The rule families ask about is the seven-year one, and that is the wrong rule. Inheritance Tax forgets a gift after seven years. Care funding never does. What a council looks at is intention: whether, when the asset went, you could reasonably expect to need care and to pay towards it. This page sets out the statutory guidance councils in England must follow.
What the rule is
The Care and Support Statutory Guidance, which councils in England work to under the Care Act 2014, defines deprivation of assets as intentionally depriving or decreasing your overall assets in order to reduce what you are charged towards care (Care and Support Statutory Guidance, Annex E, checked 26 October 2026). Assets means capital and income both.
The guidance adds the condition that decides most cases: the person must have known that they needed care and support, and have reduced their assets in order to reduce the contribution. Intention is the test. No longer having the money is not, on its own.
Two questions the council must ask
The guidance sets out the questions a council should consider. First, timing: at the point the capital was disposed of, could the person have a reasonable expectation of the need for care and support? Second, did the person have a reasonable expectation of needing to contribute to the cost of their care (Annex E, checked 26 October 2026)?
Its own example is the clearest statement of the limit. It would be unreasonable, the guidance says, to decide that a person had disposed of an asset in order to reduce their care charges if, at the time, they were fit and healthy and could not have foreseen the need for care and support. That is why the seven-year question is the wrong one: a gift made twelve years ago by someone then in good health is safe, and a gift made twelve weeks ago by someone with a care assessment booked is not.
What deprivation looks like
The guidance lists the common approaches: a lump-sum gift; sudden spending out of character with the past; transferring the title deeds of a property; putting assets into an irrevocable trust; converting savings into something disregarded, such as possessions; living extravagantly, gambling included; and buying an investment bond with life insurance (Annex E, checked 26 October 2026).
The guidance is equally clear about what it is not. It says deprivation should not be automatically assumed, that there may be valid reasons why someone no longer has an asset, and that a council should fully explore those first. Using money to remove a debt that would otherwise remain, even one not immediately due, must not be treated as deprivation.
Two of its worked examples show the line. A man in a care home makes part of his share of the sale of the family home available so that his civil partner can buy somewhere smaller; the guidance says it would not be reasonable to treat that as deprivation. A woman with £18,000 in a building society spends £10,500 on a car, enters a care home two weeks later and gives the car to her daughter; if she knew when she bought the car that she would be moving into care, deprivation should be considered.
Spending your own savings
Spending is not deprivation merely because the balance goes down. The guidance’s two questions apply to spending: whether avoiding the charge was a significant motivation in the timing of the spending, and whether at that point the person could reasonably have expected to need care and to contribute to its cost (Annex E, checked 26 October 2026).
The guidance is plain about the healthy spender. It says it would be unreasonable to decide a person had disposed of an asset to reduce their charges if, at the time, they were fit and healthy and could not have foreseen the need for care. Ordinary life, lived before care was on the horizon, is not the target.
What draws scrutiny is the pattern the guidance names: substantial spending that happens suddenly and is out of character with previous spending, or converting savings into something the assessment ignores. The worked example of the woman who buys a car and gives it away after entering a care home turns on what she knew when she bought it, not on the purchase itself. Keep receipts and a short note of why a large sum was spent, because the test looks back at the reasons.
Who has to prove it
The person does. The guidance says it is up to the person to prove to the local authority that they no longer have the asset, and that if they cannot, the council must assess them as if they still had it.
Acceptable evidence of disposal is a trust deed, a deed of gift, receipts for expenditure, or proof that debts have been repaid (Annex E, checked 26 October 2026).
That is the practical reason to keep paperwork. A gift made for good reasons years ago is only defensible if it can be shown to have happened, when, and why.
What happens if the council decides it was deprivation
The council treats you as if you still had the asset and charges accordingly. The guidance’s principle is that a person who has tried to deprive themselves of assets should not have the amount of council support they receive affected: they are assessed on the notional asset, not the real one (Annex E, checked 26 October 2026).
Where the money has gone to someone else, that person can be pursued. The guidance says a third party to whom an asset was transferred to avoid the charge is liable to pay the council the difference between what it would have charged and what it did charge, though never more than the benefit they received, and where funds went to more than one person, each is liable in proportion. As with any debt, the council can use the county court, but only after other avenues have been exhausted.
The guidance’s own example: a woman with £23,250 in savings gives £7,750 each to her three children a week before entering care. Had she not, the first £14,250 would have been disregarded and she would have paid a tariff income of £1 a week for every £250 between £14,250 and £23,250, which is £36 a week. After ten weeks she should have contributed £360, and each child is liable for a share of it.
Why the capital limits make this bite
The example works because of two figures in the same guidance: the upper capital limit of £23,250, above which a person pays the full cost of care, and the lower limit of £14,250, below which savings are ignored (Care and Support Statutory Guidance, Annex B, checked 26 October 2026).
Between the two, a tariff income of £1 a week per £250 applies. A gift that moves someone from a little above £23,250 to a little below it is the most visible kind, and the one a financial assessment is designed to notice.
What this page does not cover
Whether a particular gift will be treated as deprivation is a judgement the council makes on the facts, and where a house or a large sum is involved it is a question for a solicitor who does this work. The guidance itself says councils should treat the issue with sensitivity and care.
It also says people should be able to spend the money they have saved as they wish. The question is never whether you may give money away. It is whether you did so to avoid paying for care you knew was coming.
The capital limits and the rules on the home are on our paying for care hub. The Inheritance Tax rules on gifts, with their seven-year taper, are on our gifts and the 7-year rule page. This page describes the guidance for England; the other UK nations charge for care under their own rules.