Managing a personal budget (including Direct payments)

Read about the number of ways that a personal budget can be paid and managed.

  1. Personal budgets
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Personal budgets
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How is a personal budget managed?

A personal budget can be managed in several ways. 

  • The money can be received as a direct payment to you. 
  • The local authority can manage the money. This is known as a managed budget. 
  • The money can be paid directly to the care provider. This is known as an Individual Service Fund (ISF). 

Direct payments 

A direct payment is where the money from the budget is paid straight to you.

Direct payments can give you more choice over your care by allowing you to buy things to help achieve your outcomes. Direct payments must be used inline with the outcomes agreed in a care plan. 

Some people use direct payments to employ their own care worker or personal assistant. Others use direct payments for activities or equipment. For example, if you are lonely, you might spend some money on transport to meet other people.

Direct payments can be used for lots of things, but a record must be kept of how the money is spent, for example timesheets signed by personal assistants. Your local authority can tell you what information needs to be recorded. 

Who can receive a direct payment? 

In England and Wales, you must be at least 16 years old and one of the following: 

  • a person with a disability (which for this purpose includes someone with dementia)
  • a carer
  • the parent of a child with a disability. 

If you do not want to hold the direct payment, it can be held by someone else, who will also keep records of the spending. This person might be:

  • a broker or independent social worker
  • a carer, friend, family member, solicitor or another appropriate person (for example, an attorney)
  • a mix of the above.

Appointing a suitable person

If you no longer have the mental capacity to manage the direct payment, a suitable person can be appointed to manage it instead, such as a friend or family member. A suitable person is often, though not always, someone who has power of attorney.

The local authority decides whether someone is a suitable person. To do this, they must consult:

  • you
  • anyone currently caring for you 
  • anyone who has been named by you as someone to be consulted about becoming a suitable person
  • any written statement of wishes you have made
  • an attorney of any kind (if you have one).

A suitable person must: 

  • be able to manage the payments
  • not employ a partner or close relative who lives with you
  • always act in your best interests, following the Mental Capacity Act 2005. 
Lasting Power of Attorney (LPA)

Learn more about Lasting Power of Attorney in England and Wales or Northern Ireland.

England and Wales Northern Ireland

Employing a personal assistant

Direct payments can also be used to employ a personal assistant (PA). A PA provides some of the support you need, both at home and in the community. 

PA support may include watering plants, reading letters, walking the dog, helping you on holiday and personal care, such as help with washing and dressing. 

If employing a PA, the personal budget should include money to pay their insurance, wages and national insurance, as well as holiday, sickness, maternity and redundancy pay. The local authority should take this into account when calculating the personal budget.

How are direct payments made?

Direct payments are usually paid into a bank account set up specifically for this purpose. 

Some local authorities give the option of using a 'prepaid' card for paying direct payments. This should work like a bank card. The funds are deposited onto the card by the local authority, making it easier to use and monitor the budget. 

You can choose to stop receiving your personal budget in the form of direct payments at any time. The local authority can also decide to stop direct payments if they feel you are not getting the care you need, or if the person managing your payments is unable to do so.

If direct payments are stopped, the local authority should arrange alternative services so that you still receive the care you need. 

What can't direct payments be used for?

Direct payments cannot be spent on:

  • employing a spouse, civil partner, live-in partner, or a close relative that lives in the same household to care for you (except in special circumstances that have been agreed with the local authority)
  • food
  • rent
  • anything illegal 
  • buying services from the local authority – this can be done via a managed account
  • anything that is not directly related to meeting an outcome that is set out in your care and support plan. 

Under the current system, a direct payment cannot be used to pay for permanent residential care in a care home. However, it is possible to pay for a short stay of up four weeks within any 12-month period.

If you do not spend all the money allocated to you, the local authority might decide that your care needs are not as great as indicated in the support plan. This means that the care package and the money to pay for it could be reduced. 

If you pay for all of your own care (self-funders)

If you are assessed as needing social care but you can pay for all of your care (through income and assets), this doesn't mean you have to cope alone. The local authority should still provide information and support to help you access the services you want.

They should also carry out a needs assessment to help you identify what help and support you require. It is a good idea to ask for an assessment.

A broker is someone who helps you plan and organise support that is tailored to you. If you choose, a broker can act as your 'agent' and hold the personal budget for you. 

A broker does not have to be a paid professional. A broker can be: 

  • a relative, friend or neighbour
  • a worker from a volunteer organisation
  • someone in social services, such as a social worker or care manager
  • a staff member from an advice and information organisation 
  • an independent professional broker
  • a support care provider. 

If you want to use a professional broker, the fees should be included in the original personal budget allocation. 

You might not want a broker right away. If you change your mind, you can always think about this when your budget is reviewed. 

Personal budgets for carers

If you are a carer, you have a right to an assessment of your own needs by the local authority. This is called a carer's assessment. The aim is to support you to continue to care, as well as maintaining your health and wellbeing. This right applies even if you live separately from the person you care for. 

Support can be arranged by the local authority or offered as a direct payment to meet your needs. 

The payment must be used to help achieve the outcomes as defined in your support plan. Direct payments can potentially pay for various things, including taxi fares, gym membership, driving lessons and adult learning. 

The local authority has the power to charge carers for services that are provided directly by them.

There will be a financial assessment, but income from any work that you or your partner do is not taken into account in this assessment.

Any replacement care (known as 'respite care') provided for the person you care for cannot be included as part of your personal budget amount. It must be paid for from the personal budget of the person you care for, as it is them receiving the care. 

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