Care Funding, Direct Payments & Personal Budgets Explained

Care funding

Once the person has been assessed, the local authority can charge for the services it arranges. However, only the person receiving the services will be financially assessed. The assessors will ask questions about the person’s financial circumstances to see how much, if anything, they can contribute towards the cost of services

The procedures for charging for care in the person’s own home and the amounts charged vary among local authorities, but charges should always be ‘reasonable’. Government guidance sets out a broad framework for the local authority to follow, so the person can afford to receive services and is not pushed into poverty

The local authority will calculate the cost of the services to be provided (such as home care, meals, transport etc) and then financially assess the person using their own charging policy, to see how much the person can contribute to the cost of the services. The local authority must provide a breakdown of how they worked out the charge

The case for Dementia care funding

If the person with dementia, or their carer thinks that the charge for community care services is unreasonable, or if the person with dementia is unable or unwilling to pay, they should ask the local authority whether it could reduce or waive the charge. A service cannot be discontinued simply because a person is unable to pay

If the person with dementia needs to move into a care home, the local authority will assess the person’s income and savings according to national rules. For further details, see factsheets on

Direct payments and personal budgets

Rather than receive services arranged by the local authority, the person, or their carer, may instead choose to be given a ‘direct payment’ from the local authority, so they can arrange the services themselves. The local authority must be satisfied that the person is willing and able to manage a direct payment, either alone, or with assistance

Direct payments may offer more choice and flexibility, but they can be complicated to handle and rules vary from area to area. The local authority must support that person managing a direct payment, which may be through voluntary or charitable services

If the person lacks the mental capacity to consent to a direct payment, a ‘suitable person’ can act as an agent, and receive and manage the direct payment on their behalf. The suitable person may be an attorney under registered Power of Attorney  a court-appointed deputy, carer, relative or friend. The local authority must be satisfied that the suitable person will act in the best interests of the person with dementia

If your local authority (or your Health and Social Care Trust in Northern Ireland) agrees to fund some or all of your care services, you will be offered the choice of:

  • the council providing the services directly to you
  • receiving direct payments from the council, and arranging and paying for your care and support services yourself

To receive direct payments, you first need to contact your local council or trust to ask them to assess your care needs. How much you get depends on your financial circumstances, and you may need to top it up with money of your own.

Direct payments go straight into your bank, building society, Post Office or National Savings account, but you can’t just spend the money on anything – the council has to be satisfied that it’s going towards legitimate care needs and the services agreed in your care plan.

A care plan is a written agreement between you and your health professional and/or social services to help you manage your health and wellbeing day to day.

The care plan is based on what you want, so you’re in control. All the information in your care plan is private and you can share it as you choose.

You can have a care plan review at least once a year. You can also ask for one if you feel the care plan isn’t working or if other things in your life change.

Direct payments could be for you if:

  • you want to retain or take control of your own care and support services
  • you want more choice in selecting the products and services that meet your specific needs
  • you’re confident with money and paperwork or have people to support you with this
  • you’re happy to keep receipts and invoices and submit these to social services on time

A personal budget is an up-front allocation of funding to meet the person or carer’s eligible needs. The allocation may be:

Retained by the local authority and ‘earmarked’ for the person’s needs

Managed through an individual service fund, which is paid to a third party, such as a care agency

Managed through a user controlled trust, which is run by trustees and spent on the person’s behalf

Directly paid to the person, a carer or suitable person if the person lacks mental capacity.

If the person, or their carer, decides that they want the local authority to retain their personal budget, they should still be involved in deciding which services should be commissioned to best meet their needs

Making a complaint

If the person with dementia, or their carer, has a complaint, it is advisable to try to sort it out with the person they have contact with, such as the assessor or care manager

There may simply have been a failure in communication, or a misunderstanding that can be easily rectified

However, if this is not successful, there is a local authority complaints procedure. The local authority will explain how to use this.

The complaints procedure might be useful if:

There are problems arranging an assessment

There is an unreasonably long wait for an assessment

The services needed are not provided, or are unsatisfactory

If the local authority complaints procedure does not resolve the issue either, you can take your complaint to the Local Government Ombudsman

Are you employing a carer at home? If so, you will need to manage their PAYE and National Insurance as an employer. To minimise the hassle involved, myageingparent has partnered with Taxing Carers to give expert advice and help.

To find out more, call 0208 882 6847 or fill in the form below:

Disclaimer: All services are provided by Taxing Carers and has no responsibility or liability for the services provided by Taxing Carers. All requests and complaints should be addressed directly to Taxing Carers. bears no responsibility for goods and services purchased via third parties featured on this website.

Dave Robinson is a Partner in Albert Goodman Chartered Accountants and a Director of Albert Goodman Chartered Financial Planners and WBW Chartered Financial Planners


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