Gifting your home to your children to avoid care fees: what the council can do

When the council works out what you should pay towards your care, it looks at your capital. If you gave something away to reduce what you may have to pay for care, the rules treat you as still having it.

This is called notional capital, meaning an asset you no longer own but are assessed as owning. The council works out its value as if it were actual capital you still hold. In practice the house you signed over to your daughter can be counted in your assessment as though the deeds still had your name on them.

The council looks at why you gave it away. Guidance for England tells councils not to assume you were trying to avoid care charges just because you made a gift, because a gift can have other genuine reasons. Councils should look at 4 things:

1. Whether avoiding care charges was a significant motivation for the gift.
2. When you made the gift.
3. Whether you could reasonably have expected to need care and support at that time.
4. Whether you reasonably expected to contribute to the cost of that care.

Sources: regulation 22 of the Care and Support (Charging and Assessment of Resources) Regulations 2014 and the care and support statutory guidance for England

Good health when you make the gift, or making it years before you need care, is relevant to the questions about timing and what you could reasonably expect. Neither guarantees the gift is safe. If avoiding care fees was a significant reason for it, that's the motivation the test looks for.

You may have heard that once you've given the house away and lived another 7 years, it's out of reach. The care rules don't borrow that figure from inheritance tax.

The 2 rules that deal with gifts before care don't set a look back period or any time limit. One lets the council count a gift as if you still owned it. The other lets it ask the person who received the gift to make up the shortfall. Nothing in either one stops a council questioning a gift made many years before you needed care.

Sources: regulation 22 of the charging regulations and section 70 of the Care Act 2014

Yes, in the right circumstances. This is the rule I'd want every family to understand before a gift is made, because it moves the problem from the parent to the children. It applies when all of these are true:

• You transferred an asset to someone for less than it was worth or for nothing.
• You did it intending to avoid care charges.
• The council has met or is meeting your care needs under its Care Act duties.

The person who received the asset then owes the council the difference between what it would have charged you and what it actually charged.

There are limits on that. Your child can't be asked for more than the benefit they received from the transfer. If you gave the home to more than one person, each is liable in proportion to what they received.

Source: section 70 of the Care Act 2014

If you live permanently in a care home in England and your capital is over £23,250, the council isn't allowed to pay towards your accommodation. You pay the full cost of the care home. There's also a lower limit of £14,250. Capital between the 2 limits is treated as giving you a weekly income, called tariff income, whether or not your savings actually earn it.

The council counts £1 a week for every £250 above £14,250. Any part of £250 counts as a full £250, so even £1 over the lower limit adds £1 a week. That figure is added in when the council works out what you can contribute from your income.

Sources: regulation 12 and regulation 25 of the charging regulations. The 2026 to 2027 charging circular confirms both limits for this year.

Take an example. Someone living permanently in a care home in England has £18k of counted capital and nothing else in question. The chart shows where that sits. The £15 a week it produces is income the council assumes for the assessment. It isn't what their savings earn and it isn't the whole care bill.

Now put a home into that picture. If you live permanently in a care home and your home is counted as capital at more than £23,250, it takes you over the upper limit by itself, whether you still own it or it's treated as notional capital. What matters is the value counted in the assessment, not simply what the house would sell for. So the first thing to settle is whether your home is counted at all.

This is where I'd start, because a gift made to protect the home from a charge it isn't facing adds risk for nothing. The charging rules leave your main or only home out of the assessment in several situations.

If you get care at home, or any care other than a care home place, the value of your main or only home is left out for as long as your care stays outside a care home. If you move into a care home permanently, the rules treat the home like this.

A qualifying relative is your partner, another relative or family member aged 60 or over or incapacitated, or a child under 18. They need to have lived in the home as their main or only home since before you first moved into a care home. The home stays out only while they carry on living there and meet the occupancy conditions. If they moved in later, the council can still choose to leave the home out, but it doesn't have to. It has the same choice where someone else lives there, if it thinks that would be reasonable.

Sources: Schedule 2 to the charging regulations, including paragraph 4

The 12 weeks run from the day you first move into a care home, which gives the family time to work out what to do with the house. Different rules apply if you've been a permanent resident before.

Think about what that means for a couple. If one of you moves into a care home and the other has lived in the home all along, the home is left out while your partner lives there. If your care is provided at home, the home isn't counted. In both cases, for as long as that situation lasts, a gift to the children buys protection you already had. If the purpose was care fees, it also risks the home being counted as yours anyway and your children being asked to pay.

Neither protection is permanent. If your partner stops living in the home, or care at home turns into a permanent care home place, the home can come into the assessment. A gift made at that point sits awkwardly with the guidance's question about whether you could reasonably expect to need care.

Both rules look at why you made the gift. If cutting care fees is the reason, the balance looks like this.

Care fees are only one reason a gift can go wrong. Once the deeds are in your children's names, the home is part of their lives as well as yours. If a child divorces, could the house be part of what's divided? If one runs into debt, could creditors reach it? If one of them dies before you, whose will decides where their share goes? Can you still live there on terms that are written down? There may be tax consequences for you and for them too. Get advice on each of these before you sign anything, because the care rules answer none of them.

1. Who lives in the home. Who lives there with you now and who would still be living there if you moved into a care home? A partner or a relative aged 60 or over who has lived there since before you moved into a care home keeps the home out of the assessment while they stay.
2. Your capital outside the home. Compare your savings and investments with £14,250 and £23,250. That tells you roughly where you'd sit if the home isn't counted.
3. Your honest reason for a gift. If cutting care fees is a significant reason, that's the motivation the guidance tells councils to look at.
4. Any gift already made. Make sure the children who received it understand that they could be asked to pay towards your care, up to the benefit they received.

With those answers in front of you, you'll know whether a gift solves anything or simply moves the risk onto your children.