If you are assessed as eligible for care support, your local authority will allocate a personal budget to fund your care. This can be arranged in two ways.
In some cases, the council will organise and manage services on your behalf using this funding. Alternatively, the money can be paid directly to you as a direct payment, giving you the freedom to choose who provides your support, how it is delivered, and when it takes place. Many people find this approach offers greater independence and control over their daily life.
This guide explains how direct payments work in 2026, including who qualifies, how much funding you may receive, how the payments can be used, and how to apply.
What Are Direct Payments?
Direct payments are payments made by your local authority to cover the cost of care and support you have been assessed as needing.
Instead of the council organising care services for you, the money is paid directly to you or someone acting on your behalf. You can then arrange the support that works best for your situation.
Direct payments can be used for things such as:
- Hiring a personal assistant
- Paying a home care agency
- Funding support services or day activities
- Paying for short breaks in a care home
- Purchasing equipment or small home adaptations
This approach forms part of the wider move towards personalised care in the UK, where individuals have more choice over how their support is delivered.
According to Skills for Care, there are currently around 220,000 adults and carers in England who receive direct payments as part of their social care support.
Direct Payments Carer Insurance
Cover available for:
- Direct Payments Arranged Care
- Employers Liability up to £10m
- Public Liability up to £5m
- Legal Expenses & Redundancy Cover
- Many Healthcare Tasks Covered As Standard
What Are The Benefits of Direct Payments?
Direct payments can offer much more flexibility than council-arranged care.
Some of the main advantages of direct payments include:
Support tailored to your needs: Direct payments allow you to arrange services that suit your lifestyle and personal preferences.
More choice and independence: You can choose who provides your care and how that support is delivered.
Care that fits around your life: You can arrange care at times that work best for you rather than relying on agency availability.
Consistent support: Hiring your own personal assistant often means you receive support from the same person regularly.
Who Is Eligible for Direct Payments?
To receive direct payments, your local authority must have assessed that you need care or support. If you are eligible, the council will create a care plan and explain the funding options available to you, including direct payments. Direct payments are usually available to:
- Adults with disabilities
- Older people who need support with daily living
- Carers who need help with their caring responsibilities
- Parents or guardians of disabled children
- Young people aged 16 or over who need care support
If you already receive services arranged by your local authority, you can ask them about switching to direct payments.
In cases where someone does not have the capacity to manage the payments themselves, a nominated person can receive and manage the payments on their behalf.
How to Apply for Direct Payments
If you are not currently receiving support, the first step is to request a care needs assessment from your local authority.
During the assessment, a social care professional will consider factors such as:
- Your ability to carry out everyday tasks
- Any health conditions or disabilities
- Your home environment
- Support you receive from family or carers
If you are eligible for care support, the council will create a care plan and explain the funding options available to you, including direct payments.
You can also apply through the UK Government website.
What Can Direct Payments Be Used For?
Direct payments must be used to meet the needs outlined in your care plan. They are often used to pay for:
- Personal assistants
- Care agencies
- Support with daily tasks such as cleaning or cooking
- Social activities and community support
- Short respite stays in care homes
- Equipment that supports independent living
For example, someone might use direct payments to hire a personal assistant who helps with shopping, household tasks, or attending medical appointments.
What Direct Payments Cannot Be Used For
There are restrictions on how direct payments can be spent. In general, they cannot be used to:
- Pay close family members living in the same household (unless the council agrees this is necessary)
- Pay for long-term residential care in a care home
- Pay for services provided directly by your local authority
Local authorities will monitor how direct payments are used to make sure they are spent correctly.
How Much Can You Receive?
The amount of direct payment you receive depends on the outcome of your social care assessment.
Your payment should cover the full cost of meeting your agreed care needs. This can include costs such as:
- Wages for a personal assistant
- Employer costs like National Insurance contributions
- Pension contributions
- Holiday pay and statutory sick pay
- Insurance for employing staff
If your needs change, your local authority may reassess your care plan and adjust the amount you receive.
Employing a Personal Assistant Using Direct Payments
Many people choose to use direct payments to organise and employ their own personal assistant, instead of using an agency.
In fact, according to a recent report from Skills for Care, around 70,000 people who receive direct payments in England directly employ their own care staff.
This option can provide consistent support from someone you know and trust, but it also means you become an employer, which brings certain responsibilities. Find out more about hiring a personal assistant here.
Employers Liability Insurance
Employers in the UK are legally required to have employers’ liability insurance. This protects you if your employee becomes injured or ill because of their work.
At Surewise, we offer Direct Payments Carer Insurance specifically for these circumstances and provide three different levels of cover to suit your needs.
Written Employment Contract
As an employer, you must also provide a written contract outlining:
- Job role
- Start date
- Pay rate
- Working hours
- Holiday entitlement
- Sick pay arrangements
- Notice periods
Paying Your Employee
Employers must also manage:
- Income tax deductions
- National Insurance contributions
- Pension contributions
Many people choose to use a payroll service to manage these tasks, but bear in mind that this comes at an additional cost.
Do Direct Payments Affect Your Benefits?
Direct payments are not counted as income and will not affect most benefits.
However, if you are paid from someone else’s direct payments to provide care, this would be treated as earnings and could affect your benefit entitlement.
If you are unsure, it is always worth seeking advice before accepting payments for care.
Frequently Asked Questions About Direct Payments
Can family members be paid using direct payments?
Usually, close family members who live in the same household cannot be paid using direct payments. However, councils can allow this in exceptional circumstances.
Do I have to employ a personal assistant?
No. Direct payments can also be used to pay care agencies, day services or other support that meets your care needs.
Do direct payments count as income?
No. Direct payments are not treated as personal income and normally do not affect benefits.
Can someone manage the direct payments for me?
Yes. If you cannot manage the payments yourself, a nominated person can manage them on your behalf or you can appoint a payroll company to manage your direct payments.
How do I apply for direct payments?
You can request a care needs assessment from your local council or apply via the UK Government website.
Take Control of Your Care with Direct Payments
Direct payments give you greater choice and control over how your care is arranged. By understanding how they work, who is eligible, and how to manage your personal budget responsibly, you can ensure your care is tailored to your needs. With the right planning, support, and insurance in place, direct payments can provide flexibility, independence, and peace of mind.
To protect yourself as an employer, it’s important to have the right cover. When you’re ready, you can get a personalised quote here to see how affordable your insurance cover could be.
Organisations That Can Help
If you need further advice or guidance about direct payments, the following organisations can help:
HM Revenue and Customs: Provides guidance for people who become employers.
www.hmrc.gov.uk
Telephone: 0300 200 3200
Citizens Advice: Offers independent advice on benefits and employment responsibilities.
www.citizensadvice.org.uk
Telephone: 0800 144 8848
Care Quality Commission: Regulates adult social care services in England.
www.cqc.org.uk
Telephone: 03000 616 161
