Deliberate deprivation of assets happens when someone gives away money or property to reduce their wealth and qualify for council-funded care.
The legal test comes from the Care and Support (Charging and Assessment of Resources) Regulations 2014. Regulation 17 says a local authority can treat a person as still possessing assets they have deprived themselves of.
The council does not need to prove this was the main reason for the gift. They only need to show avoiding care fees was a significant reason. This is a low bar.
When your parent applies for care funding, the council looks back through their financial history. If they find gifts or transfers, they ask one question: did the person know they might need care, and did they give away money to avoid paying for it?
Deliberate Deprivation of Assets: Can the Council Make You Pay Back Gifted Money?
Yes. If your parent gave you money and later needs care, the council can force you to pay it back.
This applies even if you spent the money years ago. There is no time limit.
Under Section 70 of the Care Act 2014, if the council decides the gift was made to avoid care fees, you become personally liable for unpaid care costs. They can pursue this debt through the County Court.
We act for families across England and Wales who are facing these accusations. Many cases can be defended. The key is understanding what the council must prove—and where their case is weak.
What is Notional Capital?
Notional capital is money the council treats your parent as still owning, even though they gave it away.
The financial assessment is performed as if the gift never happened. If your parent gave away £80,000 five years ago, the council assesses them as if they still have £80,000.
Your parent fails the means test. They cannot access council funding. The care bills fall on them—and because they cannot pay, the council turns to you.
Notional capital is reduced over time using a formula called the “tariff income” rule. But for large gifts, this reduction is slow. A £100,000 gift would take decades to reduce to zero under the tariff calculation.
Is There a Deprivation of Assets 7 Year Rule?
No. There is no 7 year rule for care fees.
This is one of the most common misunderstandings we see. The 7 year rule applies to Inheritance Tax only. It has nothing to do with care funding assessments.
Councils can look back 10, 15, or 20 years. If they suspect a gift was made to avoid care charges, there is no time limit on their investigation.
We have seen councils investigate gifts made more than 15 years before care was needed. The question is always the same: what was in the person’s mind at the time of the gift?
What About the Deprivation of Assets 6 Month Rule?
There is no 6 month rule either. This is another common misunderstanding.
Some people confuse this with the 6 month period for challenging certain property transfers under insolvency law, or with DWP rules about benefit claims. Neither applies to care fee assessments.
The only relevant time factor is this: gifts made when the person was healthy and had no reason to anticipate care needs are harder for councils to challenge. Gifts made when care was foreseeable are much easier to attack.
What Are the Deprivation of Assets Rules?
The council can treat any of these as deprivation:
Cash gifts to family members. Birthday presents, wedding gifts, help with house deposits, paying off children’s debts.
Property transfers. Signing over the family home, adding children to the deeds, transferring into joint names.
Sales at undervalue. Selling a house to family for less than market price.
Rent-free occupation. Letting someone live in a property without paying rent is treated as an ongoing gift of the rental value.
Excessive spending. Expensive holidays, luxury purchases, or spending that seems out of character.
Trust arrangements. Placing assets into trusts, particularly those marketed as “asset protection” schemes.
The test is not whether the transaction was legal. The test is whether avoiding care fees was a significant purpose.
Red Flags That Trigger Council Investigations
From our experience defending these cases, councils pay close attention to:
Timing. Gifts made shortly before a care assessment, or after a diagnosis of dementia or serious illness.
Pattern of transfers. Multiple gifts to different family members over a short period.
Retaining benefit. Transferring a property but continuing to live there, especially rent-free.
Professional advice. Evidence that the person was advised about care fees before making transfers. Councils often request copies of wills and trust documents.
Health decline. Medical records showing cognitive decline or serious health problems around the time of the gift.
Unusual transactions. Large withdrawals in cash, or transfers to accounts the council cannot trace.
How to Avoid Selling Your House to Pay for Care
Many families search for ways to protect the family home. Be careful.
Transferring your house to your children before you need care is exactly what councils look for. If they find you did this with care fees in mind, they will treat it as deprivation.
There are circumstances where the family home is protected without any transfer:
12-week property disregard. When care first starts, your home is ignored for 12 weeks while you decide what to do.
Qualifying resident. If a spouse, partner, relative over 60, or disabled relative lives in the property, it is disregarded entirely.
Deferred payment agreements. The council can place a charge on the property and recover costs after death, allowing the home to be kept during the person’s lifetime.
Get legal advice before making any property transfers. What seems like sensible planning can become expensive if the council treats it as deprivation.
Section 70 Care Act 2014: How the Council Recovers Money From You
Section 70 is the legal basis for councils pursuing people who received gifts.
The process works like this:
- The council assesses your parent as having notional capital due to deprivation.
- Your parent cannot pay their care fees because they no longer have the money.
- The council writes to you as the recipient of the gift, demanding payment.
- Your liability is capped at the value of the benefit you received.
- If you do not pay, the council can pursue the debt through the County Court.
If you received £50,000 and spent it, you could still owe £50,000. The fact that you no longer have the money is no defence.
