deputy prior to carrying out the financial assessment. This will depend on the complexity of the person’s finances. In a simple case, the Local Authority may be able to obtain sufficient information to carry out the financial assessment by other means.
If a Deputy is required, the Local Authority should:
- Seek an agreement from a family member or other suitable person that they will make an application to the Court of Protection; or
- If there is no alternative option, make an application to the Court of Protection itself.
If a person with capacity is known to have support managing their finances (for example has an Appointee), their consent should be sought to involve that individual in the financial assessment.
A person with capacity may also ask the Local Authority to involve anyone else in the financial assessment, and the Local Authority should do so.
The detail of how to charge a person living long term in a care home is different to the model used for people who live in the community or other care settings. The model of financial assessment for every person living in a care home is the same in recognition that the model of care being provided is generally going to be the same (hence there is no need for flexibility).
If a person is staying short term in a care home (8 weeks or less) the Local Authority can decide whether to apply the model of financial assessment used for people living in a care home, or the model of financial assessment used for people living in the other settings. Decision makers should refer to the Care and Support Statutory Guidance – Annex F: Temporary and short-term residents in care homes.
If a person is staying in a care home longer than 8 weeks, but is not expected to stay more than 1 year, they are a temporary resident. A temporary resident should be assessed in the same way as a permanent resident, except that the value of their home should be disregarded.
Where a temporary resident’s property is disregarded, the council should consider whether the Personal Expenses Allowance (see below) is enough to enable them to meet related costs. Allowances should be made for fixed payments like mortgage, rent and council tax, building insurance, gas, electricity and water including basic heating during winter and reasonable property maintenance costs. (CSSG Annex C, paragraph 46 (d))
Every person living in a care home is entitled under the Care Act to retain a minimum disposable income amount called a Personal Expenses Allowance. The Personal Expenses Allowance is not a benefit but the amount of a person's own income that they must be left with after charges have been deducted. This money is for the person to spend as they wish and must not be considered as available to be used to pay towards the cost of and Care and Support they receive.
The Personal Expenses Allowance amount is set by central government and reviewed annually.
The Personal Expenses Allowance is a minimum amount. Whilst the Care Act expects that most authorities will use this amount, it does allow for them to set a higher amount on an individual basis where it considers it appropriate to do so.
A person with Multiple Sclerosis who lives in a care home but has a child still living in the family home with her partner may be granted a higher Personal Expenses Allowance by the Local Authority because it accepts that meeting the needs of the child reduces the amount of disposable income she is able to contribute towards the cost of her Care and Support.
When assessing a person's ability to contribute towards the cost of support in a care home, capital resources should be considered first. If the person has capital in excess of the financial limit, the person is required to pay the full cost and the Local Authority cannot provide any financial support.
Where the capital resources are below the lower threshold, the assessment should consider the person’s income. The person is required to contribute all income above the Personal Expenses Allowance.
A person who has capital resources that exceed the lower threshold but are below the financial limit, is treated as having additional income of £1 per week for every £250 of capital above the lower threshold. This is known as tariff income.
The Local Authority is using the upper and lower financial limits set by central government (in 2023 these are £23,250 and £14,250 respectively). Geoff has £14,750 in savings. The difference between the amount he has and the lower limit is £500. This means he is assessed as having tariff income of £2 per week.
The person is not entitled to financial support from the Local Authority if:
- They have capital exceeding the upper capital limit; or
- They have capital below the upper capital limit but income that, after paying for the cost of Care and Support still exceeds the Personal Expenses Allowance.
Where a person has chosen to live in a more expensive care home, a top-up payment is normally required. This is in addition to any financial contribution that the person may or may not have been assessed to pay. See: Choice of Accommodation and Topping Up.
The way in which the financial assessment is carried out is different where the care and support is received in settings other than a care home. This includes people living in the community in their own homes, in sheltered housing or in supported living placements.
If a person is staying short term in a care home (8 weeks or less) the Local Authority can decide whether to apply the model of financial assessment used for people living in a care home, or the model of financial assessment used for people living in other settings. Decision makers should refer to the Care and Support Statutory Guidance – Annex F: Temporary and short-term residents in care homes.
The Minimum Income Guarantee is the amount of money a person needs to be left with after any charges have been deducted. The purpose of the Minimum Income Guarantee is to ensure the person has sufficient funds for their basic everyday needs, such as food, clothing and utility bills. The cost of non-care related support provided by the local authority (such as meals on wheels, for example) is expected to be paid from the Minimum Income Guarantee.
