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Summary

The circular sets out that, for the financial year 2025 to 2026:

• the capital limits remain at their current level (lower capital limit 拢14,250 and upper capital limit 拢23,250)
• personal expenses allowance (PEA) for local authority-supported care home residents increases in line with inflation
• minimum income guarantee (MIG) for people receiving local authority-arranged care and support other than in a care home increases in line with inflation
• Savings Credit disregards increase in line with inflation

Action

The purpose of this circular, as set out in the鈥�Care and support statutory guidance, is to communicate the changes outlined above.聽

Local authorities are required to act under the care and support statutory guidance in exercising functions given to them by 鈥痮r by regulations under that part.聽

Capital limits

The capital limits, specified in regulations made under the Care Act 2014, set the levels of capital (excluding any capital that has been disregarded) that a person can have while qualifying for financial support from their local authority. For people receiving care other than as a permanent resident in a care home, local authorities have discretion to set higher capital limits if they wish.

A person with assets above the upper capital limit is responsible for the full cost of their care in a care home. A person with assets between the capital limits will pay what they can afford from their income, plus a means-tested contribution from their assets (calculated as 拢1 per week for every 拢250 of capital between the capital limits). A person with assets below the lower capital limit will pay only what they can afford from their income.

For the next financial year (2025 to 2026), the capital limits will remain at their current level: 拢23,250 for the upper capital limit and 拢14,250 for the lower capital limit.

Personal expenses allowance

The PEA鈥痠s the weekly amount that people receiving local authority-arranged care and support in a care home (residents) are assumed to need as a minimum for their personal expenses.

The PEA鈥痠s specified in regulations made under section 14(7) of the Care Act 2014 and applies to all people whose care and support in a care home is arranged by a local authority under section 18 or 19 of the act.

It is intended to allow residents to have money for personal use. Based on a financial assessment of their resources, individuals must be left with at least the full value of their PEA. It is then up to them to determine how they spend it.聽

Local authorities, providers of accommodation and residents are reminded that the鈥�PEA should not be spent on aspects of care and support that have been contracted for by the local authority and/or assessed as necessary to meet the person鈥檚 eligible care and support needs by the local authority or needs the NHS is meeting. Neither local authorities nor providers have the authority to require residents to spend their鈥�PEA in particular ways and, as such, should not do so.

For the next financial year (2025 to 2026), the鈥�PEA will increase in line with inflation from its current level of 拢30.15 per week to 拢30.65 per week.

Minimum income guarantee

People receiving local authority-arranged care and support other than in a care home need to retain a certain level of income to cover their living costs. Under the Care Act 2014, charges must not reduce people鈥檚 income below a certain amount, but local authorities can allow people to keep more of their income if they wish. This is a weekly amount and is known as the MIG.

For the next financial year (2025 to 2026), the rates of the鈥�MIG will increase in line with inflation as follows where the adult concerned is:聽

• responsible for, and a member of, the same household as a child, the amount of 拢102.95 in respect of each child
• a single person and鈥�
  • is aged 18 or older but less than 25, the amount of 拢89.15
  • is aged 25 or older but less than pension credit age, the amount of 拢112.50
  • has attained pension credit age, the amount of 拢232.60
  • is a lone parent aged 18 or over, the amount of 拢112.50
• is a member of a couple and鈥�
  • one or both are aged 18 or over, the amount of 拢88.35
  • one or both have attained pension credit age, the amount of 拢177.55
• is a single person who is in receipt of, or the local authority considers would, if in receipt of income support, be in receipt of鈥�
  • disability premium, the amount of the applicable premium is 拢49.65
  • enhanced disability premium, the amount of the applicable premium is 拢24.25
• is a member of a couple and one member of that couple is in receipt of, or the local authority considers would, if in receipt of income support, be in receipt of鈥�
  • disability premium, the amount of the applicable premium is 拢35.40
  • enhanced disability premium, the amount of the applicable premium is 拢17.45
• is in receipt of, or the local authority considers would, if in receipt of income support, be in receipt of carer premium, the amount of the applicable premium is 拢53.25

Savings Credit disregard

As part of the Pension Credit system, Savings Credit is extra money paid each week for people who have an income above a certain threshold. People above the minimum eligibility criteria for Savings Credit who also qualify for means-tested support to pay for care are allowed to keep an amount of money in addition to the鈥�PEA鈥痮谤鈥�MIG. This is the Savings Credit disregard.

For the next financial year (2025 to 2026), the rates of the Savings Credit disregard will increase in line with inflation as follows:

• from up to 拢6.95 per week to up to 拢7.05 per week for an individual
• from up to 拢10.40 per week to up to 拢10.60 per week for couples

For further information on how the rate of Savings Credit disregard should be applied for individuals receiving care in different settings, see 鈥楢nnex C: treatment of income鈥� of the Care and support statutory guidance.

Enquiries

Enquiries about this circular should be made by email to: [email protected].