Top-up fees: a growing risk for councils

The cost of residential care continues to rise sharply, and councils are feeling the strain. The Government’s new Market Sustainability and Improvement Fund (MSIF) 2025–26 report shows fee increases of around 5–6% across most adult social care services, reflecting the ongoing pressures providers face. Even with these uplifts, many councils still pay below the true cost of care, leaving a gap that someone has to fill.

Increasingly, that “someone” ends up being the families of people needing care — through top-up fees. These are the extra weekly payments charged when a care home’s fees are higher than the council’s usual rate. Top-ups can run into hundreds of pounds a week, and while some families choose to contribute so a loved one can stay in a preferred home, others find themselves pressured into paying when, legally, they shouldn’t have been asked at all.

This is where councils must tread very carefully.

When a person qualifies for council-funded residential care — usually because their savings are below £23,250 — they are entitled to have their needs met in a placement the council can afford. Only if the person or their family chooses a more expensive home should a top-up come into play. And even then, the council has a duty to make sure the family has been offered a genuine alternative within the council’s budget, and that they understand what committing to a top-up really involves.

In practice, this doesn’t always happen. Rising care fees mean councils often struggle to find placements at their usual rates. But instead of increasing what they are prepared to pay, some authorities turn straight to families to make up the difference. The law is clear: that is not allowed.

If no affordable placement exists, the council must cover the full cost itself — regardless of budget pressure. Families can only be asked to pay a top-up if they have been offered a suitable, affordable option first and have freely chosen something different.

Recent Ombudsman cases show what happens when councils do not follow the rules. Birmingham City Council was ordered to repay 11 years of top-up fees after failing to offer an affordable alternative or provide clear information about the fees. Derbyshire County Council had to refund top-up charges after it could not show that it had offered the resident a “genuine choice” of placements. These cases are not one-offs: they are warnings. 

With MSIF fee uplifts now published, councils may feel the pressure to rely more heavily on top-ups to bridge the gap between their rates and the real price of care. But the financial and reputational risks of getting it wrong are far greater than the cost of funding a placement properly in the first place. 

Poor practice doesn’t just lead to Ombudsman criticism. It can result in years of repayments, significant compensation, and huge administrative burdens — all at a time when councils can least afford it. 

Councils must show that affordable placements exist, give families clear and honest information, and only agree top-ups when the family genuinely chooses a more expensive option. Anything else risks leaving the authority — not the family — with a large bill to pay.

At a time when budgets are stretched and scrutiny of adult social care is stronger than ever, ensuring top-up fees are handled correctly is not just good practice. It is essential financial protection. 

Lisa Morgan is head of the nursing care fee recovery team at Hugh James Solicitors.