Paying Self-Funded Care Fees

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How To Plan And Pay For Care Fees When Self-Funding

We all hope to enjoy a long and healthy retirement, maintaining our independence.

But this is unfortunately not always possible.

Whether care is required in your own home or in a residential home, the cost of care fees can quickly erode an individual’s wealth.

We are here to guide you through the options available whether you are planning your own care provision, acting as an attorney, or assisting a family member with funding care fees.

So, contact us today:

📞  01522 788887 or


The Big News On Social Care Reform – But What Does It Mean?

In September 2021 the Government trumpeted a new policy on reform for health and social care - more precisely reforming how we are expected to pay for our own care - and the changes to Government funding in the meantime. What does the news mean for everyday people needing good quality advice? Read our article on the news.

In November 2021 the Government provided more clarity about just what does form part of "the cap on paying for social care"... and what doesn't. Yet again we learn how much more we will be paying for our social care. Read our article on the news.
So, contact us today:

📞  01522 788887 or


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What Can We Do For You?

We will consider eligibility for free NHS Continuing Healthcare and NHS Funded Nursing Care, local authority support, and key state benefits.

Once we understand the shortfall between your current income and future care fee expenditure, we can look at what might be the best strategy for your investments and property.

Our aim is always to provide peace of mind during a time when difficult decisions need to be made.

We hold the advanced Long Term Care qualification CF8 which is required by our regulator, the Financial Conduct Authority, to provide advice in this area.

So, contact us today:

📞  01522 788887 or


Key Questions For You

There can be a whole host of questions that you, an Attorney, or a Deputy, may have.

We can answer concerns over how long the money will last.

Each of the ways for paying for care has advantages and disadvantages and their suitability will depend on your situation and what you want to do.

The optimum solution might be one or a combination of these options:

Deferred Payment Arrangement

If your assets are below £23,250, the Local Authority may agree that you can enter a Deferred Payment Arrangement.

With a Deferred Payment Agreement, you do not need to sell your home, but in return, the Local Authority will place a charge on your property and charge you a small amount of interest.

It is a loan to pay for the care costs that is repaid when the person's property is sold or dies.

A Deferred Payment Agreement is a type of Equity Release, it is normally used where you are unable to sell your home quickly enough to pay your own care fees.

If a Deferred Payment Agreement is of interest to you, please do get in touch, we would be happy to give advice on its advantages and disadvantages.

Could I Rent Out My Home?

You could rent out your home to provide an income to pay for some, or all, of the costs of care if it is in a good condition.

The advantages are that your property would potentially benefit from any increase in value as well as give you an income.

The potential disadvantages include difficulties with maintaining the property and tenants, and as a landlord, you would need to consider the safety and other legal requirements for tenants.

This option might cause unintended tax issues, so it would be best to speak with us about your options first.

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Using Income Such As Pensions

If you are able to use your income then this would stop eating into your capital.

However, there aren't many people who can afford to meet the entire cost of care fees simply from their own income.

Equity Release

Equity release schemes enable homeowners aged 55 years or older to release some of the value of their property without the need for selling it or moving elsewhere.

This enables you to use the value of your house to pay for your care fees, or to purchase a care fees plan.

How much you can release depends on several factors such as your age, health, lifestyle, the kind of equity release plan you choose, and how much your home is worth.

Equity Release will have the interest to pay, and the amount raised will need repaying on death or entering a care home permanently.

Retirement Interest-Only Mortgage

The Retirement Interest Only Mortgage is available to people over 55.

It’s a loan secured against your home.

You pay the interest each month, which means the amount you owe doesn’t increase over time.

You can use it for most purposes (including paying off an existing mortgage).

What's more, you don't have to repay the loan until you, or the last remaining borrower, die or move permanently into long-term care.

A Care Fees Plan

A Care Fees Plan (sometimes called an “immediate needs annuity” or “care fees annuity”) is a type of insurance policy.

A Care Fees Plan would generate a guaranteed level of income for life, based on the individual’s state of health, and is free of income tax when paid directly to the care provider.

It can be bought as soon as the need for care fees arises and, as the name suggests, benefits the recipient immediately.

Alternatively, a “deferred needs care fees plan” could be bought which gives more flexibility for those unsure of committing a significant lump sum at an early stage of needing care.

