Understanding how adult social care is funded in England is genuinely complicated — and deliberately so, according to many who have tried to navigate it. There is no single national fund that pays for everyone’s care. Instead, a patchwork of local authority budgets, NHS contributions, means testing, and personal finances determines who gets what, from whom, and for how long.
This guide cuts through the complexity and explains, in plain language, how care funding actually works in England in 2026 — who pays, how eligibility is assessed, what a personal budget is, how direct payments work, and what options are available if local authority funding does not cover the full cost.
Who Is Responsible for Funding Adult Social Care?
In England, adult social care is the responsibility of your local council — specifically, its adult social care department. Local authorities receive funding from central government and council tax receipts, and they use it to commission or directly provide care for eligible adults in their area.
The NHS funds healthcare — including nursing in care homes, community nursing, and continuing healthcare for people whose primary need is health-based. The boundary between ‘health’ and ‘social care’ is one of the most contested and consequential lines in English public services, and families frequently have to fight to ensure that needs are correctly categorised.
The Means Test: Who Gets Funded?
Local authority social care funding is means-tested. This means your income and assets are assessed to determine how much — if anything — the council will contribute to your care. In England in 2026, the following thresholds apply:
| Capital Threshold | Outcome |
| Below £14,250 | Local authority pays the full cost (above a minimum income threshold) |
| £14,250–£23,250 | Sliding scale contribution from both the individual and the council |
| Above £23,250 | Individual is expected to self-fund their care in full |
Note: For supported living, the means test applies to the care and support element only. The housing cost (rent) is assessed separately, and Housing Benefit may cover it regardless of capital assets in some circumstances. This is an important distinction that many families are not aware of until they are deep into the process.
What Is a Personal Budget?
If the local authority determines that an individual has eligible care and support needs and that they qualify for funded support after the means test, it will agree a personal budget. The personal budget is the total amount of money the council allocates to meet that person’s eligible needs.
The personal budget is not cash handed to the individual — it is a notional figure that is then used to commission support. However, individuals and families have significant choice in how it is used:
Option 1: Local Authority Managed Account
The council commissions a care provider on your behalf, using its existing contracts and frameworks. You have limited choice over which provider delivers your support, but you have no administrative responsibility for managing the budget.
Option 2: Direct Payments
The council pays the personal budget directly to the individual (or to a nominated person or trust on their behalf). The individual then uses that money to arrange and pay for their own care — including hiring personal assistants, contracting with an independent provider like AESN Care, or paying for day services. This model gives the greatest flexibility and control, but also requires the individual or a trusted person to manage employment law, payroll, and contractual responsibilities.
Option 3: Third-Party Direct Payment
For those who want the flexibility of direct payments but not the administrative burden, a third party — often a family member, a trust, or an independent support broker — holds and manages the direct payment on their behalf.
NHS Continuing Healthcare (CHC): When Health Funds the Whole Cost
NHS Continuing Healthcare is a package of ongoing care arranged and funded entirely by the NHS — not the local authority — for adults whose primary need is health-based. If a person’s care needs are mainly driven by a health condition (rather than social needs), they may be eligible for CHC. If awarded, CHC funding covers the full cost of care, including accommodation in a care home, with no means test.
CHC is frequently refused at initial assessment, and the threshold (‘primary health need’) is applied inconsistently across different ICB areas. A significant proportion of successful CHC awards are the result of families challenging initial refusals. If you believe someone’s needs are primarily health-based, it is always worth pursuing a formal CHC assessment.
What If the Personal Budget Does Not Cover the Actual Cost of Care?
One of the most common frustrations for families is the gap between the personal budget the council agrees and the actual cost of appropriate care in the local market. Providers are not obliged to accept local authority rates, and specialist care for complex needs — including autism, dual diagnosis, and behaviours that challenge — consistently costs more than standard rates reflect.
Options include: asking the council to review and uplift the personal budget; seeking a ‘top-up’ from family funds (permitted under the Care Act in specific circumstances); challenging the adequacy of the budget through the complaints process; or requesting an independent review.
AESN Care and Funding
AESN Care works with both local authority commissioners and self-funding individuals and families across England. We are transparent about our costs and work with families to explore all available funding options, including direct payments and CHC pathways. Contact us for a no-obligation conversation about funding your care.
