What is capital?

Capital includes anything like buildings, land, premium bonds, shares and savings that you own. You may own a property with someone else and unless this is land, the Trust treat you as owning half of it even if you did not pay that much towards it – this will change if there is evidence that you don’t own half.

Savings also count as capital so if you have investments on fixed term, they will not count if the money is not ‘obtainable’. If you can shorten the term of investment and obtain the money (even if this means that you lose the interest) this will count as capital, too.

The rules on what does and doesn’t count as capital can be complicated; some capital can always be left out completely or left out for periods of time depending on the circumstances.

Your main home will not count as capital if you need to stay in a residential care home for a temporary period but if you need to move to residential care permanently, the value of your former home will be considered as capital and taken into consideration for part of the financial assessment. It will not count as capital if any of the following people are living there permanently before your move into a care home:

• A partner, former partner or civil partner (except where the resident is estranged from the partner, former partner or civil partner),
• A lone parent who is the resident’s estranged or divorced partner,
• A relative or a member of the resident’s family who is aged 60 or over,
• A relative or member of the resident’s family who is incapacitated, and
• A relative or a member of the resident’s family who is a child under sixteen whom the resident is liable to maintain.

The Trust also has a general discretion to ignore the value of the premises occupied by any third party where this would be reasonable in the circumstances.

If your capital does not count, this is known as being ‘disregarded’.

How does my capital affect how much I have to pay?

If the Trust finds that you have capital more than £23,250, you will be responsible for paying for all of your residential care accommodation. If they run the service where you will be living, they will set a standard fee but if they don’t, they will charge you what the service charges them.

If your capital is between £14,250 and £23,250, the local Trust will include it when deciding how much you will have to pay. For every £250 over £14,250 you own, they will assess you as being able to pay £1 a week towards the cost of your eligible care needs, which is called ‘tariff income’.

If you have assets that are slightly above the £23,250 upper limit, the local authority will think about how long this may last – they need to plan when your assets will get to be below that limit when working out your charges.

If you have capital below £14,250, it will not count. Depending on your financial assessment, you may not have to make any payment towards your care home costs at all.

What does ‘notional capital’ mean?

Notional capital is capital that may be included in the means test even though you do not have it, so Notional capital may be capital that:

• You could have if you applied for, such as a pension,
• Is paid to someone else instead of you, or
• You have got rid of yourself in an effort to reduce how much you have to pay (‘deprivation of capital’).

Examples of deprivation of capital can include giving money away as a gift, going on expensive holidays and living an extravagant lifestyle (if you did this to deliberately take advantage of the system).

The Trust will look at the timing and motive to assess whether the capital was disposed of deliberately or not, so if the transfer was made after going into care or within six months before going into care, the Trust can retrieve the money that was given away.