Deprivation of Assets Rules

Deprivation of assets occurs when a person reduces their capital in a deliberate way, and a significant motivation for doing so was to reduce the amount they would contribute towards the cost of care. Common examples include:

• Giving away large sums of money to children or grandchildren;
• Transferring the family home into a child's name;
• Setting up a trust to hold assets;
• Spending capital on luxury items shortly before entering care;
• Paying off debts to family members that may not be genuine.

The key legal test is whether avoiding care costs was a significant motivation — not the only motivation. A person may have genuinely wanted to benefit their family AND reduce care costs. If avoiding care costs was a significant (not necessarily the only) reason, the council can treat the deprivation rules as applying.

If the council decides a deprivation has occurred, it applies the notional capital rule: it treats you as still possessing the capital you gave away. If this notional capital takes you above the upper capital threshold (£23,250), you will be required to pay the full cost of care as if you still had the assets.

Importantly, there is no time limit on how far back the council can look. A gift made ten years ago can still be treated as deprivation if the council believes avoiding care costs was a significant motivation at the time. In practice, gifts made very far in advance of care needs arising are less likely to be treated as deprivation, but the council retains discretion.

If notional capital exceeds the upper threshold, it is assumed to diminish over time at the rate you would have been paying for care. This notional capital spend-down continues until it falls below the upper threshold, at which point the council begins to contribute to costs.

Not every transfer is deprivation. Transfers that are not deprivation include:

• Spending money on a holiday or experience when you did not anticipate needing care;
• Making gifts at a time when you could not have foreseen needing care;
• Gifts that were clearly motivated by other reasons (generosity, family need) and where avoiding care costs was not a significant factor.

The burden of proof is on the council to demonstrate that avoiding care costs was a significant motivation, not merely a consequence. If you dispute a deprivation finding, challenge it through the complaints procedure and provide evidence of the genuine reasons for the transfer.

If you are considering making significant financial gifts and may need care in future, seek specialist legal and financial advice before proceeding. A later-life financial adviser accredited by SOLLA can help you understand the implications.

If the council decides you have deliberately deprived yourself of assets, the financial and practical consequences can be severe — you may be required to pay the full cost of care as if you still owned the assets, even if those assets no longer exist. Understanding how to challenge a deprivation finding is therefore critical.

What the Council Must Establish

The Care and Support Statutory Guidance is clear that councils must investigate individual cases properly. The council must establish that:

• A transfer or disposal of capital actually occurred;
• Avoiding care costs was a significant motivation at the time of the transfer — not the only motivation, but more than a trivial or incidental reason;
• The person had a sufficiently foreseeable need for care at the time of the transfer. A council cannot treat a gift made when the person was in good health and had no diagnosed condition as deprivation simply because they later needed care.

A council that applies a blanket rule — for example, treating all gifts in the last five years as deprivation without individual assessment — is acting unlawfully. Every deprivation decision must be reached on the individual facts of the case.

Evidence to Gather

If you are challenging a deprivation finding, gather evidence of the genuine reasons for the transfer:

• Correspondence, emails, or diary entries from the time showing the reason for the transfer;
• Medical records showing you were in good health at the time with no anticipated care needs;
• Legal documents (e.g., a will, trust deed, or letter from a solicitor) showing a legitimate estate planning or family reason for the transfer;
• Evidence that the transfer was part of a pattern of generosity predating any possible awareness of care needs.

Challenging Through Complaints and Legal Routes

A deprivation finding should be challenged in writing. Set out clearly the reasons the finding is wrong, supported by evidence. If the council does not change its position, use the formal complaints procedure and then the LGSCO. The LGSCO can find that a council applied the deprivation rules incorrectly and require the council to reassess and repay any amount charged in excess.

Where the council's finding is clearly perverse — for example, treating a transfer from 20 years ago as deprivation when there was no foreseeable care need — judicial review in the High Court may be the appropriate route. A community care or public law solicitor can advise on this. Many operate on a legal aid basis for adults in residential care.