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Deferred Payment Agreement

The Care Act 2014 included the establishment of the “Universal Deferred Payment Scheme”, which was brought into practice in April 2015.

This means that people should not be forced to sell their home in their lifetime to pay for their care. By entering into a Deferred Payment Agreement, a person can ‘defer’ or delay paying the costs of their care and support until a later date. Deferring payment can help people to delay the need to sell their home, and provides peace of mind during a time that can be challenging (or even a crisis point) for them and their loved ones as they make the transition into care.

The Scheme is universally available throughout England, and Local Authorities are required to offer Deferred Payment Agreements to people who meet certain criteria governing eligibility for the Scheme. Local authorities are also encouraged to offer the scheme more widely to anyone they feel would benefit who does not fully meet the criteria.

You can ask for a Deferred Payment if a “needs assessment” identifies that

  • A person’s needs should be met in residential care,
  • The property is not disregarded (i.e. because it is occupied by a spouse or dependant relative), and
  • A person has less than £23,250 in qualifying savings (excluding the value of the property and any disregarded investments),
  • There are no other charges against the property and
  • The Local Authority are confident that their loan will be secure.

There is a maximum amount that can be deferred, which is 90% of the property value, minus £14,250 (for 2017/2018, this figure may change in future years).

The Deferred Payment Agreement scheme is intended to be run on a cost-neutral basis, with Local Authorities able to recoup the costs associated with deferring fees by charging interest.  The maximum compound interest rate a Local Authority can charge is set nationally. It changes every six months from January and July.

Local Authorities can also recoup the administrative costs associated with DPAs, including legal and ongoing running costs, via administration charges which can be passed on to the individual. Administration charges and interest can be added on to the total amount deferred as they are accrued, although a person may request to pay these separately if they choose.

The Disposable Income Allowance

Under rules in the Care Act 2014 that apply in England only, your Local Authority must allow the person to keep a minimum amount of income each week if they enter into a Deferred Payment Agreement.

This is called the Disposable Income Allowance (DIA) and is currently set at £144 a week (2017/2018).


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