Third Party Top Up Fees Explained: Rules, Risks and Rights

In short: Third party top up fees are extra payments made by someone other than the resident or the council when a person chooses a care home that costs more than the council’s personal budget, and they can be requested only where the choice is genuinely the person’s own. In England the council must set the arrangement out in a written agreement, and if the payments stop the resident may eventually have to move. This guide explains the rules and the risks.

What third party top up fees are

A top-up is the difference between the amount in the person’s council personal budget and the actual cost of the care home they have chosen, paid by someone else. Third party top up fees are therefore an additional cost agreed between the council and a friend, relative or other supporter.

When a council arranges and funds a care home place, it works out a personal budget after the financial assessment. Age UK explains that if you choose a home that is more expensive than the amount your council will pay, you can still move there as long as someone, such as another family member, agrees to pay the difference.

The rules come from the Care Act 2014 statutory guidance for England (Annex A, choice of accommodation and additional payments) and the regulations behind it. This page covers England; see the last section for the other nations. For how councils set their fee levels, see our guide to council care rates.

When councils allow third party top up fees and when they must not ask

A council can accept a top-up only where the person has actively chosen a more expensive setting, never because the council has no suitable option at its usual rate. The statutory guidance is explicit that an additional payment must always be optional and must not result from commissioning failures that limit choice.

Under the guidance, the council must make sure at least one suitable option is available and affordable within the personal budget, and should make sure there is more than one. If no preference has been expressed and nothing suitable is available at the personal budget amount, the council must arrange care in a more expensive setting, adjust the budget, and must not ask for a top-up. Age UK gives the same message: you should not be asked for a top-up if you moved into a more expensive home out of need rather than preference.

Where a person does choose a different home, the council must arrange it if these conditions are met:

• the home is suitable for the person’s assessed needs;
• it would not cost the council more than the personal budget for that type of accommodation, apart from the top-up;
• a place is available;
• the provider is willing to contract with the council on its terms and conditions.

The choice is not limited to homes the council already uses or to homes inside its own area. The CMA’s consumer law advice adds that where a resident is funded through NHS continuing healthcare, a home should not charge any top up, because NHS services must be free at the point of delivery.

Who can pay third party top up fees

Third party top up fees are paid by someone other than the resident or the council, such as a family member, a friend or sometimes a charity. Age UK describes this, and the NHS adds that the council does not look at a relative’s finances when it assesses the person needing care.

The resident cannot usually pay their own top-up, so in most cases third party top up fees must come from someone else. The statutory guidance allows it in only three situations:

• while the 12-week property disregard applies after a permanent move into a care home;
• where the person has a deferred payment agreement with the council, in which case the terms should reflect this;
• where the accommodation is provided as after-care under section 117 of the Mental Health Act 1983.

The person paying must be willing and able to meet the cost for the likely duration of the stay, which may be years. Because of that, Age UK advises getting financial advice before agreeing to pay someone else’s top-up. Turn2us is the service Age UK points to for checking whether a charity might help. If the resident has a deferred payment agreement, our guide to deferred payment agreements explains how it interacts with a top-up.

The written agreement the council must put in place

The council must make sure the person paying enters into a written agreement with it, agreeing to meet the extra cost. The statutory guidance sets a minimum list of what the agreement must include:

• the additional amount to be paid;
• the amount specified for the accommodation in the personal budget;
• how often payments are made;
• who the payments go to;
• how and when the agreement will be reviewed;
• a statement on the consequences of ceasing to make payments;
• a statement on the effect of any increases in the provider’s charges;
• a statement on the effect of any change in the payer’s financial circumstances.

Before the agreement is signed, the council must give the payer enough information and advice to understand the terms and conditions, and must actively consider providing independent financial information and advice. The guidance says the amount should be the difference between the chosen provider’s actual cost and the personal budget the council would have set, and the council should not simply default to its cheapest rate.

Read the draft carefully and ask for time to think, because third party top up fees can continue for years. Anyone who is unsure should take advice from a solicitor or an independent financial adviser, since this is a long-term financial commitment.

How the money is paid and who is responsible

The council contracts with the care home and remains responsible for the total fee, including the top-up. That is why the guidance says that if the arrangement breaks down, the council is liable for the fees until it has recovered the extra cost or made alternative arrangements.

The guidance gives the council three options for collecting third party top up fees: treat the top-up as part of the resident’s income, if the payer gives it to the resident; have the payer pay the top-up to the council, which then pays the whole fee to the home; or, with everyone’s agreement, have the payer pay the provider directly. It says the third option is not recommended, and that councils should deter direct payments to a provider, because several contracts risk confusion and the council may be unable to check it is meeting its duties.

If you are asked to pay the home directly, ask the council to confirm in writing which option applies. The CMA’s advice also says any separate contract between a home and a third party payer must be on the same terms as the council’s contract, and that top-up fees should not run for longer than the council continues paying after the resident’s death. Our guide to care home fees after death covers this.

