If a parent or partner may need care one day, it is natural to think about the family home and savings, and whether giving some away now could protect them. You may have heard that if you gift money early enough, it will not count against you. The rules for care fees are not that simple, and getting this wrong can be costly.
This article explains what “deliberate deprivation of assets” means, how councils look at it, and why there is no straightforward seven-year rule for care. It is general information only, not legal or financial advice. Everyone’s situation is different, so please speak to a regulated adviser before you give anything away.
How care fees are worked out first
When someone in England needs care, the local council carries out a financial assessment, often called a means test, to decide how much they should contribute. In simple terms, it looks at their income and their capital, meaning savings, investments and sometimes the value of property.
There are two capital thresholds, and they have been frozen for several years:
- Upper limit, £23,250. Above this, the person usually pays the full cost of their care.
- Lower limit, £14,250. Below this, capital is ignored, though most income is still taken into account.
- Between the two, a “tariff income” applies. The council treats every £250 of capital above £14,250 as if it produced £1 a week of income.
It is because crossing the upper threshold can mean paying for care in full that some families think about reducing savings or passing on the house. That is exactly the situation the deprivation rules are designed to catch.
What “deliberate deprivation of assets” means
Deliberate deprivation of assets is when someone intentionally reduces their money or property so that it is not counted in the means test, in order to avoid or reduce what they pay towards care. It can take several forms:
- Giving away a lump sum of money as a gift.
- Transferring the deeds of a property to a relative.
- Putting assets into a trust.
- Spending unusually large sums, or buying expensive items that would be excluded from the assessment.
The key word is deliberate. Councils are not looking to penalise people for living their lives or being generous. They are looking at whether assets were moved specifically to dodge a care bill.
How councils assess it
When a council reviews past gifts or transfers, it weighs up the whole picture rather than applying one rigid test. The guidance points to a few questions in particular.
Was avoiding care fees a significant motivation?
The council does not have to prove that avoiding care costs was the only reason for a gift. It only needs to be satisfied that it was a significant reason. So a transfer can still count even if there were other motives alongside it.
What was the timing?
The council will look at when the money or property was given away in relation to when care was needed. A large gift made shortly before moving into a care home naturally invites more questions than something done many years earlier.
Was the need for care foreseeable?
This is often the heart of it. If someone was fit and well, with no reason to expect they would need care, a gift is far less likely to be treated as deprivation. If they already had a diagnosis or were clearly becoming frail, and could reasonably have foreseen needing care and having to contribute, the picture changes.
Why there is no seven-year rule for care
This is the biggest misunderstanding, so it is worth being clear. The seven-year rule belongs to inheritance tax, where gifts can fall outside your estate if you live for seven years after making them. It has nothing to do with care fees.
For care, there is no fixed time limit. A council can look back at a gift or transfer made at any point, whether that is two years ago or fifteen. What matters is not how long ago it happened, but the motivation and whether care was foreseeable at the time. So the idea that you can simply give the house away, wait seven years and be safe is a myth that catches families out.
What a council can do if it finds deprivation
If the council decides that someone deliberately deprived themselves of assets, it has two main options.
- Treat it as notional capital. The council can carry out the means test as if the person still owned the money or property they gave away. In practice that can mean they are assessed as able to fund their own care, even though the asset has gone.
- Recover from the person who received it. In some cases the council can pursue the relative or friend who was given the asset for the value of the care that should have been paid for.
Either way, the family can end up worse off than if nothing had been done, with the added stress of a dispute at an already difficult time.
Legitimate spending is absolutely fine
None of this means an older person cannot enjoy or share their money. People are entitled to spend on themselves and to be generous within reason. Things that are usually perfectly legitimate include:
- Normal day-to-day living costs and bills.
- Reasonable spending on holidays, home improvements or hobbies.
- Modest, regular gifts that fit a long-standing pattern, such as birthday or Christmas money, or a contribution to a family celebration.
- Paying off genuine debts.
The difference is intention and proportion. Buying a sensible new car is one thing; emptying a savings account into gifts the moment care looks likely is another.
Get proper advice before you give anything away
Because there is no simple rule and a lot rests on individual circumstances, this is an area where professional advice genuinely pays for itself. Before making any significant gift or transfer, please speak to someone qualified:
- A regulated financial adviser who specialises in later-life planning. You can find one through the Society of Later Life Advisers (SOLLA).
- Age UK, for free, independent guidance on paying for care.
- Citizens Advice, for help understanding your rights and options.
A short conversation now can save a great deal of money and worry later, and a good adviser will tell you honestly what is sensible and what is likely to be challenged.
Compare local care homes, free
Understanding the money is one part of the picture; finding the right home is the other. CareFinder is a free, independent directory where you can browse and compare care homes near you, including in Birmingham, London and York.
Start comparing local care homes for free on CareFinder and take the next step with a clearer idea of your options.