Moving into a care home in the UK can be a significant financial commitment. Many families wonder if the costs associated with care homes are tax-deductible, hoping to offset some expenses through tax relief. In this article, we’ll explore everything you need to know about tax deductibility for care home expenses in the UK, giving you a clear answer to this pressing question.
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Are care home costs tax-deductible in the UK?
Unfortunately, care home fees are not directly tax-deductible in the UK. However, there are some financial relief options and benefits that may help ease the cost burden of care. Below, we outline the primary ways families can receive financial support or tax relief related to care home costs.
1. Understanding the care costs you’ll face
Residential care costs: These typically include accommodation, meals, and assistance with daily living.
Nursing home costs: Nursing homes provide additional medical care, which often results in higher fees.
Specialized Dementia or Alzheimer’s care: These services, offered in some care homes, can be more expensive due to the specialized support required.
Understanding the specific type of care your loved one needs will help you estimate costs more accurately and explore the financial options available to you.
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2. Can you claim tax relief on care home fees?
Currently, the UK does not allow individuals to claim direct tax relief on care home fees. However, certain circumstances may help reduce the overall tax burden:
Medical expenses: While care home fees aren’t deductible, some medical expenses related to care may qualify for tax relief if they’re paid privately.
Relief for severely disabled residents: Individuals with severe disabilities may qualify for additional support, though this is often managed through government benefits rather than tax relief.
3. Financial support options for care home fees
Although tax relief isn’t available, various financial support schemes can help with care home costs in the UK:
NHS Continuing Healthcare (CHC): Individuals with ongoing healthcare needs might qualify for fully funded NHS Continuing Healthcare, which covers the entire cost of care, including residential and nursing home fees.
Related reading: NHS continuing healthcare
Local authority funding: Based on financial assessments, local authorities may cover some or all care home costs for individuals with low income or limited savings.
Related reading: 4 Financial assistance options for UK care home costs
Attendance allowance: This non-means-tested benefit helps cover care costs for individuals over the age of 65 who require regular personal care due to illness or disability.
Related reading: Attendance Allowance in the UK: A Comprehensive Guide for Seniors (2025)
Personal Independence Payment (PIP): For those under 65 with a long-term illness or disability, PIP can help with additional care costs.
Related reading: How Much Is PIP Per Month? Comprehensive Guide to PIP Payments in the UK (2025)
4. Tax-free savings accounts and trusts
ISAs and other tax-free savings accounts: While these don’t directly offset care costs, using savings from tax-free accounts like ISAs can help cover care fees without additional tax burdens.
Family trusts: Setting up a family trust to manage assets can be a strategic way to protect savings, ensuring funds are available for care expenses.
5. Claiming carer’s allowance
If a family member provides unpaid care for an individual who is moving into a care home, they may be eligible for Carer’s Allowance, which offers additional financial support for unpaid caregivers.
6. Inheritance tax planning
While care home fees aren’t tax-deductible, you can make estate planning decisions to reduce inheritance tax, potentially preserving more of your assets for your family. Gifting assets or placing assets in trusts are common strategies to mitigate inheritance tax implications while ensuring that funds are available for long-term care if needed.
7. Tax relief for specific medical equipment and adjustments
For individuals requiring special equipment or home adjustments due to a disability, tax relief may be available. While this isn’t directly related to care home fees, such deductions can help ease the financial burden of other care-related expenses.
8. Are there other tax benefits for elderly care?
The UK doesn’t provide many direct tax benefits for care home expenses. However, planning around other tax allowances can make a difference:
Personal Savings Allowance (PSA): This allows individuals to earn a certain amount of interest tax-free.
Married couple’s allowance: For married couples born before 6 April 1935, this tax allowance can help reduce tax liability, potentially freeing up more funds for care.
9. Consult a tax advisor or financial planner
Navigating care home expenses and tax implications can be complex. Consulting a qualified tax advisor or financial planner who understands care-related costs can help you make informed decisions and identify potential savings.
| Type of Care Home Cost | Tax-Deductible? | Explanation (2025 Rules) |
|---|---|---|
| Accommodation & food | No | HMRC considers these personal living costs. |
| Nursing care | Sometimes | Tax relief possible if linked to medical treatment and disability criteria are met. |
| Personal care | No | Not eligible unless integrated into qualifying medical treatment. |
| Medical treatment prescribed by a doctor | Yes (in limited cases) | Eligible if considered a qualifying medical expense. |
| Care paid by the local council | No | Tax relief applies only to privately funded costs. |
The importance of financial planning for long-term care
Although care home fees aren’t directly tax-deductible, careful financial planning and awareness of available benefits can help make these costs more manageable. Understanding all the available support, from NHS Continuing Healthcare to Attendance Allowance, ensures that you’re not missing out on financial assistance.
To claim any form of tax relief on care fees, the resident must meet HMRC’s definition of a qualifying disability. In 2025, this generally includes:
- A long-term illness requiring continuous nursing supervision
- A diagnosed severe disability affecting daily living
- Cognitive conditions such as advanced dementia
- Doctor-confirmed medical needs that require residential care
Indirect Tax Reliefs Available in 2025
Even though most care fees are not tax-deductible, families can reduce overall costs through:
Attendance Allowance (AA) – for residents over State Pension age
Personal Independence Payment (PIP) – if under State Pension age
Carer’s Allowance – if a family member provides ≥35 hours of care
Council tax reductions for severe mental impairment (SMI)
Capital Gains exemptions if selling the primary home when moving into care
Tax Planning Strategies to Help Cover Care Costs
| Strategy | Benefit |
|---|---|
| Using Tax-Free ISAs | Withdraw savings tax-free to cover care costs |
| Family Trusts | Protects assets while ensuring funds are available for care |
| Inheritance Tax Planning | Gifting assets or setting up trusts to reduce tax liabilities |
| Personal Savings Allowance | Earn interest tax-free to contribute towards care costs |
| Married Couple’s Allowance | Reduces tax liability, freeing up more funds for care |
FAQ:
1. Can I claim tax relief on care home fees in the UK?
No, care home fees are not directly tax-deductible in the UK. However, financial support options such as NHS Continuing Healthcare and Attendance Allowance can help cover costs.
2. What financial assistance is available for care home fees?
Support options include NHS Continuing Healthcare, Local Authority Funding, Attendance Allowance, Personal Independence Payment (PIP), and Carer’s Allowance.
3. Can I use tax-free savings to pay for care home costs?
Yes, using tax-free savings accounts such as ISAs can help cover care costs without additional tax burdens.
4. Does inheritance tax planning help with care home expenses?
Yes, strategic estate planning, such as setting up trusts or gifting assets, can reduce inheritance tax and help preserve wealth for care needs.
5. Are medical expenses related to care tax-deductible?
While care home fees aren’t deductible, some medical expenses paid privately may qualify for tax relief.
6. Can a family member claim tax benefits if they provide unpaid care?
Yes, unpaid caregivers may be eligible for Carer’s Allowance, which provides up to £76.75 per week.
7. How can I find a care home that fits my financial situation?
We can assist you in finding an affordable care home. Contact us at 0230 608 0055 or fill out our online form for guidance.
Need help finding a care home?
Senior Home Plus offers free personalized guidance to help you find a care facility that suits your health needs, budget, and preferred location in the UK.
Call us at 0203 608 0055 to get expert assistance today.
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