Care home top-up fees are one of the most misunderstood and most frequently abused aspects of the UK care funding system. Thousands of families pay top-up fees every week without realising that in many cases the fees are unlawful, and that they have the right to refuse or reclaim them. This guide explains what top-up fees are, when they are legitimate, who is legally allowed to pay them, the four situations where they are unlawful, and what to do if you believe you have been charged unfairly.
What is a care home top-up fee?
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When a person qualifies for local authority funded care, the council sets a maximum weekly rate it is willing to pay. This is called the usual cost or council rate. It reflects what the council considers sufficient to meet the person's assessed care needs in their local area.
Many care homes charge more than this rate, particularly those with better facilities, specialist dementia units, single en-suite rooms, or rural locations. When a family chooses one of these homes as a matter of preference, the shortfall between the council rate and the home's actual fee must be covered by someone. That extra payment is the top-up fee.
Example: the council rate in a given area is £900 per week. The family's preferred care home charges £1,150 per week. The top-up fee is £250 per week, which is £13,000 per year. Before agreeing to pay this, families should ask the council whether there are suitable alternatives within the council rate. If there are none, the top-up may be unlawful.
The fundamental rule: the council must offer a suitable free option first
Before any top-up fee can legally be requested, the council must have offered at least one suitable care home placement that fully meets the person's assessed care needs AND falls within the council rate.
This is not optional. It is a legal requirement under the Care Act 2014 and the statutory guidance. If the council cannot identify a single placement within its usual cost that meets assessed needs, it must fund the more expensive home at full cost, with no top-up required from the family.
In practice, many families are never told this. They are simply presented with a list of homes and a top-up fee, without being clearly informed that they are entitled to a free suitable placement and that the top-up is a choice, not a requirement.
Who can legally pay a top-up fee?
| Who | Can they pay? | Important conditions |
|---|---|---|
| A family member or friend (third party) | Yes, voluntarily | Must be entirely voluntary. Must sign a written agreement with the council. Must be able to sustain payments long term. No family member can be forced to pay. |
| The resident themselves from assessed income | No | The resident cannot pay a top-up from pension income, benefits, or any income counted in the means test. This prevents councils from bypassing their funding duty. |
| The resident from exempt income sources | In limited circumstances | Income from a property being rented out that is not counted in the means test may be used. Seek specialist advice before relying on this. |
| The resident via a Deferred Payment Agreement | Yes, via DPA only | Where a Deferred Payment Agreement is in place, the resident can fund the top-up through the deferred arrangement secured against their property. This is the one formal exception to the resident cannot pay rule. |
| A charity or benevolent fund | Yes | Charities related to a profession, religion, or community can legitimately pay top-up fees on behalf of a resident. |
The four situations where a top-up fee is unlawful
Understanding when a top-up is unlawful is the most important thing families can take away from this guide. Each of the following situations represents a breach of the council's legal duties under the Care Act 2014:
1. No suitable alternative was offered within the council rate
If the council cannot identify any placement within its usual cost that meets the person's assessed care needs, it must fund the chosen home at full cost. Charging a top-up in this situation is unlawful. Local authorities in Birmingham and Derbyshire have been ordered by the Local Government and Social Care Ombudsman to repay significant sums where they failed to provide affordable alternatives.
2. The resident is funded by NHS Continuing Healthcare
When a person qualifies for NHS Continuing Healthcare, the NHS must cover the full cost of all care and accommodation. No top-up fee can legally be charged, regardless of which home is chosen. This rule is frequently broken in practice. Families with a relative in CHC-funded care who are being asked to pay additional fees should seek specialist legal advice. In many cases, historic overpayments can be reclaimed with interest.
3. The top-up is being requested from the resident themselves using assessed income
As explained above, a council-funded resident cannot be asked to top up from pension income, Attendance Allowance, or any other income that forms part of their financial assessment. A care home or council that charges the resident directly from these income sources is acting unlawfully.
