Third-Party Top-Up Fees Explained
If your loved one is funded by the council but wants to live in a more expensive care home, a family member or friend may be asked to pay a "top-up fee". This guide explains what top-up fees are, who can pay them, when they are unlawful, and what to do if you are struggling to afford them.
Key facts at a glance
Top-up fees are legal — but only if the council has first offered a suitable, affordable alternative care home.
Payment must be entirely voluntary. The council cannot demand a top-up from family members.
The care home resident cannot usually pay their own top-up — except in three specific circumstances.
If no affordable alternative is offered, the top-up may be unlawful — and you may be entitled to a refund.
Top-up fees often rise faster than council rates, meaning the gap — and your payments — can grow each year.
If payments stop, the resident may have to move to a different, less expensive care home.
What is a third-party top-up fee?
When a local authority funds someone's care home place, it sets a personal budget — the amount it is prepared to pay for care that meets the person's assessed needs. This figure is sometimes called the "council rate" or "local authority rate".
Many care homes charge more than this rate, particularly in London and the South East. If the resident or their family wants to live in one of these more expensive homes, someone else — a family member, friend, or occasionally a charity — can pay the difference between the council rate and the home's actual fee. This additional payment is the third-party top-up fee.
The term "third party" simply means it is paid by someone other than the resident themselves or the council. It is entirely separate from any contribution the resident makes from their own income (such as their pension), which is calculated separately during the financial assessment.
Worked example
In this example, the family member pays £250 per week — £13,000 per year — on top of the council's contribution. If the care home increases its fees by 5% the following year but the council rate rises by only 2%, the top-up gap widens further.
Who can pay a top-up fee?
Under the Care Act 2014 and the accompanying statutory guidance, a top-up fee can be paid by:
Family members
An adult son, daughter, spouse, or other relative. This is by far the most common arrangement. The payer must confirm in writing that the payment is voluntary and affordable.
Friends
A close friend of the resident can pay a top-up, subject to the same conditions. The council must still be satisfied the arrangement is genuinely voluntary.
Charities
In some cases, a charity may agree to cover top-up fees. Turn2us (turn2us.org.uk) can help identify whether any charitable funds are available for your situation.
Can the resident pay their own top-up?
Generally, no. The resident's income and savings are already taken into account in the financial assessment, so they cannot normally pay a top-up from their own funds. However, there are three exceptions where a resident can pay their own top-up:
- During the 12-week property disregard period, when the value of their home is temporarily excluded from the financial assessment.
- When the resident has a Deferred Payment Agreement (DPA) with the council, using the equity in their property to fund the top-up.
- If the care home place is provided as after-care under Section 117 of the Mental Health Act 1983.
When are top-up fees unlawful?
Top-up fees are only lawful if the council has met its legal obligations first. The following situations may make a top-up fee unlawful — and potentially refundable.
No affordable alternative was offered
Potentially unlawfulBefore asking a family member to pay a top-up, the council must offer at least one suitable, affordable care home that falls within its budget. If it cannot do so, it must fund the more expensive home in full. The Local Government and Social Care Ombudsman has upheld complaints — and ordered full refunds — where councils failed to offer a genuine alternative.
The top-up was presented as mandatory
Potentially unlawfulTop-up fees must be entirely voluntary. If a council or care home told you that you had to pay a top-up, or implied there was no other option, that is unlawful. The council cannot demand or pressure a third party into paying.
The resident was moved in out of necessity, not preference
Potentially unlawfulIf the resident was placed in a more expensive home because it was the only home that could meet their assessed care needs — not because they chose it — no top-up should be charged. The council must fund the full cost.
The top-up agreement was not in writing
Procedural breachThe council must provide a written top-up agreement that clearly sets out the amount, who pays it, how it will be reviewed, and what happens if circumstances change. A verbal arrangement is not sufficient.
The agreement did not explain what happens if payments stop
Procedural breachThe written agreement must explain the consequences of stopping payments — including the possibility that the resident may need to move. If this was not made clear at the outset, the arrangement may be challengeable.
Real cases: councils ordered to refund top-up fees
The Local Government and Social Care Ombudsman has investigated — and upheld — complaints against multiple councils for unlawful top-up fee practices:
- Derbyshire County Council was ordered to waive the top-up fee entirely, backdated to the date of admission, after failing to offer a single appropriate affordable alternative.
- Birmingham City Council was ordered to refund 11 years of top-up fees after it was found to have breached its obligations throughout that period.
What to expect from the top-up agreement
If you agree to pay a top-up fee, the council must provide a written agreement. Under the Care and Support Statutory Guidance, this agreement must include:
The top-up amount
The exact weekly or monthly sum you are agreeing to pay, and how it is calculated (i.e. the difference between the council rate and the home's fee).