Price increases and changes in circumstances

Care home fees often rise each year, and the council does not always raise its own funding by the same amount, so the top-up can grow. Age UK warns that you could find yourself paying more each year to cover the gap.

The statutory guidance requires the council to set out in writing how increased costs will be shared and how agreement on that will be reached. It must also state that there is no guarantee increases will be shared evenly, if the provider’s costs rise faster than the amount the council would have increased the personal budget. The guidance suggests councils may negotiate future price rises with the provider when the contract starts, to help keep the top-up affordable.

It also says that if the resident has a change in circumstances that leads to a new financial assessment and a different personal contribution, that may not reduce the need for a top-up. The payer’s own circumstances can change too, and the council must say in writing how it will respond and what the payer must tell the council. Our guide to care home fee increases explains the notice and fairness rules for the home’s own contract.

Risks if the payer stops paying

If third party top up fees stop, the resident may eventually have to move to a cheaper home, but only after the council has carried out a new assessment. The statutory guidance says the council must make the consequences clear in writing before the agreement starts.

The guidance says the person may be moved to alternative accommodation that is suitable for their needs and affordable within the personal budget. Before considering that, the council must carry out a new assessment, including whether a health needs assessment is required, and have regard to the person’s wellbeing. The council can also try to recover any unpaid amount from the payer. The NHS gives a short warning: if the family has to stop paying, the person may have to move out.

Age UK recommends that anyone paying a top-up whose money is going to run out should speak to the council and the care home manager as soon as possible. Early notice gives the council time to plan, and the guidance expects it to keep an overview of all top-up agreements. A move late in life can be unsettling, so before agreeing, ask yourself whether you could keep paying if fees rose or your income fell.

Practical questions to ask, and the other UK nations

Ask the council for the personal budget figure, the home’s actual fee and the written agreement before anyone commits to third party top up fees. Useful questions include:

• What is the personal budget for this type of home, and how was it calculated?
• Is there a suitable home within that budget, and was it offered?
• Who will the payments go to, and how often?
• How will annual increases be shared, and when will the agreement be reviewed?
• What happens if the resident’s needs change, or if I can no longer pay?

If you are not satisfied with the answers, you can use the council’s complaints procedure, and our guide on local authority funding for care explains the wider system.

In Wales, Scotland and Northern Ireland, choice of accommodation and additional payments are governed by separate legislation and guidance, so the detail can differ. Check with the relevant council or Health and Social Care Trust before agreeing to pay.

Frequently asked questions

What is a third party top up fee?

It is an extra payment, made by someone other than the resident or the council, covering the gap between the council’s personal budget and the actual cost of a more expensive care home that the person has chosen. Age UK describes it as the difference someone else agrees to pay.

Can the council ask for a top-up if there is no cheaper home available?

No. The statutory guidance says a person must not be asked to pay a top-up because of market inadequacies or commissioning failures. If no suitable home is available at the personal budget amount and no preference was expressed, the council must arrange a more expensive home and adjust the budget.

Can the resident pay their own top-up?

Usually not. Under the statutory guidance, the resident can pay only in three situations: during the 12-week property disregard, where they have a deferred payment agreement, or where the place is section 117 after-care under the Mental Health Act 1983.

Does the top-up need to be in writing?

Yes. The council must make sure the payer signs a written agreement covering the extra amount, the personal budget figure, payment frequency, who is paid, reviews, the effects of stopping payments, of provider price rises and of changes in the payer’s finances.

What happens if I can no longer afford the top-up?

Tell the council and the home manager straight away. The council remains liable for the fees while it recovers the extra cost or makes other arrangements. After a new assessment, the resident may be moved to a suitable home that is affordable within the personal budget.

Can a care home charge a top-up for someone on NHS continuing healthcare?

The CMA’s consumer law advice says that where a home accepts NHS continuing healthcare funded residents, it should not charge any top up, because NHS services must be free at the point of delivery. Ask the NHS body and the home if you are asked for one.

Are the rules the same across the UK?

No. This guide covers England and the Care Act 2014 statutory guidance. Wales, Scotland and Northern Ireland have separate legislation and guidance on choice of accommodation and additional payments, so check with the relevant council or Health and Social Care Trust.

Official sources

• GOV.UK: Care and support statutory guidance, Annex A and chapters 8 and 9
• Age UK: Care home top-up fees
• Age UK: Paying for residential care
• NHS: Care homes
• GOV.UK (CMA): Care homes consumer protection case, advice re-issued 8 December 2021

This page is general information, not legal, medical or financial advice. The Care Panel is an independent guide and is not part of any government body or care provider. Last checked 9 November 2026.

Related: Council care rates explained · Your rights under the Care Act 2014 · Average care home fees in the UK

See also: Are next of kin responsible for care home fees?

Reviewed by The Care Panel team on 9 November 2026. This guide is general information about care in England, not legal, medical or financial advice. Rules and rates change; check with your council or an adviser before making decisions.