Receiving Direct Payments & How To Use Them

Direct Payments Insurance Covers You For:

  • Direct Payments Arranged Care
  • Employers Liability up to £10m
  • Public Liability up to £5m

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Direct payments are a cash payment paid by your local authority which can be used to hire your own care services directly.

This payment is designed to be enough to cover the full costs of hiring care services and support that you have been assessed to need, including your Personal Care Assistant’s salary or paying a Home Agency for their services, as well as any additional costs you need to factor in such as insurance.

If you have been assessed to need care services by your local authority, you may prefer to handle putting this in place yourself (or entrusting a loved one to assist you), rather than having the council arrange your care. In this guide, we’ll cover everything you need to know about understanding direct payments, how much you may be entitled to, and exactly what you can use your payments for.


What are the benefits of direct payments?

Direct payments are a popular option for many people, and an alternative worth considering if you would prefer to arrange your own care or have a family member arrange your care on your behalf rather than relying on agency services provided by your local authority.

Some of the main benefits this option offers include:

Who can get direct payments?

If you are already receiving care services from your local authority, you will be entitled to ask them to switch to direct payments instead.

How to get a social care assessment

If you do not currently receive any social services, you will need to request for your care needs to be assessed. Direct payments will typically be available to you if:

If the person requesting direct payments does not have mental capacity, or does have mental capacity but would not be able to handle receiving direct payments, a third party can be nominated to receive the direct payments provided the local authority agrees that person will be acting on the person who requires care’s best interests.

How do I apply for direct payments?

To apply for direct payments, visit the government website here.

What can I use direct payments for?

You can use your direct payments to:

In the case of people who require care, this means hiring care and support services to assist you in your day-to-day needs. This could mean hiring care from an agency, or directly hiring a personal assistant.

If you are a carer, you may have been deemed eligible for direct payments to assist you in your role as a carer. For example, your local authority may agree that you would benefit from driving lessons in order to fulfill your role as a carer, and in this case you could use the direct payments for the lessons.

What can’t I use my direct payments for?

There are specific things you may not use your direct payments for, and it is important that you follow these regulations to ensure your payments are not jeopardized. You cannot use your direct payments to:

You are also not allowed to use direct payments to pay for support services provided by your local authority, or to pay for long-term residential care, for example in a care home.

How much can I receive?

The number of direct payments you receive is entirely decided by the Trust’s assessment of your needs and the level of support you require. If you already receive services from your local Trust, make an inquiry about direct payments with them.

Your direct payments should cover the cost of employing care, as well as additional expenses such as insurance, statutory holiday pay, national insurance, sick pay etc.

What should I do if my circumstances change?

You must contact your local trust as soon as possible if your needs change, whether the change is short-term or long-term. They will then make a reassessment of your entitlement.

Hiring a Personal Assistant With direct payments

If you choose to hire a personal assistant to provide your care, there are some things you should know. Hiring a personal assistant with your direct payments gives you the role of an employer, and with that comes some responsibilities you need to be aware of.


First, as an employer, you are legally required to have Employers’ Liability Insurance. This covers you in the case of your employee (i.e. anyone you have hired to provide you with care with your direct payments) being injured or having their property damaged and holding you responsible.

Find out more about Hiring A Personal Care Assistant and Arranging Your Own Care.

We offer Direct Payments Carer Insurance specifically for these circumstances, with three different levels of coverage to suit different needs. Other benefits our cover options include are emergency dental cover, motor theft, employee negligence, redundancy cover, travel, medical expenses & much more. You’ll also want to be sure that any healthcare tasks you need assistance with are covered by your insurance.

Visit our quote page to find out more and get a quote for your direct payments carer insurance.

Contract of employment

You are also legally required to create a contract of employment when hiring someone to assist you with your care needs with direct payments. The contract must specify:

Paying your employee

As an employer, you are also responsible for paying your employees and organising their:

If these tasks seem too overwhelming, however, you can choose to use a support provider or payroll services to take on these responsibilities. You should note, however, that using an additional service does come with additional charges from your direct payments.

Do direct payments affect any other benefits I may be receiving?

If you receive direct payments as a carer or as someone who needs to purchase care services to meet your needs, these payments are not counted as a means of income and therefore do not affect your other benefits.

If the person you care for pays you with their direct payments, however, then this is classed as earnings and could affect other benefits that you receive.

Useful links & organisations

HM Revenue & Customs 

Website: | Telephone 0300 200 3200
HMRC has a useful helpline providing support for anyone considering becoming an employer (classes as anyone with one or more employees).

Citizens Advice

Website: | Telephone 0344 411 1444 (England)
A network of advice centres available nationwide to provide confidential and independent advice.

Care Quality Commission

Website: | Telephone 03000 616 161 

The CQC is the independent regulator of adult social care and health services in England.