Who pays and to whom
Whether you pay the council directly or the care home. Both arrangements are lawful, but the council remains responsible for ensuring the home receives the full fee.
Review arrangements
How and when the top-up will be reviewed — typically annually. The agreement must explain how increases will be handled and what notice you will receive.
What happens if you stop paying
The consequences of stopping payments, including the possibility that the resident may need to move to a less expensive care home that falls within the council rate.
Your right to withdraw
You have the right to stop paying at any time, though you must give reasonable notice. The council cannot pursue you for arrears if it failed to meet its obligations.
Dispute resolution
How to raise a concern or complaint if you believe the top-up is unfair, the amount is wrong, or the council has not met its obligations.
What if you can no longer afford the top-up?
Top-up fees can become unaffordable over time — particularly as care home fees rise faster than council rates. If you are struggling, here is what you should do:
Tell the council and care home as soon as possible
Do not wait until payments stop. Contact both the council and the care home manager immediately. Early communication gives everyone time to explore alternatives and avoids the resident being placed in an uncertain situation.
Request a financial reassessment
Ask the council to carry out a new financial assessment of the resident. If their circumstances have changed — for example, their savings have reduced — they may now qualify for a higher level of council funding, reducing or eliminating the top-up.
Ask the council to review its rate
You can ask the council to increase its personal budget contribution if you believe the current rate is insufficient to meet the resident's needs in a suitable home. The council must consider this request and give reasons if it refuses.
Explore charitable funding
Some charities help with care costs. Use the Turn2us grant search (turn2us.org.uk) to find funds you may be eligible for. Age UK and Citizens Advice can also help identify local sources of support.
Understand the resident's rights if they must move
If top-up payments stop and no alternative funding is found, the council must carry out a new care needs assessment before deciding whether the resident needs to move. It must offer at least one suitable, affordable alternative. The resident cannot simply be evicted.
How to challenge an unlawful top-up fee
If you believe you have been charged a top-up fee unlawfully — for example, because no affordable alternative was offered — you have the right to complain and potentially claim a refund.
Complain to the council
Start by raising a formal complaint with the council's adult social care team. Put it in writing, explain why you believe the top-up is unlawful, and ask for a full written response within 20 working days.
Escalate to the Ombudsman
If the council does not resolve your complaint satisfactorily, escalate to the Local Government and Social Care Ombudsman (lgo.org.uk). The Ombudsman can investigate and order refunds, as it has done in several high-profile cases.
Get legal advice
For complex cases or large sums, consider specialist legal advice. Solicitors who specialise in care funding (such as those accredited by SOLLA) can advise on the strength of your case and represent you if needed.
Free helplines and resources
Frequently asked questions
Can the council increase the top-up fee without telling me?
No. Any change to the top-up amount must be agreed in writing by all parties. The council must give you advance notice of any proposed increase and explain how it has been calculated. You have the right to refuse an increase, though this may mean the resident needs to move to a less expensive home.
What happens to the top-up if the resident's savings run out?
If the resident's own savings fall below the upper capital limit (£23,250 in England), the council will take over funding their care. At that point, the third-party top-up arrangement should be reviewed. The council must offer at least one suitable, affordable alternative before asking a family member to continue paying a top-up.
Can a care home charge me a top-up directly without involving the council?
Only in limited circumstances. If the council has arranged the placement, it must be party to any top-up agreement. A care home cannot bypass the council and charge you directly without the council's knowledge and agreement. If this has happened, it may be unlawful.
Are top-up fees tax-deductible?
No. Top-up fees paid by a family member are not tax-deductible in the UK. They are treated as a personal expenditure, not a charitable donation or business expense.
Does paying a top-up affect my entitlement to benefits?
Paying a top-up fee does not directly affect your own benefit entitlements. However, if you are transferring significant sums of money, it is worth taking independent financial advice to ensure this does not affect any means-tested benefits you receive.
What if the care home increases its fees but the council does not increase its rate?
This is one of the most common problems with top-up arrangements. If the care home raises its fees, the top-up gap widens and you will be asked to pay more. You can challenge this by asking the council to review its personal budget contribution. If the council refuses, you can escalate to the Ombudsman.
Can I pay a top-up for someone who is not a relative?
Yes. There is no legal requirement for the top-up payer to be a family member. A close friend or even a charity can pay a top-up, provided the arrangement is voluntary, affordable, and documented in a written agreement with the council.
This page provides general information about third-party top-up fees in England. Rules differ in Scotland, Wales, and Northern Ireland. This is not legal or financial advice. If you are in dispute with a council over top-up fees, or are considering legal action, always seek independent legal advice from a qualified solicitor.
Understand your full funding picture
Use our free calculator to find out whether your loved one qualifies for NHS funding, local authority support, or needs to self-fund — before any question of top-up fees arises.