When families learn that care home fees can run to £1,300 or more per week, one of the first questions that comes up is: can we give away the house, or move money to the children, to avoid paying? It is an understandable instinct. But the rules around what counts as deliberate deprivation of assets are strict, the consequences are serious, and some of the most widely repeated “advice” on this topic is simply wrong.
This guide sets out what the law actually says, what local authorities can and cannot do, what you do not need to worry about, and what options do exist for legitimate financial planning.
At Merling Care, we want families to approach funding decisions with accurate information. Our teams at Glebe House in Staines and Moorland House in Barton-on-Sea can signpost you to specialist financial and legal advice where it is needed.
Deprivation of assets occurs when a person deliberately reduces their capital, income, or property specifically to avoid paying for care, at a time when they could reasonably have foreseen that care might be needed. If a local authority concludes this has happened, it can treat you as if you still own the asset and charge you accordingly.
The rules are set out in Annex E of the Care and Support Statutory Guidance, which local authorities must follow under the Care Act 2014. The core principle is that the financial assessment for care must reflect a person’s true financial position, not a position they have engineered specifically to avoid charges.
Crucially, deprivation of assets is not just about property. It applies to savings, investments, pension income you choose not to draw, and any other capital or income that has been deliberately put beyond the reach of the means test.
No. This is one of the most persistent myths in care funding, and it causes real harm to families who act on it.
The seven-year rule applies to inheritance tax on gifts, where gifts made more than seven years before death may fall outside a person’s estate for IHT purposes. It has no application whatsoever to social care funding.
There is no time limit on how far back a local authority can look when investigating a potential deprivation of assets. A transfer made twenty or thirty years ago could, in principle, be investigated if the council has grounds to suspect that care needs were foreseeable at the time.
What matters is not when the transfer took place, but whether, at the time of the transfer, the person could reasonably have anticipated needing care and support. This is a question of facts and circumstances, not elapsed time.
When assessing whether a deprivation of assets has occurred, the local authority must consider two questions:
1. Did the person know, or could they reasonably have known, that they might need care? A transfer made in good health, with no diagnosed conditions and no foreseeable reason to anticipate care, is less likely to be treated as deprivation. A transfer made shortly after a diagnosis, or at an age where care needs were clearly becoming likely, is much more difficult to defend.
2. Was avoiding care fees a significant reason for the transfer? The guidance is clear that avoiding care costs does not have to be the only reason for a transfer. It simply needs to have been a significant reason. If a gift was made partly for family reasons and partly to reduce assets before a means test, the deprivation rules can still apply.
The local authority must make its decision based on all available evidence and must give clear, reasoned justification for its conclusion. Decisions can be challenged and appealed.
If a local authority concludes that deliberate deprivation has occurred, it has two main options under the Care Act 2014:
Treating the asset as notional capital: The council can treat you as if you still own the asset, even if you no longer do. It includes the value in your financial assessment and charges you accordingly. You may end up being treated as a self-funder and required to pay care costs you do not have the money to meet, because you no longer hold the asset you gave away.
Pursuing the recipient of the transfer: Where a person has transferred an asset to someone else and is then charged as if they still own it, but cannot pay, the council can in some circumstances pursue the person who received the asset for the outstanding debt. This is sometimes called a “transfer of assets” claim under the Care Act.
Refusing to arrange care: In cases where the person is treated as having notional capital above the upper threshold of £23,250, the local authority has no duty to arrange their care, unless they lack mental capacity and have no one to make decisions on their behalf.
Deliberate deprivation is primarily treated as a civil debt matter under the Care Act 2014. In cases involving fraud or dishonest conduct, it may also engage criminal law. Local authorities can apply for county court judgements against individuals found to have deliberately deprived themselves of assets.
The guidance is equally clear that many everyday financial decisions are not deprivation of assets, and local authorities should not treat them as such. These include:
The key principle throughout is intentionality and foreseeability. Ordinary life decisions made in ordinary circumstances are not deprivation.
Alongside the seven-year myth, a number of other rules are widely repeated online but have no basis in social care law:
The six-month rule: There is no six-month rule. This appears to derive from misremembered advice and has no legal foundation.
