What is deprivation of assets? And how to avoid it?

What is deprivation of assets? And how to avoid it?

Deprivation of assets - is when someone gives away their money, property, or other valuables on purpose to avoid paying for care costs. For example, this might mean gifting a house or large sum of money to family members before moving into a care home.

A common myth is that there’s a 7 year rule for assets deprivation (like with inheritance tax). This isn’t true. There is no time limit – a local council can look back at assets given away at any point if they believe it was done to avoid paying care fees.

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What does deprivation of assets mean for care home fees?

When someone needs help from social care – whether that’s support at home or moving into a care home – the local council will carry out a financial assessment (also called a means test). This checks how much the person can afford to pay toward their care fees.

Both income and savings are included in this assessment. If a person needs to move into a care home, their property may also be counted when working out costs.

Some people think about giving away their house or savings to family, friends, or charities so they aren’t included in the means test.

However, the council may decide this is "deliberate deprivation of assets" – meaning it was done to avoid paying for care. If this happens, the council can still treat the person as if they still own those assets.

This means:

1. The council may refuse to pay for care, or

2. They might expect the person (or their family)to cover the costs as though the assets were still available.

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When is it relevant?

Deprivation of assets only matters when a person is asking the local council to help pay for their care. The council can look back at someone’s financial history – as far back as when they first needed care – to see if they gave away, transferred, or sold assets to avoid paying for care fees.

What the council checks?

The council must be able to show that:

1. Something valuable (like cash, shares, or property) was given away or transferred

2. The main reason was to avoid paying for care

3. The person could have reasonably expected they’d need care in the future, and that it would cost money

4. Avoiding care fees was a significant or main reason for giving away that asset

If there’s a genuine reason for giving away an asset (not linked to care costs), this should not count as deprivation – but the reason should be explained so the council can review it.

What the council look at?

Examples include:

1. Gifts of money or property

2. Putting assets into a trust

3. Selling a home for less than its true value

4. Paying off unsecured debts in large amounts

5. Sudden big spending or "living extravagantly"

6. Gifting pension income or savings

7. Moving assets into investment products (like capital bonds)

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Notional capital and income

Even if an asset is no longer owned, the council may treat the person as if they still have it – this is called "notional capital" or "notional income." For example, if someone delays taking their pension, the council might still count it as if they are receiving that income.

Example of when deprivation has not happened

Max has moved into a care home but still owns 50% of the home he shared with his civil partner, David. While David continues to live there, the property’s value is ignored in the financial assessment.

Later, David decides to move to a smaller, easier-to-manage property, so they sell their shared home. Technically, Max’s 50% share of the money from the sale could be counted in the financial assessment.

However, Max allows part of his share to be used so David can buy the new property.

In this situation, it would not be considered deprivation of assets, because Max’s decision wasn’t made to avoid paying care fees – it was to help David move into a smaller, suitable home.

Example of when deprivation of assets may be considered

Emma gives her daughter Imogen a painting worth £2,000 the week before moving into a care home. This would not be seen as deprivation because personal possessions like paintings are not included in a financial assessment.

However, if Emma had bought the painting just before entering care – using £2,000 from her savings account – and then gifted it to her daughter, this could be seen as deprivation.

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What if I disagree with the council’s decision?

If you don’t agree with the council’s decision about deprivation of assets, you have the right to challenge it through their formal complaints process.

When you do, remind the council that they must prove that:

1. You were significantly motivated by avoiding care costs

2. You knew you would need care and support when you gave away the assets

3. You expected to contribute towards care costs at that time

The council must base their decision on facts, and you should be given a chance to provide clear evidence explaining why the assets were given away. Be specific and honest about your reasons. If you are still unhappy with the outcome, you can take your complaint to the Local Government and Social Care Ombudsman.

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Next Steps

It’s natural to want to plan ahead and make sure your money or property is passed onto your family.

To make things easier, we’ve put together a free checklist – "Avoiding Deprivation of Assets"

This resource will help you:

1. Understand the questions to ask before giving away money or property

2. Spot the situations that could raise concerns with the council

3. Plan safely and avoid issues with future care costs

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Need help with planning, Wills, or Trusts?

Our Private Client team can guide you through the best ways to protect your assets while staying within the rules.

Fill out our quick form to speak to one of our experts.