The government sets the value of the Minimum Income Guarantee in the Regulations. However, a Local Authority is able to set a higher amount in their charging policy if they wish. The amount set by the government differs depending on a number of factors including but not limited to:
- Whether the person lives alone or is part of a couple;
- Whether the person has reached the age at which Pension Credit is payable; and
- Whether the person is severely disabled.
So long as the person is left with the Minimum Income Guarantee the Local Authority can decide how much to charge them taking into consideration their income, capital and personal circumstances. However, this must be done in a consistent, transparent and equitable way so it is important that there is a clear policy about what the Local Authority will or will not charge for in different situations.
Disability Related Expenditure is the amount of money that a person spends to meet needs relating to any disability they have that are not being met by the Local Authority. The Care and Support Statutory Guidance describes the following as all things that could be included as a DRE, but does note that this is not an exhaustive list:
- Payment for a community alarm system;
- Cost of any privately arranged care services, including additional respite, care during the day or overnight care;
- Cost of any specialist items, including washing powders, food to meet a dietary requirement and specialist clothing or footwear;
- Additional utility costs to meet needs, including above average water or heating costs;
- Additional purchase costs associated with disability, including purchase of frequent bedding due to incontinence, or clothing due to increased wear and tear;
- Internet access, for example for people who are blind or partially sighted;
- Reasonable cost of basic garden maintenance, domestic tasks or shopping related to disability and not being met by the Local Authority;
- Purchase, maintenance or repair of disability related equipment, including equipment or transport needed to remain in work and the cost of any equipment hire whilst waiting for Local Authority equipment to be provided;
- Transport costs over and above any mobility component of the Disability Living Allowance or Personal Independence Payment; and
- Health related items that are not available at nil cost on the NHS or by other means.
Recent judgements in the Administrative Court have found that the costs of activities at a day centre were disability related expenditure, as were the costs of a holiday where the person needed to be accompanied by a carer.
If the Local Authority decides not to recognise an expenditure as a DRE, the rationale for this decision should be clearly recorded and communicated to the person.
When assessing a person's ability to contribute towards the cost of support, capital resources should be considered first. If the person is assessed as liable to pay the full cost on account of their capital resources, the Local Authority charging policy may require them to pay the full cost. However (unlike when the care is provided in a care home) it is not required to do so.
If the person is not assessed as liable to pay the full cost on account of their capital resources, their income should be assessed. Once the Minimum Income Guarantee, housing related costs and (if appropriate) DRE have been deducted, the Local Authority is permitted to require all remaining income to be used to pay for the care.
Tariff income will be added to actual income at the rate of £1 per week for every £250 between the lower threshold and the financial limit (in the same way as it is for a person in a care home).
It is important that there is a clear policy about what the Local Authority will or will not charge for in different situations and that it is applied in a consistent, transparent and equitable way.
Where the Local Authority is meeting the needs of a carer by providing a service directly to the carer it has the power to charge them, but does not have to do so.
The Local Authority can under no circumstances charge a carer for a service that is being provided to the person they care for, even if it is of benefit to the carer.
The same charging method applies when charging carers as when charging people who live in the community. However, when charging carers careful consideration should be given as to the proportionality and appropriateness of doing so.
The Care and Support Statutory Guidance states that careful consideration should be given regarding charging carers, as doing so can:
- Give a negative message about the way that the Local Authority values the contribution carers make;
- Impact on their willingness to continue in the role;
- Increase the likelihood that the carer will refuse Support, making them at higher risk of carer breakdown.
The Local Authority has a duty to promote the Wellbeing of carers in the same way that it has a duty to promote the Wellbeing of the person they care for. Any decision it makes about charging a carer should not negatively impact on a carer's ability to look after their own Wellbeing.
The Local Authority should also consider the cost of carrying out a financial assessment with a carer against the cost of the service being provided to them. If the cost of assessment exceeds the cost of the service this could be a false economy.
Where a decision is made to charge a carer the Local Authority should consider a light touch financial assessment as the amounts involved are often significantly less than the cost of services to the cared for person, making a standard financial assessment often disproportionate.
All financial assessments consider the same 2 things:
- Capital
- Income
In both areas there are things that must be included and there are things that must be disregarded. The following is a list of examples from each element of the assessment.
The list is not exhaustive in any way as the number of factors and variables is vast. Any person wishing to know the detail must refer to the Regulations and to the latest version of the statutory guidance and its annexes.
To access the statutory guidance click here.