The “you can give away 10% each year” rule: There is no such rule. This appears to be a confusion with HMRC’s annual gift allowance for inheritance tax, which has no relevance to care funding.
Tenants in common as automatic protection: Changing a property from joint tenants to tenants in common can be a legitimate part of estate planning, but it does not automatically protect the value of your share from care funding assessment. The timing, motivation, and circumstances matter.
None of these have any legal standing in the social care context. Relying on them can leave families in serious financial difficulty.
The law does not prevent sensible financial planning. What it prohibits is planning that is specifically and primarily designed to avoid care costs while expecting public funding to cover care instead. There are options available, but they should always be pursued with independent specialist advice:
Independent financial advice on care funding: A qualified financial adviser who is a member of the Society of Later Life Advisers (SOLLA) can help families understand all the legitimate funding routes, including equity release, immediate needs annuities, and deferred payment agreements. This is the right starting point for anyone planning ahead.
Deferred Payment Agreements: If your property would otherwise need to be sold to fund care, a Deferred Payment Agreement with your local authority allows you to defer the cost against the equity in your home, without selling. This does not involve giving anything away. It is a legitimate, council-supported arrangement. We cover this in detail in our guide: Who Pays for Care Homes? Funding and Local Authority Support Explained.
Lasting Power of Attorney: Ensuring that a trusted family member has Lasting Power of Attorney for property and financial affairs is not an asset protection strategy, but it is essential planning. It allows decisions to be made on your behalf if you lose capacity, and removes a significant source of stress for families during the care process.
Wills with protective trusts: A properly drafted will, prepared well in advance with a specialist solicitor, and with multiple legitimate estate planning purposes, can provide some protection for assets after death. The critical point is that the planning is done in good health, with clear documented purpose, long before care is foreseeable.
Local authority decisions on deprivation of assets can be challenged. The guidance requires councils to make decisions based on clear evidence and to provide reasoned justifications that can be scrutinised. The process for challenging a decision is:
Specialist solicitors who practise in community care law can advise on the strength of a challenge and assist in preparing it. Age UK’s Factsheet 40, updated September 2025, provides detailed guidance on the deprivation of assets rules and how to challenge incorrect decisions.
The most important thing families can take from this guide is that early, honest, transparent planning is always better than last-minute asset transfers. The people most affected by deprivation of assets findings are not those who planned years ahead with proper advice. They are those who acted quickly and without guidance in the weeks or months before care was needed, often from genuine panic rather than bad faith.
If you are beginning to think about the costs of care for yourself or a loved one, now is the right time to seek proper advice, not after a transfer has been made.
At Merling Care, we are always happy to talk through the practical side of care funding with families and to point you in the direction of the right professional support.
This is the most common question on this topic, and the honest answer is: probably not without significant risk. If care is foreseeable at the time of the transfer, the local authority is likely to treat the property value as notional capital and charge you as if you still own it. The children who received the property may also be pursued for the debt. Always seek specialist legal advice before taking any action.
Yes. It is possible to deprive yourself of income as well as capital. For example, choosing not to draw a pension you are entitled to, or transferring rental income from a property to someone else, could be treated as deliberate deprivation of income if care was foreseeable at the time.
Notional capital is the value of an asset that a person no longer owns but which a local authority treats them as still having for the purposes of the financial assessment, because it was deliberately disposed of to reduce care costs. The person is charged as if they still hold the asset, even if they do not.
Deliberate deprivation is primarily dealt with as a civil debt matter under the Care Act 2014. In cases where the actions involved dishonesty or fraud, criminal law may also apply. Local authorities can and do pursue county court judgements to recover care costs.
The Society of Later Life Advisers (SOLLA) accredits financial advisers who specialise in later life and care funding planning. Your local authority adult social care team can also provide information and advice as part of the care needs assessment process.
They are entirely separate. Inheritance tax rules allow certain gifts to fall outside a person’s estate for IHT purposes after seven years. This has no relevance to social care funding. The care funding rules look at whether care was foreseeable at the time of the gift, with no time limit on how far back they can look.