Care Home Deferred Payment Agreement Calculator 2025/26

A Deferred Payment Agreement allows people who need care home funding to delay paying their care home fees until a later date (usually when their home is sold). The local authority pays the fees and secures the debt as a legal charge against your property. You must meet certain eligibility criteria and the care must be in a registered care home or nursing home.

To qualify for a DPA: (1) your savings and investments must be below £23,250 (the upper capital limit, excluding the value of your home during the first 12 weeks and for couples where a qualifying relative still lives there), (2) you must own property in the UK, and (3) your local authority must be funding at least some of your care. You cannot get a DPA if your home is already fully disregarded (e.g. a spouse lives there).

In the first 12 weeks of a care home placement, the value of your home is disregarded for means-testing purposes. This means you are assessed only on your savings and income, not your property value. After 12 weeks, your home is included in the financial assessment — this is when a DPA typically begins.

Local authorities can charge simple interest on DPAs at a rate set nationally by the Department of Health and Social Care. In 2025/26, this is typically around 2.2-2.35% per year on the outstanding debt. Some councils offer a 0% rate while you are alive and only apply interest if the debt is not repaid within 90 days of death or sale.

A minimum of £14,250 of equity in your property is always protected — the council will stop the DPA (or require alternative funding) if your equity falls to £14,250. Above this, the council can defer costs up to the full net equity in your property (after mortgages and the £14,250 buffer).

Taking a DPA should not affect your entitlement to means-tested benefits. The debt created by the DPA is not counted as an asset. However, the local authority means test still includes your property value when calculating whether you qualify for council-funded care (the DPA is a mechanism to delay payment, not to reduce the amount you ultimately pay).

Alternatives include: selling the property immediately to fund care; equity release (lifetime mortgage) to release funds; renting out the property (rental income can contribute to care costs); third-party payments from family members to top up; or using savings to fund care while property is retained. Each option has different tax and benefit implications.

The DPA debt plus interest is repaid when: the property is sold (proceeds are used to repay); the person permanently leaves the care home (rare); or within 90 days of death (from the estate). If the estate cannot repay within 90 days, the council can force a sale. Family members can request more time in certain circumstances.