- Buildings and Land;
- Any main Property (for people living in a care home only);
- Any additional properties (in all cases);
- National Savings Certificates and Ulster Savings Certificates;
- Premium Bonds;
- Stocks and Shares;
- Capital held by the Court of Protection or a Deputy;
- Cash;
- Savings held in building society or bank accounts of any nature;
- Savings held in a trust fund;
- Save as You Earn schemes (SAYE); and
- Unit trusts.
- Employment and Support Allowance (ESA);
- Income Support;
- Jobseekers Allowance;
- Universal Credit;
- Pension Credit;
- Personal Independence Payment (Daily Living Component)
- Maternity Allowance;
- Industrial Injuries Disablement Benefit or equivalent;
- Private pension;
- State pension.
The number of different factors that must be disregarded or partially disregarded is vast. This guidance summarises the most commonly disregarded factors only.
Extensive information about what must be disregarded during a financial assessment can be found in the Regulations and the latest version of the Care and Support Statutory Guidance and its annexes.
In the following circumstances the value of the person's main or only home must be disregarded:
- Where the person is receiving care in a setting other than a care home; or
- If the person's stay in a care home is temporary and they either;
- Intend to return to their home; or
- Are taking reasonable steps to dispose the property and buy a more suitable property to return to.
- Where the person no longer occupies the property but they shared it with;
- Their partner/spouse; or
- Another relative over the age of 60, under the age of 18 or who is incapacitated; and
- That person still lives there.
- Where the person legally owns the property but has no beneficial rights to it (meaning they are not entitled to the proceeds of any sale).
Aside from the situations when the Local Authority must apply a property disregard there are circumstances in which it can choose to apply a discretionary disregard. This must be done in a way that ensures public monies are not being used to maintain a person's assets inappropriately.
Some time ago Bill left his own home to move in with his friend Bob and care for him full time. Bob has now gone into a care home. Bill has nowhere else to go. Bill is not related to Bob so the non-discretionary property disregard does not apply. However, in this situation the Local Authority may agree to apply a discretionary property disregard.
In order to allow a person time to consider fully the options for meeting their long term eligible needs the Regulations under the Care Act 2014 mean that the Local Authority must disregard the value of their main or only home for 12 weeks in the following circumstances:
- When they first enter a care home as a permanent resident; or
- When a property disregard or discretionary property disregard unexpectedly ends because the qualifying relative remaining in the property has died or moved into a care home themselves.
The Local Authority can also choose to apply a discretionary 12 week disregard if there has been a sudden change in the person's financial circumstances.
The following are some examples of income that must be disregarded:
- All earnings through employment or self-employment in all cases;
- The mobility component of the Disability Living Allowance;
- The mobility component of the Personal Independence Payment;
- Direct Payments;
- Guaranteed Income Payments made to veterans under the Armed Forces Compensation Scheme; and
- Working Tax Credits (for people living in the community only).
The Local Authority may choose whether to take disability related benefits into account in the assessment of income. If it does do so, it must also disregard any Disability Related Expenses (DRE).
When considering income and capital only that belonging to the person receiving the care (or the carer providing care) must be considered (not the income or capital of a parent, spouse or child etc).
When assessing financial resources there are some other general rules that apply:
- Where a person has joint beneficial ownership of capital (e.g. property), unless there is evidence as to the split of the share they hold then they should be treated as holding an equal share;
- Where an income is a shared income between 2 or more people, unless there is evidence as to the split of the share then they should be treated as holding an equal share;
- Where something has been included as a capital resource it should not be included again as a source of income or vice versa. For example, where a person has savings and transfers a monthly amount into their bank account this should be counted as capital or income, but not counted twice as both.
Following the financial assessment (whether this was a standard assessment, a light touch assessment or following a refusal of assessment by a person with capacity) the Local Authority must confirm in writing to the person or carer:
- The outcome of the assessment;
- How that outcome has been reached;
- In the case of a person who has had a light touch assessment, how they can request a standard financial assessment if they would like one;
- In the case of a person who has refused an assessment, how they can request an assessment if they would like one;
- In the case of a person or carer who has been assessed as making a contribution, the amount, method and frequency of payment of contribution;
- In the case of a person or carer who has been assessed as self-funding, information about how to arrange services, including whether the Local Authority can arrange them, any arrangement charges and how to request this;
- In the case of a person in a care home with property, information relating to deferred payment agreements;
- Their right to complain and the complaints process;
- Any information and advice (e.g. relating to benefits the person may be eligible to claim or any independent financial advice it may be beneficial for them to access);
- How and when their financial assessment will be reviewed (no less than annually); and
- What they should do if their financial circumstances change.
The Local Authority should provide this information in an accessible way, including meeting with the person face to face if appropriate.
Last Updated: February 12, 2024
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