Is care home fees
tax deductible?

No. Care home and care fees for a parent, partner or yourself are personal costs, not business expenses (GOV.UK). GOV.UK also says you cannot claim for carers or domestic help (GOV.UK). Help with care costs comes through local authority funding and NHS continuing healthcare, not the tax return.

Paying for a parent's care home can be one of the largest bills a family faces, and it is understandable to ask whether a business can help. It cannot. Care is a personal and family cost, and the support available comes through local authority means-tested funding and NHS continuing healthcare.

Is care home fees tax deductible?

The HMRC rule

A cost is only allowable if it is incurred wholly and exclusively for the business. Everyday living costs, health, appearance and leisure have a personal purpose, so they are not allowable even when they help you work. The rule comes from HMRC Business Income Manual BIM37007: wholly and exclusively, Staff expenses.

GOV.UK says you cannot claim for carers or domestic help (staff expenses), and only business costs are allowable (expenses overview). Help with paying for care is means-tested by local councils (NHS: care and support).

When you can claim it

• If you run a care home or care agency, its running costs.
• Carer’s Allowance or other benefits, if eligible, outside the business.
• Council funding for care, if the person qualifies.
• NHS continuing healthcare, where needs are primarily health needs.

When you cannot

• Care home fees for a relative.
• Home carers for yourself or a relative.
• Paying care fees through the business to reduce tax.
• Fees for respite care for family members.

What to claim instead

Ask the local council for a needs assessment and financial assessment, and ask about NHS continuing healthcare if needs are mainly health-related. Some families use care fees annuities or other planning, which are personal financial matters.

How to decide if you can claim it

1. Was it for the business? A cost is only allowable if you incur it wholly and exclusively for the business. If it also serves a personal purpose that cannot be separated, such as clothing that keeps you warm or a meal that keeps you going, HMRC disallows it.
2. Is part of it personal? Where a cost has a business part you can identify, such as the business calls on a phone bill or the business miles in a car, you claim that part and leave the rest out, on a reasonable basis you can explain.
3. Is it a running cost or something you keep? It is not a cost of running the business at all, so the accounting basis makes no difference: it never goes in your expenses, although it may have a relief of its own elsewhere on the return.
4. Is there a specific rule? For care home fees, the deciding rule is personal costs: a cost is only allowable if it is incurred wholly and exclusively for the business. Everyday living costs, health, appearance and leisure have a personal purpose, so they are not allowable even when they help you work.

Worked example: a sole trader paying for a parent’s care

A sole trader pays £3,200 a month towards her mother's care home fees, £38,400 a year, from her business account. None of it is a business expense. She records the payments as drawings, and her taxable profit is unaffected.

The wholly and exclusively test

An expense is allowable only if it is incurred wholly and exclusively for the purposes of the business. HMRC's manual explains that some costs have an intrinsic duality of purpose: they meet a personal need, such as health, warmth or appearance, whatever else they do. Where a personal purpose is part of the reason for the spending, even a small part that cannot be separated, the whole cost fails the test.

Care businesses

If you run a care home, domiciliary care agency or work as a self-employed carer, the costs of running that business, such as staff, premises, training and travel between clients, are business expenses. This page is about paying for care, not providing it.

Employing a carer at home

If you employ a carer for a relative in your home, you are a domestic employer and may need to run payroll. The costs are personal. The Employment Allowance can be claimed for care and support workers employed in a domestic setting, which reduces the employer's National Insurance, but that is not a business expense.

Funding and benefits

Councils assess both needs and finances. Attendance Allowance, Carer's Allowance and other benefits may be available. NHS continuing healthcare pays the full cost where needs are primarily health needs.

Paying personal costs from the business account

Sole traders often pay personal costs from the account they use for the business. That is allowed, but the payment is drawings, not an expense. Record it that way in your bookkeeping so it does not end up in your expense totals. If your accounts do include it, the full self-employment pages have a disallowable column, box 45 for other expenses, where the same amount is added back.

Attendance Allowance

Older people who need help with personal care may qualify for Attendance Allowance, which is not means-tested and can help with care costs. It is paid to the person who needs care, not through the business.

Where it goes

Care fees go nowhere on the business pages. If paid from the business account, they are drawings.

Where it goes on your return and in MTD

It is not an allowable expense, so it does not reduce your profit. Where your bookkeeping shows it as a business payment, record it as drawings, or include it and add it back as a disallowable expense on the full self-employment pages.

If your turnover was under £90,000, you can use the short self-employment pages (SA103S), which ask for a single figure for total allowable expenses rather than a box-by-box breakdown, and the full pages let you give just a total in box 31 too. The category still matters for your own records and for Making Tax Digital, where each quarterly update uses the same categories unless you choose to send one consolidated figure.

The accounting basis changes when a cost counts. On the cash basis, the default for sole traders since 2024/25, it counts when you pay it; on traditional accounting, when you incur it, with things you keep claimed through capital allowances.

How much an allowable cost saves

An allowable expense does not come back to you in full: it reduces your profit, so it saves tax at your marginal rate. For a sole trader in England, Wales or Northern Ireland that is 26p in the pound at the basic rate (20% Income Tax plus 6% Class 4 National Insurance) and 42p at the higher rate. The sole trader tax calculator works out the figure for your own profit.

What £1,000 of allowable expense saves a sole trader in 2026/27

• Basic rate (20% + 6%)£260
• Higher rate (40% + 2%)£420
• Additional rate (45% + 2%)£470
• Allowance taper band (60% + 2%)£620

Records to keep

You do not need business records for personal costs. If a personal cost was paid from the business account, record it as drawings so it is excluded from your expenses. For any business element you do claim, keep the receipt and a note of the business reason.

If Making Tax Digital for Income Tax applies to you (qualifying income over £50,000 from April 2026, £30,000 from April 2027 and £20,000 from April 2028), the records must be digital, and each quarter's costs go into a quarterly update. Check your date with the MTD requirement checker.

Common mistakes

• Paying care fees through the business as expenses.
• Employing a relative’s carer through the business payroll.
• Not checking council or NHS funding.

Related expenses

This item sits in the other business expenses category, alongside art and collectibles, charity donations, clothing and workwear, cryptocurrency, fines and penalties, funeral costs, furniture and glasses and eye tests. The A to Z of expenses answers the same question for every other cost.

If you record your costs in TapTax, each one lands in the HMRC category it belongs to, with its receipt attached, so your quarterly updates and year-end return use the same figures.