This means there is no reason to "run out of money" and your remaining capital is ring-fenced from future care costs.

These care plans will require you to provide details of your health, but unlike other types of insurance, the worse your health is, the lower will be the cost of the plan.

The amount of income paid out by the annuity each year can be fixed, or you can choose to have it increase by a fixed percentage, or by the rate of inflation.

This is often a good idea as care needs, and costs, are quite likely to rise over time, and if you move care homes, the plan simply moves with you.

Of course, such an annuity will not be the best solution for everyone's individual circumstances.

An example of using a Care Fees Plan can be found in our article - Paying Nursing Home Fees - Simon's Story

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Using Savings, Investments and Selling Your Home

In whatever form - the bank account (which is normally a bad idea), savings accounts, investments, and money from the sale of your home (if that is needed and appropriate).

This might be the right solution, especially if it isn't likely to be a long term need for care in a nursing home.

It might be a better use of the money than a care needs plan.

For any surplus funds that need to be invested, we strongly recommend talking to us about a suitable investment strategy.

We have lots of resources to recommend a suitable range of investments that are low risk and hopefully return income better than current rates of interest from holding the money in the bank.

We look at bonds, gilts, money markets and other opportunities, designed to fit around your care fee needs.

Your home may be the best – or only – asset that you can rely on to pay for care fees over a lengthy period. If equity release or renting isn’t an option, then you might want to consider selling it.

The money raised from selling your home would then benefit from investing into a suitable strategy to make sure it didn’t go down in value unnecessarily and be available to meet your care fee needs at the right times.

Securing A Third Party Top-Up

This is where somebody else, for example, a family member, agrees to top up the amount the local authority will pay for care, to pay the extra needed for a better home of your choice, or for the extra services or facilities that the local authority won't pay for.

The person receiving care from the local authority can’t make payments themselves, which is why it is called a “third party” top-up.

What Our Clients Have Said

"When my mum came out of the hospital and straight to a care home with dementia, my mind was a whirlwind - making sure she was ok, panicking about money. I didn't know where to get help about who was doing what, why, and how to look after things. From my first call to Ian I felt a weight had been lifted from my mind. I owe so much to Ian's service, knowing my mum is being looked after and the bills are paid."

Andrew, Lincoln

What It Means To Be SOLLA Accredited

We have been advising clients on long term care solutions for several years now, backed up not just by professional qualifications but also by the membership of various professional bodies, most notably the Society of Later Life Advisers (SOLLA) and the Personal Finance Society, so we specialise professionally in care fees all the time.

We are proud that Ian Francis is an Accredited adviser with SOLLA. Clients requiring financial planning in their later life benefit from advice that is clear and concise. Such advice comes from an adviser that is suitably qualified and experienced to advise them and manage their financial planning.

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What Happens When I Run Out Of Money?

We know it is a worrying situation and our article “What Happens When I Run Out Of Money?” covers the very difficult area.

What's On Your Mind? Let's Talk...

We offer a free, no-obligation, initial telephone consultation for new clients to answer some initial questions and help you with some first steps.

After that, we will then ask if you would like to set aside more time at a good time of day for you, when we can meet in person, on video, or by phone, whichever is most convenient for you.

If you would like to use our services after our initial telephone call then we charge an hourly fee of £150, including travel time. We can also agree on a fixed fee depending on what you need.

So, contact us today:

📞  01522 788887 or


Important Information

Care fee plans do not guarantee to cover the full costs of the client’s care, care costs are subject to inflation and care needs may increase.

If the cost of care exceeds the income from the plan you will be responsible for paying the difference yourself.

Plans cannot be cancelled or cashed in at any time after the first 30 days.

If the income is paid directly to a registered care provider, the plan benefits from a favourable tax treatment.

Should this tax treatment be changed by HMRC or income be paid to a party other than a registered care provider, some of the income may be subject to tax.

Please note not all care fee advice is regulated by the Financial Conduct Authority.

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Chestnut Financial Services Limited

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The guidance and/or advice contained within this website is subject to the UK regulatory regime. It is therefore targeted at consumers based in the UK. Chestnut Financial Services Limited. Registered in England no 9918363, 2a Sadler Court, Lincoln, LN6 3RG. Authorised and regulated by the Financial Conduct Authority.