Deprivation of Assets – Everything You Need to Know

Deprivation of assets: what is it? And more importantly, how does it affect you? If your local authority is arranging social care for you or your elderly parents, you need to know the rules around deprivation of assets. Keep reading to find out what you need to know.

What is Deprivation of Assets?

If you need social care, such as help at home from a carer or moving into a care home, you have a couple of options. You can select your own care provider and pay for care yourself, or you can go through the local authority and receive social care funding if you’re eligible. If you take the second route, the local authority will assess your finances to work out how much you should pay towards your own care. The more capital (savings, property, and income) you have, the more you’ll have to pay. Deprivation of assets is when someone deliberately reduces their capital (by giving away money or property, for example) to try and avoid paying for their care.

If your local authority deems that you have deliberately deprived yourself of assets, this can affect the funding you receive. For example, they may calculate your care home fees as if you still owned the assets you have given away. However, they will have to prove that your intention in giving away your assets was to avoid paying for your care.

How to Arrange Social Care

The system for arranging social care can be a little confusing, so let’s break it down in simple steps.

1. You contact your local council and request a needs assessment. This assessment is free and anybody can apply to have one.

2. Prepare for your assessment by making some notes – what everyday tasks do you struggle with? What can you manage by yourself? What do you think would help you cope better?

3. If you can, have somebody with you during the assessment. They’ll be able to help you explain things if you’re nervous and make notes for you.

4. A professional e.g. a social worker will conduct the needs assessment in person or over the telephone. They’ll ask you about everyday tasks, such as washing, dressing, and cooking, and how you cope with them.

5. During the assessment, make sure you mention everything you want the assessor to know. This includes any medical conditions, any difficulties with personal care or mobility, and any issues with your home that make things harder.

6. Within a week or so, you’ll get the results of your assessment, which will tell you what support the council can arrange for you.

Social Care Funding

If the needs assessment concludes that you need social care, you’ll have a financial assessment (also called a means test) later on. This will determine whether the council will pay for your care in full or in part, or whether you’ll need to pay for it all yourself.

How much funding you’ll receive will depend on how much capital you own. This includes your:

• Savings
• Property
• Earnings
• Benefits
• Pensions

The system is slightly different depending on which country you live in. In England or Northern Ireland, for example, the council will help you pay for care costs if your capital does not exceed £23,250. This is set to be extended to £100,000 in October 2025. Meanwhile, if your capital is £14,250 or less, you will likely receive full funding from the local authority.

In Scotland, you’ll have to fund your own care if your capital exceeds £29,750. In Wales, the threshold is £50,000.

Deliberate Deprivation of Assets

Some people try to spend more money or give away property before their financial assessment, in order to receive more council funding towards the cost of their care. However, this will not work, as the assessment can also ask you about things you used to own. If it turns out that you have given away money or property deliberately with the intention of avoiding social care costs, you may receive less council funding – or possibly none at all! The council can also look at things you’ve given away in the past, if they can prove that you had a reasonable expectation that you would later need care and support.

If you are moving into a care or nursing home, your house can be counted as part of your capital, unless your partner or a close relative over 60 or under 16 continues to live there. Your house will not count towards your capital until 12 weeks after you move into a care or nursing home. Personal possessions such as art, jewellery, and vehicles are not included in the assessment either.

What Counts as Deprivation of Assets?

The rules around deprivation of assets can be confusing. Next, we’ll look at some example scenarios and tell you whether they would count as deliberate deprivation of assets.

Example 1.

A few days before moving into a care home, Mrs A buys a necklace worth £1,000 using money from her savings and gives it to her daughter.

This could be considered deliberate deprivation of assets because the money she spent would have been included in the financial assessment. In this case, the necklace would be considered ‘notional capital’ and would result in less financial support from the local authority for Mrs A’s care home fees.

Example 2.

A few days before moving into a care home, Mrs B gives her daughter a necklace worth £1,000 that she had owned for several years.

This would not be considered deliberate deprivation of assets because personal possessions are not taken into account during the financial assessment.

Example 3.

Mr C gives his son a gift of £3,000 to put towards a house deposit. The money comes from Mr C’s savings. Mr C is fit and healthy when he gives his son the money but a month later, he is diagnosed with a terminal illness and needs to move into a care home.

This would not be considered deliberate deprivation of assets, as Mr C had no reason to expect he would need social care when he gave the gift.

Example 4.

Mr C gives his son a gift of £3,000 to put towards a house deposit. The money comes from Mr C’s savings. Mr C gives his son the gift a month after he is diagnosed with a terminal illness and shortly before he is due to move into a care home.

This could be considered deliberate deprivation of assets, as the local authority could view the gift as an attempt to reduce the amount he would have to pay in care home fees.

The Myth of the 7 Year Rule

If you’re familiar with the rules on Inheritance Tax, you might be familiar with the ‘7 year rule’. Essentially, if you give someone a gift like a property or a large sum of money, the recipient will have to pay inheritance tax if you die within seven years of gifting it. For this reason, many people believe that deprivation of assets will not apply to any capital they gave away more than seven years ago. However, no such rule exists.

In fact, the local authority can look as far back as they like when deciding whether you have deliberately deprived yourself of assets. Whether you gave away an asset last week or ten years ago, it could still be subject to Deprivation of Assets rules. It all depends on your health at the time of the gift and your intentions in giving the asset away.

More Advice

The process of arranging social care can be stressful – and it can take a rather long time too. If you are worried about a vulnerable relative or friend, a Careline Alarm can put everyone’s mind at ease. Careline Alarms can also help your loved one stay independent at home for longer.

Every Careline alarm comes with a lightweight, water-resistant, wearable pendant button. Pressing this button will connect you straight away to our UK-based Care Team. From there, one of our trained responders will speak to the alarm user, assess their situation, and send them the help they need. We operate 24 hours a day, 365 days a year to keep thousands of people safe in their homes and on the go.

Find out more about our range of Careline Alarms.

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Editor’s Note: This article was updated on 19th March 2024 to reflect current information.