budgeting for personal care

Personal health budget: Everything you need to know

9 min read |

If you are in need of care and support, one way to fund this is with a personal health budget.

Applying for funding from the local authority or the NHS for care can be tricky to begin with.

If you need to, you can nominate a friend or family member to deal with the paperwork for you.

In this article we will give an overview of what a personal health budget is, who provides it, and how you can spend it.

Here’s a summary of what we cover in this article:

  • A personal health budget is provided by the NHS or Local Authority.
  • It is for the provision of an agreed care plan, or some adaptations to your home.
  • The personal health budget is not permitted to be spent on permanent residential care. Funding for that would come from a different source.
  • The local authority can spend the budget for you, or pay it directly to you to pay your carers.
personal health budget

What is a personal health budget?

A personal health budget is a sum of money awarded to an individual to cover the cost of their care.

In essence, this funding covers the cost of supporting your health and care needs.

An individual will work with a local NHS team to assess how much money they will be allocated for care. 

Because you are involved in the allocation of this budget, you can manage how you access care and support.

How much choice do you have with a personal health budget?

You can personalise how you purchase and use services, treatments and equipment also. 

Perhaps you may need mobility equipment for your home – the personal health budget will cover the cost of that.

Equipment or adaptations to your home costing less than £1,000 will usually be paid for by your local authority.

Here’s some more on local authority funding for care in your own home.


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Who is eligible for a personal health budget?

People who need ongoing funding to cover the cost of their healthcare can all apply for a personal health budget.

Those in receipt of NHS Continuing Healthcare funding will be able to use a personal health budget.

There is no age limit to this funding.

It can apply both to those with physical and mental health needs.

Your local Clinical Commissioning Group

In order to assess whether you are eligible for a personal health budget, speak to your local Clinical Commissioning Group.

They make all the arrangements for personal health budgets, and so will be well placed to advise you on the criteria. 

Seniors with complex health needs might find a personal care budget helpful.

People who need arthritis care and dementia care, or complications from diabetes, may all benefit from managing their own care.

how to apply for a personal health budget

How do I spend my personal health budget?

Your NHS team will work with you to develop your personal care plan.

This plan looks at your needs, both health and general wellbeing. You will be able to specify the health and wellness outcomes you wish to achieve. 

You and your care coordinator from your local NHS team will work together on this plan.

Together you will work to allocate your budget to the services you need to achieve this.

You will always be required to spend your personal health budget on your health and wellness.

Spending this funding on anything else is not permitted. 

Any medicines and emergency care will come from another budget.  

Gambling, alcohol, tobacco or illegal drugs are not permitted uses of this funding.

Will I be able to get my personal health budget directly?

Your local authority must always act with your health and safety in mind.

For this reason there may be some conditions attached to how you receive your funding. 

They will make an assessment of your situation before they issue direct payments. 

  • Mental capacity

Your local authority will decide if you are mentally capable of dealing with the money they send to you.

This could mean carrying out a mental health assessment. It could also be an assessment of dementia progression. 

  • Legal rights

The local authority will also check into your legal right to receive direct payments.

Undergoing some substance rehabilitation can mean that you are not legally permitted to receive this funding into your bank account.

In some cases, money can be taken from a bank account in order to offset outstanding debts.

If you are in this situation, you may be denied a direct payment. 

If this happens, the local authority will see to the payment of caring services.

This is to safeguard the care you need over the servicing of any debts you may have.

budgeting for personal care
  • Budget management

The local authority will need to be satisfied that you are able to manage the budget they send you.

They need to make sure you won’t become confused and spend the budget on things other than care. 

This is particularly true of those living with dementia. You may nominate a person to help you.

The local authority will also assess this person for their suitability to manage your personal health budget.

  • Checks for appropriateness for your personal health budget

The local authority will have to be satisfied that direct payments are appropriate and meet your needs.

This is open to interpretation.

It acts as a condition for the local authority to decide what they think is best for your funding provision.

This might sound prescriptive, but is designed to protect the individual and particularly, their care funding. 

Should you run into difficulties managing the budget yourself, the local authority can take control of your personal health budget.

This means that they will arrange paying for your care according to your care plan. More here on what is a care plan.

Additional conditions

They can also add certain conditions to the provision of direct payments. This is often to do with record keeping.

You will have to show proof of how the personal health budget has been spent by keeping receipts. 

It is a good idea to use a dedicated bank account to manage your personal health budget, for clarity’s sake.

Employment conditions

The local authority may also add a condition that you may not employ a certain person/people.

This is to ensure your safety if there are concerns about this person/people.

Some fraudsters particularly target the elderly, so this is a key condition to protect the recipient of the funding. 

The council may not, however, dictate who you employ directly.

types of arthritis

What if I’m too ill to manage the direct payments?

You may opt for direct payments even if you have limited mental capacity, for example are experiencing advanced dementia. 

The procedure here is to appoint an ‘authorised person’ to receive your direct payment on your behalf.

They will usually be a friend or family member, but they don’t need a power of attorney. 

The local authority will look into their suitability as an authorised person, and decide if they agree to them.

Often a nominated authorised person will be a partner, cohabiting family member, or close friend. 

Anyone outside of those groups will need to arrange DBS checks on any staff they employ for the care of the individual.

A DBS check is to assess the criminal record of potential employees.

cost of home care

How do I spend my personal health budget? 

You will work with the NHS coordinator and team to create your care plan.

After this you may ask the local authority to find you a carer or a care agency. 

You may prefer to find your own carer or care agency.

In the case of using a care agency, you simply pay them for the services described in your care plan.

Being an employer with your personal health budget

Should you wish to employ your own carer or team of carers, you will become an employer. 

This comes with responsibilities such as making allowances for national insurance, paid holiday, and pension contributions for your employees.

You will also need to arrange referencing, contracts, and employers liability insurance. 

You may choose to employ people who are already self-employed or freelance, who arrange most of this for themselves.

what is a personal health budget

What can’t I use my personal health budget on? 

We have already seen that you can only use your personal health budget on the provision of your approved care plan.

If paid by direct transfer you must be careful that it is not used for anything else. 

Restrictions particularly apply to things like gambling, spending money on debts, and tobacco and alcohol. 

It is also not permitted to be spent on full-time, permanent residential care.

There is some allowance for short-term or respite residential care. 

Generally speaking, you can pay for up to four consecutive weeks spent in a care home per year. 

If you use a care home for regular respite care you are permitted to use your personal health budget.

However, the stays must be more than a month apart. i.e. one week’s stay in a residential home every six weeks.

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Who can I employ with my personal health budget?

You can employ the appropriately qualified person or people who specialise in providing the sort of care you need.

Generally, you are not permitted to employ family members who live in the same house as you.

If family members living in your house provide care to you, this might be allowed.

You can ask the local authority if they will permit payment to them. 

The same applies if family members run administrative elements of your life.

If your care needs are complex and diverse, administering this care could be a big job.

In this case, the local authority may permit a payment to them based on their work for you.

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