Lisa Morgan, head of the nursing care fee recovery team at Hugh James Solicitors, considers the financial impact of England’s social care capital thresholds remaining frozen for another year.
The Department of Health and Social Care has confirmed that the capital thresholds used to determine eligibility for local authority-funded adult social care in England will remain frozen for the 2026/27 financial year.
The upper capital limit remains at £23,250 and the lower limit at £14,250—figures that have been unchanged since 2010.
While the announcement may appear administrative in nature, the continued freeze has significant financial implications for individuals requiring care, their families, and the professional advisers supporting them.
A Threshold Frozen in Time
Under the Care Act 2014, individuals with capital above £23,250 are generally expected to fund their own care. Those with capital between £14,250 and £23,250 contribute towards care costs on a sliding scale, while individuals with assets below £14,250 are assessed primarily on their income.
The issue is not simply the level of the thresholds themselves, but the fact that they have remained static for more than 16 years. During that period, inflation has substantially eroded their real value, while property prices and investment portfolios have grown significantly in many parts of the country.
The effect is striking. Using Consumer Price Index (CPI) inflation, the current upper capital threshold of £23,250 would be worth approximately £38,700 had it been uprated since 2010. Similarly, the lower threshold of £14,250 would now stand at around £23,700. Instead, the thresholds remain fixed at their 2010 levels, meaning an increasing number of individuals are being drawn into self-funding arrangements despite having assets that would not traditionally have been regarded as indicative of substantial wealth.
The Financial Impact on Families
For many clients, the prospect of paying for long-term care can have a profound impact on lifetime financial planning.
Residential care costs continue to rise, with nursing home fees frequently exceeding £1,500 per week in some regions. Extended periods of care can therefore erode assets rapidly, affecting retirement planning, inheritance expectations, and intergenerational wealth transfer.
Families are often surprised to discover the extent to which social care is means-tested. A common misconception is that care costs will be met automatically by the NHS or local authority once a person becomes unable to live independently. In reality, ownership of a property or relatively modest savings can place an individual above the funding thresholds.
This can result in difficult decisions regarding the sale of family homes, the liquidation of investments, or the restructuring of financial arrangements to meet escalating care costs.
Implications for Professional Advisers
The continuing freeze places greater emphasis on early financial planning and informed advice.
Professional advisers are increasingly encountering clients seeking guidance on the potential impact of future care costs on retirement resources and estate planning objectives. While advisers must be mindful of the rules surrounding deliberate deprivation of assets, there is significant value in helping clients understand the potential funding landscape well before care becomes necessary.
The interaction between care funding assessments, property ownership, trusts, pensions, inheritance planning and broader wealth management considerations can be complex. Early discussions allow families to make informed decisions rather than reacting during periods of crisis.
Professional advisers can also play an important role in identifying circumstances where individuals may be entitled to support that has been overlooked.
“Many families are understandably reviewing their estate planning following the proposed pension inheritance tax changes, but decisions made purely to save tax can create significant problems later if future care needs are not properly considered.
We are increasingly advising clients to take a balanced approach — one that considers inheritance tax efficiency alongside long-term financial security, potential care costs and the risk of deprivation of assets challenges from local authorities. What may appear to be sensible gifting today can become far more complicated if health circumstances change in later life.”David Hulse, Head of the Independent Financial Planning Department at Hugh James
The Often-Overlooked Role of NHS Continuing Healthcare
One area that remains poorly understood is NHS Continuing Healthcare (CHC).
CHC is a package of care funded entirely by the NHS for individuals whose primary need is a health need rather than a social care need. Crucially, eligibility is not means-tested.
Where a person qualifies, the NHS is responsible for meeting the full cost of their assessed care needs, whether care is delivered in a care home, nursing home or their own home.
Eligibility may arise in cases involving advanced dementia, complex neurological conditions, significant behavioural needs or other circumstances requiring intensive supervision and support. However, the assessment process is often challenging, and many families remain unaware that CHC exists.
For advisers working with older clients, awareness of CHC can be particularly important. In some cases, individuals who have funded their own care may have been eligible for NHS funding and could potentially pursue retrospective reimbursement claims.
A Growing Policy Gap
The ongoing freeze in capital thresholds highlights a broader structural issue within the adult social care system.
Successive governments have recognised the pressures facing social care and the need for long-term reform. However, maintaining funding thresholds at 2010 levels means that more individuals are expected to self-fund care despite the changing economic environment.
As the population ages and demand for care increases, the gap between available state support and the actual cost of care continues to widen. The financial consequences are being felt not only by those requiring care but also by families attempting to preserve financial stability and implement long-term succession plans.
For professional advisers, understanding the social care funding framework is becoming increasingly important. Early identification of potential liabilities, awareness of available funding routes, and collaboration with specialist legal and financial advisers can help clients navigate what is often one of the most significant financial challenges they will face later in life.
Lisa Morgan is head of the nursing care fee recovery team at Hugh James Solicitors