Section 423 Insolvency Act: When Councils Overturn Transfers
Councils have a second weapon: Section 423 of the Insolvency Act 1986.
This allows transactions to be set aside if they were made to put assets beyond the reach of creditors. The council is treated as a creditor for this purpose.
In Derbyshire County Council v Akrill, Mr Akrill transferred his home to his children and arranged to lease it back. He did this shortly before moving into a nursing home.
The court used Section 423 to set aside the transfer. The judge found the “real and substantial purpose” was to protect the house from care fees. The family lost the property.
This power exists independently of the Care Act. Even if a council decided not to pursue Section 70, they could still apply to court under the Insolvency Act.
Can You Defend Against a Deprivation of Assets Accusation?
Yes. The council must prove that avoiding care fees was a significant reason for the gift. If you can show the gift was made for genuine reasons, the accusation may fail.
Defences that can work:
No foreseeability of care. If the gift was made when your parent was healthy and had no reason to expect needing care, the council’s case is weak.
Genuine purpose. Wedding presents, helping children buy homes, rewarding care given over many years—these are legitimate reasons for gifts.
Mental capacity issues. If your parent lacked capacity at the time of the gift, the transfer may be invalid for other reasons.
Procedural failures. Councils must follow the statutory guidance. If they have not, their decision can be challenged.
We have overturned these decisions. When challenged with detailed legal argument, councils often struggle to prove their case to the required standard.
Expert Tips: What To Do If You Are Accused
From our experience acting in these cases:
- Do not ignore the letter. Councils interpret silence as acceptance. Respond in writing, even if only to say you dispute the accusation and are seeking legal advice.
- Gather evidence of the gift’s purpose. Bank statements, letters, emails, cards—anything showing why the gift was made. A wedding invitation with a matching gift date is powerful evidence.
- Get your parent’s medical records. If they were healthy at the time of the gift, this supports your case. If they had early dementia, the gift may be invalid anyway.
- Request the council’s evidence. Ask them to explain exactly why they believe this was deprivation. They must show their reasoning.
- Do not admit anything. Councils sometimes contact family members hoping for admissions. Everything you say can be used in their decision.
- Check the calculation. We often find errors in how councils calculate notional capital and tariff income. Mathematical mistakes can reduce your liability significantly.
- Consider a formal appeal. Councils have complaints procedures. If that fails, you can complain to the Local Government Ombudsman. We can advise on the best route.
Common Questions
Can the council take back money that was gifted years ago?
Yes. Under Section 70 of the Care Act 2014, you can be held liable for care costs up to the value of what you received. There is no time limit on how far back the council can look.
How much can you keep before paying for care?
The upper capital limit is £23,250. If your parent has more than this, they pay full care fees. Below £14,250, the council pays. Between these amounts, they contribute on a sliding scale. These limits apply to savings and most assets, but the family home has special rules.
Is deprivation of assets a criminal offence?
Deprivation itself is not a criminal offence. It is a civil matter. The council pursues the money through civil courts, not criminal prosecution. Fraud charges are theoretically possible in extreme cases involving deception, but this is rare.
Can I be forced to pay my parent’s care fees?
If you received a gift classified as deprivation, yes. Your liability is capped at the value of what you received. You cannot be forced to pay more than the gift was worth.
What if I spent the money and cannot afford to pay?
This does not remove your liability. The council can obtain a County Court judgment against you. They can then enforce this through charging orders on your property, attachment of earnings, or other debt recovery methods. Early legal advice is important if you are in this position.
How long does a deprivation of assets investigation take?
Investigations typically take 2-6 months. Complex cases involving property or trusts can take longer. During this time, care fees continue to accumulate. The longer the investigation, the larger the potential liability.
Can I put my house in a trust to avoid care fees?
Be very careful. Trusts marketed as “asset protection” schemes are high on councils’ radar. If the purpose was to avoid care fees, the trust will be treated as deprivation. Some trusts are legitimate for other purposes, but they require proper legal advice—not a scheme sold by an unregulated company.
What if my parent gave money to several children?
Each recipient can be pursued separately under Section 70. If your parent gave £30,000 to three children, the council can pursue each of you for up to £30,000. They often start with whoever they think is most likely to pay.
Why Families Choose Steene Law
We act exclusively in elderly care law. We do not do conveyancing, divorce, or employment disputes. This is all we do.
David Steene has practised as a solicitor since 1985. He is a member of the Court of Protection Practitioners Association and an Accredited Member of the Association of Lifetime Lawyers. He is a Dementia Champion.
We have been featured in the Daily Mail on elderly care law issues. We have 50 five-star Google reviews.
We act for families across England and Wales. Most of our work is done by phone, video call, and email. You do not need a local solicitor for this type of case.
What To Do Now
If you have received a letter from the council about deprivation of assets, or if you have accepted a gift and are worried about future problems, we can help.
Contact Us for a free initial conversation. We will give you an honest assessment of where you stand and explain your options.
Once the council’s position becomes fixed, it is harder to change. Early advice makes a difference.