Local authority charges for care and support

In general, a local authority may charge for the services and resources it provides to meet care and support needs, but a charge for care and support services may not be made where:[1]

• an adult's income would reduce below a specified threshold if a charge was made

• charging for a service is prohibited by legislation

• the 'care cap' would be exceeded if a charge for meeting an adult's eligible needs was made (the cap was to be introduced from April 2016, but has been delayed until 2020)

An assessment of an adult's financial resources must be made where that adult is likely to be charged for care and support services.[2]

Regulations state that certain services must be provided free of charge. These include:[3]

• aids and minor adaptations (minor adaptations are those costing under £1000)

• intermediate care and reablement support (these are short-term services intended to enable the adult to maintain or regain the ability to live at home) for up to the first six weeks of a need being assessed

• services provided to a person suffering from variant Creutzfeldt-Jakob disease (CJD)

An authority can only charge for the actual cost it incurs of providing a service, but may not charge for carrying out an assessment.

A carer cannot be charged for services that are provided to the adult they are caring for in order to meet the the needs identified in the carer's assessment.[4]

A financial assessment inquires into an adult's capital and income, to establish whether their resources are over a threshold (the 'upper capital limit') above which the adult must contribute to their care costs. The upper capital limit, and rules on how capital and income are treated are laid down in regulations.[5] The authority must have regard to detailed guidance in Annexes B and C of the Care Act statutory guidance which cover charging and financial assessment.

It is the financial resources of the individual adult with care and support needs that is assessed. Capital or income that belongs exclusively to their partner cannot be counted.

Earnings from employment or self-employment are disregarded, in line with the principle of the Care Act 2014 of promoting independence.[6] Other financial resources that are disregarded are listed in the regulations and include the mobility component of disability living allowance, certain charitable payments, child tax credit, and the pensioner's Christmas bonus.

A 'light touch' financial assessment (ie the authority is treated as having made the assessment) can be made in circumstances where there is clear initial evidence to show that an adult's resources are over or under the capital limits. Where the adult has refused to participate in a financial assessment the authority can be treated as having completed the assessment, and is entitled to conclude that the adult's resources are over the financial limit.[7]

Minimum income

After making any contributions determined following the financial assessment,[8] an adult must be left with the following amounts for their personal use:

• a personal expenses allowance for a care home resident

• a minimum income guarantee equivalent to the level of income support plus 25 per cent for an adult receiving care other than in a care home

Treatment of former home

If a person moves into residential care permanently, the home that they formerly occupied may be counted as capital in the financial assessment.

However, the value of the former home is completely disregarded if it is occupied as their home by the adult's:[9]

• partner, former partner or civil partner (providing they are not estranged or divorced)

• estranged or former partner provided they are a lone parent

• relative who is aged 60 or over, or who is incapacitated

• child who is aged under 18

In order for the home to be disregarded it must have been occupied by one of the above qualifying family or former family members at the point when the adult entered first entered the care home. The disregard cannot be 'activated' by a qualified person moving into the adult's former home subsequent to them having gone into care.[10] The authority has the discretion to disregard the home if anyone else occupies it.

If none of the above conditions apply, the value of the former home is disregarded for 12 weeks from the date that the decision is made to enter residential care permanently. If the former home is sold within the 12-week period, the capital gained from the sale is taken into account as soon as the sale is completed.

Only the value of one former home can be disregarded. If the disregard ceases to apply, the value of the home is assessed using its market value minus any mortgage or loan secured on it and a sum to recognise any expenses involved in selling it (usually 10 per cent of the market value).

Former home and housing benefit

If a claimant moves into a residential care home on a trial basis, for example to see if it is suitable for their needs, with the intention on the day of entry to return to their home if the trial proves unsuccessful, that person can receive housing benefit on their old home for up to 13 weeks.[11] This entitlement is not affected if during that time they decide to stay in residential accommodation permanently.[12]

Where a claimant enters residential care temporarily, for example for respite care, with the intention to return to their original home once the period has ended, they are entitled to housing benefit to pay for the original home for up to 52 weeks.

Where a local authority is responsible for arranging to meet an adult's care/support needs, the adult must have a personal budget,[13] which is a kind of statement of account. This applies even if the adult is responsible for paying for some or all of their own care.

An adult's personal budget is recorded in their care and support plan, and is subject to revision and changes. In one case, the courts held that a local authority did not act unlawfully when reducing the personal budget of a severely disabled adult in an attempt to develop his independence.[14]

The personal budget provides a breakdown of the costs agreed by the local authority in connection with the provision of care/support, and will specify which are care costs and which are daily living costs. The difference is important as only care costs count towards the care cap.

From April 2016, where an authority is not responsible for arranging to meet an adult's eligible care/support needs, and therefore the adult does not have a care and support plan, it will set up an independent personal budget in respect of that adult.[15] This allows a self-funding adult to keep track of what s/he is spending on care, and therefore how much of what is spent counts towards to the care cap (see below).

Many adults with care and support needs are entitled to receive payments from social services so that they can make their own care/support arrangements.[16] This is known as direct payment. Direct payments can be used in situations where social services would otherwise be arranging an adult's care/support.

A direct payment can be made to a person nominated by the adult, or, when an adult does not have capacity to manage direct payments, to an authorised person on her/his behalf.

With the exception of situations where making direct payments is prohibited by legislation, direct payments must be made on the request of an adult or an authorised person if the authority is satisfied that:

• this is an appropriate way to meet needs

• the adult or nominated/authorised person can manage them, either by themselves or with support that is available

• an authorised person will act in the adult's best interests

Direct payments are not liable for tax and are not taken into account in the calculation of means-tested benefits.

In some circumstances, an adult who is assessed as liable to pay for or towards their care and/or support has the right to defer payment until a later date. This applies to home owners whose capital after deducting the amount of their interest in the home would bring them under a specified threshold.[17]

Local authorities also have discretion to offer a deferred payment agreement.

Guidance on deferred payments is available from Gov.uk.

The care cap[18] was to come into effect in April 2016 to limit the total amount an adult should have to pay over their lifetime towards the cost of social care. However, the cap has been delayed.[19]

The cap does not take into account the cost of non care-related expenditure, such as daily living and accommodation.

The authority where an adult is ordinarily resident (or present, if the adult is not settled anywhere) must open a 'care account' for each adult who it has assessed as having eligible care needs from the date the care cap comes into force.[20] All expenditure on social care is recorded in this account, to monitor progress towards the cap. An adult's care account is up-rated for inflation each year, and transfers if they move to a new local authority.