4. The family was not clearly informed that a suitable free alternative existed
The council must provide clear, accurate, and timely information about suitable alternatives within its rate before presenting a top-up arrangement. A family that chose a more expensive home without knowing a suitable free option was available has potential grounds to challenge the top-up arrangement, particularly if the council failed to meet its information duties.
The top-up agreement: what it must contain
If a top-up arrangement is legitimately agreed, the written agreement between the council and the third party payer must include:
- The exact weekly amount of the top-up
- Which party is responsible for paying it (council or care home direct, depending on the arrangement)
- What happens if the care home increases its fees and whether the top-up will increase accordingly
- What happens if the third party can no longer afford to pay
- Notice requirements for ending the arrangement
Under the Consumer Rights Act 2015, any term in the agreement that creates a significant imbalance against the payer may be unenforceable. Agreements that allow the care home to increase top-up fees without notice, or that place unlimited liability on the third party, should be challenged before signing.
Before signing any top-up agreement: consider whether you can genuinely sustain the payments for the long term. Care home stays often last several years. A top-up of £200 per week amounts to over £10,000 per year. If you stop being able to pay, the council has the right to move your relative to a cheaper home that meets their assessed needs. Only sign if you are confident you can maintain payments indefinitely.
What happens if the top-up can no longer be paid
If the third party payer can no longer afford the top-up, they must inform the local authority as early as possible. What happens next:
- The council must carry out a review to determine whether a suitable alternative placement exists within its usual cost
- If a suitable alternative exists, the council has the right to move the resident to that home, with appropriate notice
- The resident cannot be evicted without proper notice and due process, even if the top-up stops being paid
- If no suitable alternative exists within the council rate, the council must continue funding the current placement at full cost
How to challenge an unlawful top-up fee
| Step | Action | Who to contact |
|---|---|---|
| Step 1 | Write to the local authority asking for evidence that a suitable alternative within the council rate was offered at the time the placement was arranged. Request a written explanation of the basis for the top-up requirement. | Local authority adult social care team |
| Step 2 | Submit a formal complaint to the local authority if the response is unsatisfactory or if no evidence of an affordable alternative is provided. | Local authority complaints team |
| Step 3 | Escalate to the Local Government and Social Care Ombudsman once the internal complaints process is exhausted. The Ombudsman has ordered councils to repay unlawful top-up fees in multiple decided cases. | lgo.org.uk or 0300 061 0614 |
| For CHC cases specifically | Contact a solicitor specialising in NHS Continuing Healthcare. Unlawful top-ups in CHC cases can be reclaimed with backdated interest in many circumstances. Some solicitors work on a no-win no-fee basis for these claims. | Specialist CHC solicitor or CHC advocacy organisation such as Farley Dwek or Beacon CHC |
Top-up fees and self-funders: a different situation
Everything above applies to local authority funded residents. Self-funders, meaning those paying for their own care because their assets exceed the means test threshold, have a different position.
A self-funder is paying the full cost of care from their own resources and is not subject to a council rate. There is no formal top-up arrangement. However, self-funders should be aware that:
- Care home contracts must be fair under the Consumer Rights Act 2015. Terms that allow unlimited fee increases without notice, or large non-refundable deposits, may be challengeable
- Once assets fall below the means test threshold (£23,250 in England), a self-funder transitions to local authority funding. At that point, if the existing home charges above the council rate, a top-up arrangement will be needed from a third party or the person will need to move
- Planning ahead for this transition is important, particularly for residents in premium homes where the gap between the care home fee and the council rate is large
Finding a care home that fits your budget?
Navigating the gap between council rates and care home fees is one of the most stressful aspects of care home planning. Senior Home Plus provides free, impartial guidance to help families identify suitable homes at sustainable costs, understand what the council is obliged to fund, and plan financially for the long term.
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FAQ: care home top-up fees UK
Can the council force me to pay a top-up fee?
No. Top-up fees are entirely voluntary for third party payers. No family member can be legally compelled to pay a top-up. The decision to pay is always a choice. If no family member is willing or able to pay, the council must fund a suitable placement within its usual cost, or fund the more expensive home in full if no suitable alternative exists.
