Top-up fees are one of the most stressful and misunderstood parts of care home funding. Families find themselves committed to paying hundreds of pounds a month on top of the council’s contribution — often without fully understanding what they have signed up to, or for how long.
This guide explains exactly what top-up fees are, who can and cannot pay them, what the written agreement must cover, and what your options are if the arrangement becomes unaffordable.
What Is a Care Home Top-Up Fee?
When the council funds someone’s care, it pays an agreed rate to the care home based on local authority negotiated terms. This standard rate may be lower than what the person would pay as a self-funder.
If a person (or their family) wants a particular care home that charges more than the council’s standard rate, the difference must be paid by someone — this is the top-up fee.
Example:
- Council agreed rate for that home: £800 per week
- Full care home weekly charge: £1,050 per week
- Top-up fee required: £250 per week (£13,000 per year)
Top-up fees are sometimes called third-party top-up payments because they are paid by a third party — almost always a family member or friend.
Who Can Pay a Top-Up?
| Who Can Pay | Details |
|---|---|
| A family member | Most common arrangement |
| A friend or third party | Must agree to the formal arrangement |
| A charity or trust | Possible in limited circumstances |
| A personal injury compensation trust | Specialist legal arrangement |
| The resident themselves | Generally NOT permitted under standard rules |
Why Can’t the Resident Pay Their Own Top-Up?
If the person in the care home can afford to pay the top-up from their own income or savings, then — in the council’s view — they are not using those assets on care costs, which means they should be treated as a self-funder for the amount above the council’s rate. The whole point of a top-up is that someone else willingly subsidises a personal preference for a more expensive home.
The rules become more complex if a resident has income set aside under a property disregard (e.g. rental income from a property that is temporarily disregarded) — seek specialist advice in these circumstances.
The Legal Requirement: A Written Agreement
The council has a statutory duty under the Care Act 2014 (England) to ensure that every top-up arrangement is:
- Voluntary — the third party has not been pressured
- Financially sustainable — the payer can realistically maintain payments
- Documented in writing before the placement begins
The written agreement must be made between the council and the third-party payer — not directly between the care home and the payer. Arrangements made directly with care homes (bypassing the council) have been the source of significant disputes.
What the Agreement Should Include
- The total weekly charge of the home
- The council’s agreed rate
- The top-up amount
- Who is responsible for paying the top-up
- How and when payments are made
- What happens if the top-up can no longer be paid
- Review clauses (especially for fee increases)
Annual Fee Increases: A Growing Problem
Many families are caught out when care home fees increase each year. The council may increase its rate modestly (e.g. 2–3%), but the care home raises its full charge by more. This quietly widens the top-up gap.
Example:
| Year | Council Rate | Home Charge | Top-Up |
|---|---|---|---|
| Year 1 | £800/wk | £1,050/wk | £250/wk |
| Year 3 | £824/wk | £1,155/wk | £331/wk |
| Year 5 | £850/wk | £1,270/wk | £420/wk |
Over time, a family paying £13,000 per year in top-ups could be paying £22,000 per year — without any formal notice or renegotiation rights under a poorly drafted agreement.
Always ensure the agreement specifies:
- A cap on annual top-up increases
- A right to review if the gap becomes unaffordable
- Notice periods before fee changes take effect
What the Council Must Provide Without a Top-Up
The council must always be able to offer at least one suitable care home at its standard rate that:
- Meets the person’s assessed needs
- Has a place available
- Agrees to accept the council rate
If no such home exists, the council must either:
- Increase its funding to pay for a suitable home
- Place the person in a home that costs more and fund the full amount
The person’s right to choose their care home is genuine — but it does not extend to forcing the council to pay above its rate for a preference rather than a need.
What Happens When Top-Up Payments Stop?
If the third-party payer can no longer afford the top-up:
- The care home is entitled to serve notice (typically 4 weeks) for the shortfall
- The council must step in and arrange an alternative placement at its standard rate
- The person may have to move care homes — a process that can be extremely distressing for residents, particularly those with dementia
This is why the council is required to assess whether the payer can genuinely sustain the payments — not just for a year, but potentially for the duration of the person’s life in care.
Top-Up Fees in Scotland, Wales, and Northern Ireland
Top-up rules vary across the nations:
| Country | Key Differences |
|---|---|
| Scotland | Similar framework; free personal and nursing care removes many top-up situations for nursing needs |
| Wales | Welsh Government framework broadly similar but with higher capital threshold (£50,000) |
| Northern Ireland | Trust-administered rather than council; top-up rules broadly similar |
Alternatives to Top-Up Fees
If a top-up is unaffordable, consider:
- Choosing a home within the council’s rate — the person has the same legal right to a good home; the council rate can cover good homes
- A Deferred Payment Agreement — if property value is involved, using the property as security can fund care without a family top-up
- Exploring NHS CHC eligibility — if the person has complex health needs, all costs may be NHS-funded; see our Care Home Fees & Funding Guide
- Speaking to an independent financial adviser specialising in care fees
Red Flags to Watch For
- A care home asking you to pay a top-up directly to them (should go via the council agreement)
- No written agreement before placement
- Agreements with no cap on annual increases
- Being told you “must” pay a top-up for the person’s chosen home without explanation of alternatives
- Pressure to make a quick decision without time to read the agreement