As the cost of care continues to rise in the UK many people are seeking ways to protect their assets from being ravaged by care costs in later life. With the threat of looming care fees many people are tempted to gift away their assets to family members so these cannot be taken into account when they are assessed for state funding.
However, if reducing care costs is the primary reason for the gift, transfer or arrangement it is possible to fall foul of the deliberate deprivation of assets rules, which could have potentially disastrous financial consequences.
What Does 'Deliberate Deprivation' Mean?
The Care Act 2014 governs the laws relating to social care costs and how these are assessed in England (Wales has a separate regime under The Social Services and Well-being (Wales) Act 2014).
Deliberate deprivation can occur when someone intentionally reduces their assets to avoid them being used to pay for care fees.
Examples may include:
- Gifting your home to children
- Transferring large sums of money to someone else.
- Creating a trust to hold assets after care needs become foreseeable.
- Selling property at below market value.
- Redirecting an inheritance to another individual
How Local Authorities assess deprivation
Broadly speaking if your capital exceeds £23,250 (in England as of July 2025), you are expected to pay the full cost of your social care if you are required to move into a care home. If your capital is below £23,250 then the local authority will assess your finances and may be able to fund your ongoing care either in full or in part depending on your circumstances.
During the assessment process the local authority may conduct their own indepth investigation of your finances and consider whether any previous gifting arrangements or transfer of assets were a deliberate attempt to reduce your future financial liability.
In cases where the local authority believe an individual has deliberately deprived themselves of an asset, to circumvent care fees, they are permitted to treat the individual as still owning the asset for the purposes of the financial assessment under The Care and Support (Charging and Assessment of Resources) Regulations 2014.
The value of the capital the individual is deemed to have deprived themselves of in these circumstances is known as ‘notional capital’.
Not only can the local authority include ‘notional capital’ when assessing an individual’s contribution towards their care but, where assets have been transferred to a third party then that third party may also be held liable to pay the local authority the difference between the care costs which would have applied had asset still belonged to the individual being assessed.
Before deciding that deliberate deprivation of assets has indeed taken place the local authority must show that there was an intention to deprive before it can take the notional capital into account. They will need to consider the following:
- Was the avoidance of care costs a significant motivation for gifting, transferring or disposing of the asset?
- At the time of the disposal, did the individual have a reasonable expectation that they would need care and support from the local authority (for example, were they fit and healthy)?
- Did the individual have a reasonable expectation that they would be assessed as having to contribute towards the cost of those care needs?
Crucially there is no time limit on how far back the local authority can investigate the disposal of assets. There is a common misconception that assets disposed of more than seven years ago will fall outside of these rules and will not be taken into account for financial assessments, as is the case with such disposals for inheritance tax purposes. However, this is not the case and the local authority can potentially review arrangements from decades prior to the individual being assessed.
Understandably such investigations made by the local authority into deliberate deprivation of assets can be immensely invasive and distressing for both the individual and their family. They may also require paperwork and documentation from years prior which has long since been lost. This coupled with the fact the individual may be seriously or even terminally ill or have capacity issues will only aggravate what is an already upsetting time for often very vulnerable people.
Where deliberate deprivation of assets has been found the individuals involved can challenge the decision through the local authority’s formal complaints procedure. If the challenge is unsuccessful, then it is possible to escalate the matter to the Social Care Ombudsman.
As a result of the complaints received, in August 2022, the Local Government and Social Care Ombudsman issued guidance to local authorities on the complex issues surrounding deliberate deprivation of assets and the decision making process which should be adopted.
The guidance reminds the local authority to deal with the matter with ‘sensitivity and care’, not to assume that every disposal was carried out with the intention of evading care costs and be mindful of the official guidance on this subject as set out in Annex E of the Care and Support Statutory Guidance.
What’s next?
In 2021 the government announced substantial reforms to social care with one of the changes relating to means tested support. The changes would have meant that anyone with assets up to £100,000 could potentially still be eligible for state support, this in stark contrast to the current limit of £23,250. It was announced in 2024 that these reforms would not be taking place until October 2025 due to lack of funding. However, in May 2025 it was announced that an independent commission in adult social care will be commissioned by Baroness Louise Casey. The final report for the longer term recommendations is currently due in 2028
How Lee Bolton Monier-Williams can help
The potentially devastating financial consequences of falling foul of the deliberate deprivation of assets rules is a reminder to seek legal advice and undertake estate planning as early as possible and not to delay discussing your affairs, finances and later life decisions.
If you have any concerns or questions about anything raised in this article then please contact the Megan Morgan in the Private Client Department who will be happy to assist you.