Deprivation of Assets: What Councils Can and Can't Do

By CareFinder Team · Published 2026-06-30 · Last reviewed 2026-09-18

Deprivation of assets is when someone deliberately reduces their money, property or income so that it is not counted in a care means test. In England, if avoiding care charges was a significant motivation and care could reasonably have been foreseen, the council can assess the person as if they still had the asset, and can recover charges from whoever received it, up to the value they gained.

Deprivation of assets is when someone deliberately reduces their capital or income so that it will not count when the council works out what they pay for care. If the council decides this has happened, it can assess the person as though they still had the money or property. It can also, in some cases, ask the person who received it to pay.

The rules below apply in England, under the Care Act 2014 and Annex E of the Care and Support Statutory Guidance. Scotland, Wales and Northern Ireland have their own charging rules with similar principles. This is general information; take legal advice about your own situation.

What counts as deprivation of assets?

People are free to spend their money as they wish, including on gifts to family. Deprivation only arises when the council believes someone gave away or used up assets in order to avoid or reduce care charges.

The statutory guidance lists common ways it can happen:

• giving someone a lump sum, for example as a gift;
• sudden, large spending that is out of character;
• transferring the title deeds of a home to someone else;
• putting assets into a trust that cannot be revoked;
• converting money into something the means test ignores, such as personal possessions;
• reducing assets by living extravagantly, for example gambling;
• buying an investment bond with life insurance.

The guidance is clear that none of these is automatically deprivation. The council has to look at why it was done.

How does the council decide?

The guidance asks councils to consider:

1. Motivation and timing. Was avoiding care charges a significant motivation in the timing of the gift or spending? It does not have to be the only reason.
2. Foreseeability. At the time, could the person reasonably have expected to need care and support?
3. Expectation of paying. Could they reasonably have expected to have to contribute towards that care?

The guidance says it would be unreasonable to find deprivation if, when the asset was disposed of, the person was fit and healthy and could not have foreseen needing care. It also expects councils to treat these cases with sensitivity and care.

It is up to the person to show the council they no longer have the asset. Useful evidence includes a deed of gift, a trust deed, receipts for spending, and proof that debts were repaid.

Is there a seven-year rule?

No. The seven-year rule belongs to inheritance tax, where most gifts fall out of the estate after seven years. For care charges there is no fixed period. A council can ask about gifts or spending from any time, but the older a transaction is, and the healthier the person was at the time, the harder it is to argue that care was foreseeable.

What can the council do if it finds deprivation?

Treat the asset as still owned

The council's first step should be to charge the person as if the deprivation had not happened. The asset is counted as notional capital (or notional income). If notional plus actual capital is above the upper limit, which is £23,250 in England for 2026/27 according to the DHSC charging circular, the person may be assessed as a self-funder.

Notional capital does not last for ever. Each week it must be reduced by the difference between what the person is paying and what they would have paid if it had not been counted.

Recover the charges from the person who received it

Under section 70 of the Care Act, if assets were transferred to someone else to avoid charges, that person can be liable for the difference between what the council would have charged and what it did charge. They cannot be asked for more than the benefit they received. If several people received gifts, each is liable in proportion to what they got.

Go to court as a last resort

Councils can use the county court to recover care debts, but the guidance says this should only happen after other avenues have been exhausted. Under the Care Act, the time limit for recovering a care debt is six years from when it became due.

What can't the council do?

• Assume deprivation just because a gift was made. It must consider motivation, timing and foreseeability.
• Penalise ordinary spending, such as normal living costs, repairs to the home, or reasonable gifts in line with past habits.
• Recover more from a family member than they received.
• Refuse to explain. You are entitled to reasons for the decision, so ask for them in writing.

How can you challenge a decision?

1. Ask the council for its decision and reasons in writing, including what evidence it relied on.
2. Send evidence of why and when the gift or spending happened: medical records showing good health at the time, a history of similar gifts, or receipts.
3. Use the council's formal complaints procedure.
4. If you are still unhappy, complain to the Local Government and Social Care Ombudsman.

Age UK has a free factsheet and advice line, and a solicitor who specialises in community care law can help with complex cases.

How can families plan without falling foul of the rules?

• Keep records of large gifts and spending, with dates and reasons.
• Be most cautious once care is on the horizon, for example after a diagnosis or a fall.
• Don't rely on the seven-year rule for care fees.
• Be wary of schemes marketed to "protect your home from care fees", particularly trusts. They can cost a lot and may still be treated as deprivation.
• Get independent advice from a solicitor or an FCA-regulated financial adviser before transferring a home or large sums.

Frequently asked questions

How far back can the council look?

There is no fixed time limit. The council can ask about any transaction, but it has to consider whether care was foreseeable and whether avoiding charges was a significant reason at the time.

Is paying off a mortgage or debts deprivation?

Usually not, if the debt was genuinely owed. The guidance lists proof that debts were repaid as acceptable evidence of how capital was used. Repaying in an unusual way just before needing care could still be questioned.

Can the council make my children pay?

If assets were transferred to them to avoid charges, they can be liable for the charges the council lost, but no more than the value they received.

Is putting the house in trust safe?

Not necessarily. Putting assets into a trust that cannot be revoked is one of the examples in the guidance. If avoiding care fees was a significant motivation, the council can still count the house.

Does buying things count?

It can. Converting cash into possessions the means test ignores, such as jewellery or a car, can be deprivation if done to avoid charges. Everyday purchases and normal spending are not.

Key takeaways

• Deprivation of assets means reducing assets to avoid care charges; ordinary spending and gifts are not automatically caught.
• Councils look at significant motivation, timing and whether care was foreseeable.
• There is no seven-year rule for care fees.
• If deprivation is found, the asset counts as notional capital, which reduces weekly over time.
• Recipients can be liable, but only up to what they received.
• Keep records, ask for reasons in writing and take advice before large transfers.