Can the care home increase the top-up fee without my agreement?
Not unilaterally. Any increase must be set out in the written top-up agreement. If the care home raises its fees and expects the top-up payer to cover the additional amount, this must be agreed in advance. Clauses that allow the home to increase the top-up without the payer's consent may be unenforceable under the Consumer Rights Act 2015.
What happens to the top-up if my relative's care needs increase?
If care needs increase to the point where the current home can no longer meet them, the council must reassess and find a suitable placement. In some cases, higher care needs mean a different type of home is required, such as a move from residential to nursing care. The top-up arrangement relates to the current placement and would need to be renegotiated for any new home.
Can I reclaim top-up fees already paid if they were unlawful?
Yes, in many cases. Where a council failed to offer a suitable alternative within its usual cost and then charged a top-up that was therefore unlawful, historic payments can be reclaimed through the complaints process or via the Local Government and Social Care Ombudsman. For CHC cases, specialist solicitors can pursue backdated claims with interest. Evidence that the unlawful practice has continued for years means the sums involved can be substantial.
Do top-up fees apply in Scotland and Wales?
The same basic principles apply across all four nations but the specific rules differ. In Scotland, free personal care reduces the amount the council funds from the outset, which affects how top-up calculations work. In Wales, the capital threshold is £50,000, meaning fewer residents qualify for council funding at all. Always check the rules specific to the nation where your relative lives and receives care.
Can Attendance Allowance or PIP be used to pay a top-up fee?
For council-funded residents, Attendance Allowance stops being paid after 28 days in a council-funded care home. Before that point, and for self-funders at any time, Attendance Allowance can be used toward care costs. However, a council-funded resident cannot use income from benefits counted in the means test to pay a top-up. If Attendance Allowance is not counted in the means test in a specific case, seek specialist advice on whether it could be used toward a top-up.
What if the care home tells us we must pay a top-up or our relative will have to leave?
This is pressure that families should not accept without question. If the resident is council-funded, it is the council's responsibility to find and fund an appropriate placement. The care home cannot simply demand a top-up as a condition of continued residence without the council's involvement. Contact the local authority immediately, put the situation in writing, and if necessary use the complaints process and the Ombudsman. A care home cannot remove a resident without proper notice and legal process, regardless of whether a top-up is being paid.
Related guides
- Nursing home costs in the UK Full breakdown of fees, means testing, council rates and what happens when savings run out
- NHS Continuing Healthcare funding If your relative qualifies, no top-up fee can legally be charged. How to request a CHC assessment.
- How care homes treat private pension income What counts in the means test and what council-funded residents are entitled to keep
- What to do if a loved one's rights are violated in a care home CQC, ombudsman and formal complaints explained step by step
- Care funding thresholds across England, Scotland, Wales and Northern Ireland How the council rates and means test thresholds differ by nation
Summary
Care home top-up fees bridge the gap between the council's usual cost and the fee of a preferred, more expensive care home. They are voluntary, must be paid by a third party rather than the resident from assessed income, and can only be requested after the council has offered at least one suitable free alternative within its rate. Top-up fees are unlawful when no suitable alternative was offered, when the resident receives NHS Continuing Healthcare, when the resident is charged from assessed income, or when the family was not properly informed. Historic unlawful top-up payments can often be reclaimed through the complaints process or via the Local Government and Social Care Ombudsman.
Key Takeaways
- Top-up fees are always voluntary. No family member can be forced to pay.
- The council must offer a suitable free alternative within its rate before requesting a top-up.
- The resident cannot pay from assessed income such as pension or benefits.
- NHS Continuing Healthcare residents cannot be charged any top-up fee.
- If no suitable free alternative exists, the council must fund the more expensive home in full.
- If the top-up can no longer be paid, the council must find an alternative within its rate.
- Unlawful top-up fees can be challenged and reclaimed through the ombudsman or legal action.
- Any top-up agreement must be in writing with clear terms on increases and exit arrangements.
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