Few moments hit a family harder than realising that a parent or partner with dementia can no longer manage at home. On top of the grief and the worry comes a question that feels almost impossible to ask: how on earth do we pay for this? Good care is expensive, the rules are confusing, and the system rarely explains itself kindly. This guide walks you through the main ways dementia care is funded in the UK, in plain English, so you can work out where you stand.
This is general information rather than financial advice, and the figures below apply to England (Scotland, Wales and Northern Ireland have their own rules). Where we quote a number, we have checked it against the official source and linked it, but your own situation deserves tailored advice.
Why dementia care is usually means-tested
Here is the part that strikes many families as deeply unfair, and it is worth naming plainly. If your relative had cancer or heart disease, their treatment would be free on the NHS. But dementia is largely treated as a social care need rather than a healthcare one, and social care in England is means-tested. That means most families are expected to pay towards care, sometimes all of it, depending on savings and property.
It feels like a cruel distinction, because dementia is unmistakably a disease. The funding system, sadly, does not see it that way for most people. Understanding the rules is the best way to make sure you claim everything your relative is genuinely entitled to.
The local authority financial assessment
If you ask your council for help with care costs, it will carry out a financial assessment (sometimes called a means test) to work out how much, if anything, it will contribute. The council looks at your relative’s income and capital. Capital includes savings, investments and, in many cases, the value of their home.
In England for 2026/27, the capital thresholds are:
- Above £23,250 — your relative is a “self-funder” and is expected to pay the full cost of their care.
- Between £14,250 and £23,250 — the council helps with some of the cost, but your relative still contributes from income and a sliding charge from their capital (roughly £1 a week for every £250 of capital in this band).
- Below £14,250 — capital is no longer counted towards the cost, though most income is still taken into account. Your relative keeps a small Personal Expenses Allowance, set at £31.80 a week for 2026/27.
These figures are confirmed in the government’s social care charging circular for 2026 to 2027.
What about the family home?
If your relative moves permanently into a care home and no one else qualifying lives there, the home’s value usually counts as capital. But there are important protections. The home is disregarded if a spouse, partner, or a relative over 60 (or who is disabled) still lives there. And for the first 12 weeks of a permanent stay, the council ignores the property value altogether, giving you breathing room before any decisions about selling.
Self-funding
If your relative pays for their own care, it is worth knowing that self-funders often pay more than the council would for the same room, because councils negotiate lower rates. You also have the right to ask your local authority for a care needs assessment even if you will be paying privately. That assessment helps confirm the level of care required and can open doors to advice and, later, council support once savings fall.
It also pays to compare homes carefully on quality and price before committing. You can browse and compare local options free on CareFinder, for example care homes in Bristol, care homes in Glasgow or care homes in Nottingham.
NHS Continuing Healthcare: free care for a primary health need
This is the most important thing many families never get told. If your relative’s needs are primarily about health rather than day-to-day social care, they may qualify for NHS Continuing Healthcare (CHC). If they do, the NHS pays for all of their care, including the full cost of a care home placement, and it is not means-tested.
Some people with advanced dementia do qualify, particularly where there are severe, complex or unpredictable needs around behaviour, communication, mobility or other conditions. Eligibility turns on the nature and intensity of the needs, not the diagnosis itself, and the assessment process is notoriously hard to navigate. It is well worth requesting an assessment, and seeking advocacy support if you are turned down, because the financial difference is enormous. You can read more on the NHS Continuing Healthcare page.
NHS-funded Nursing Care in a nursing home
If your relative does not qualify for full Continuing Healthcare but lives in a nursing home and needs care from a registered nurse, the NHS pays a fixed weekly contribution towards that nursing element. This is called NHS-funded Nursing Care (FNC). For 2026/27 the standard rate is £267.68 a week, paid directly to the home, according to the NHS. It does not cover the whole fee, but it reduces what you pay, and it is not means-tested.
Attendance Allowance and other benefits
Attendance Allowance is a benefit for people over State Pension age who need help with personal care because of illness or disability, including dementia. It is not means-tested, it does not depend on savings, and you do not have to spend it on care specifically. For 2026/27 it is paid at £76.70 a week (lower rate) or £114.60 a week (higher rate, for those needing help day and night), as set out in the government’s benefit and pension rates.
It is one of the most under-claimed benefits in the country, so please do check it. Other support worth looking into includes:
- Pension Credit, which can top up a low income and unlock further help.
- Council Tax reductions, including a disregard where someone is “severely mentally impaired”, which can apply with a dementia diagnosis.
- Carer’s Allowance for a family member providing substantial unpaid care.
Deferred payment agreements: you may not have to sell the home straight away
One of the most distressing fears is having to sell the family home in a hurry to pay care fees. A deferred payment agreement can prevent that. It is an arrangement with the council where it effectively lends the care costs against the value of the property, and the money is repaid later, usually when the home is eventually sold or from the person’s estate. It lets your relative keep the home for now, perhaps to rent out, while care is paid for. Ask your local authority whether your relative qualifies.
Where to get free, trusted advice
You should never have to work this out alone, and you should not pay for basic guidance. These organisations offer free, expert help:
- Age UK — detailed advice on paying for care and a free advice line.
- Alzheimer’s Society — dementia-specific support, including their guide to the financial assessment and a Dementia Support Line.
- Citizens Advice — help with benefits, debt and challenging decisions.
- Your local council’s adult social care team, which must carry out the needs and financial assessments.
It is also worth seeking independent financial advice from an adviser who specialises in later-life care funding, particularly before selling property or buying a care fees annuity.
You are not alone in this
Funding dementia care is one of the hardest financial puzzles a family ever faces, layered on top of real heartache. Take it one step at a time: get the needs assessment, claim Attendance Allowance, ask about Continuing Healthcare, and find out whether a deferred payment could protect the home. Every entitlement you secure is money that stays with your family.
When you are ready to look at the practical side, compare local care homes for free on CareFinder to find the right place, at the right price, for the person you love.