Care Home Top-Up Fees

When the council funds a care home placement, it pays a rate it considers sufficient to meet the resident's eligible needs in an appropriate care home. If the only available placement the resident (or their family) prefers is more expensive than the council's standard rate, the difference can be covered by a top-up fee paid by a third party — typically a family member.

A top-up is only legitimate if the council has first identified at least one suitable care home that it is willing to fund at its standard rate. If no suitable home is available at the council's rate, the council must pay the full cost of an appropriate placement — a top-up cannot be demanded in these circumstances.

The resident themselves cannot usually pay a top-up from their own assets or income while the council is funding care (as those funds would be assessed in the financial assessment). There is an exception for residents who have capital above the lower threshold (£14,250) that is being spent down — they can sometimes contribute to a top-up from that capital.

Top-up arrangements are subject to important rules:

• Written agreement — The top-up arrangement must be set out in a written agreement between the council and the third-party payer. The agreement must specify the amount, how increases will be handled, what happens if the payer can no longer afford it, and dispute resolution;
• Voluntary — The decision to pay a top-up must be genuinely voluntary. A family should not feel pressured into a top-up to secure any funded placement;
• Sustainability — The council should check that the third-party payer can sustain the top-up for the foreseeable future. If the top-up becomes unaffordable, the council must find an alternative funded placement — it cannot require the resident to move immediately;
• Review — Top-up amounts may increase over time as care home fees rise. Agreements should include arrangements for reviewing and adjusting the top-up amount.

Top-up fees are being demanded unlawfully in a number of scenarios that are unfortunately common:

• The council has not identified any suitable home at its standard rate — if no suitable home exists at the council rate, the council must pay the actual cost;
• The resident is required to pay their own top-up from income or assets that should have been assessed in the financial assessment;
• The care home charges the family directly without a written agreement with the council;
• The council's standard rate is set artificially low, meaning it does not genuinely reflect the cost of appropriate care in the local area.

If you believe a top-up is being demanded unlawfully, challenge it. Ask the council to explain why its standard rate does not cover the home's fee and to identify alternative suitable placements at its rate. If unresolved, use the formal complaints procedure and the LGSCO.

Top-up agreements are legally binding contracts between the third-party payer and the council. Before signing, there are several points you should negotiate and clarify — because once agreed, changes can be difficult to secure.

Key Clauses to Review

• Cap or maximum increase — Insist on a provision limiting annual increases to a specific percentage (e.g., RPI or CPI inflation) or requiring renegotiation before any increase above an agreed level. Without this, the top-up can increase significantly each year as the care home raises its fees;
• Review period — The agreement should specify when the top-up amount will be reviewed (usually annually) and how disputes about proposed increases will be resolved;
• What happens if the payer can no longer afford it — The agreement must set out what happens if the top-up becomes unaffordable. The statutory position is clear: if the top-up breaks down, the council must find an alternative funded placement. Ensure this is recorded in the agreement;
• Notice period — How much notice must the payer give of an intention to stop paying the top-up? Typically 28 days is reasonable;
• Who signs — The agreement is between the council and the third-party payer. The resident does not sign. The care home does not have a direct contractual relationship with the third-party payer in this arrangement — payments are made to the council, which pays the home.

The "Suitable Alternative Placement" Duty

A recurrent practical issue arises when the top-up arrangement breaks down. Families sometimes fear that the resident will be evicted from the care home at short notice if they can no longer pay. The statutory position under the Care and Support Statutory Guidance is that the council is responsible for finding an alternative suitable placement if a top-up arrangement becomes unworkable. The resident cannot be required to leave the home until an alternative funded placement is confirmed and agreed.

In practice, however, care homes may apply direct pressure on families in this situation. If this happens, contact the council immediately and confirm in writing that the top-up is unaffordable and that you require the council to find an alternative placement. The council's duty to meet the resident's eligible needs is continuous — the breakdown of a top-up arrangement does not suspend this duty.

LGSCO Cases on Top-Up Fees

The Local Government and Social Care Ombudsman has upheld many complaints about unlawful top-up practices. Common findings include councils failing to identify suitable placements at their standard rate before requiring a top-up; care homes charging families directly without council authorisation; and councils failing to act when top-up arrangements break down. If you believe your situation is unlawful, a complaint to the LGSCO is a realistic route to remedy.