Personal budgets and direct payments

Find out everything you need to know about personal budgets and direct payments from your council. 

On this page:

What is a personal budget?

A personal budget is an amount of money that the local authority agrees to pay for your care and support, following a needs assessment and/or a carer’s assessment. 

Before you can be allocated a personal budget, your local authority will assess you to find out:

  • What care and support you need.
  • Your financial circumstances. 

Find out more about assessments for care and support, and find out more about carers’ assessments.

Once you’ve been assessed, the local authority will tell you how much money has been allocated to pay for your care. This is your personal budget.

What is the difference between direct payments and personal budgets?

Your personal budget can be paid directly to you. This is known as a direct payment. 

Your personal budget is the amount of money that your local authority allocates towards meeting your care and support needs.

Direct payments are one way in which you can receive your personal budget. If you opt for direct payments, you will get the money directly, so that you can arrange and pay for support yourself. 

What your rights are in different parts of the UK

The approach to personal budgets depends on where you live.

England

  • The Care Act 2014 means that – if you have eligible needs – your council should award you a personal budget. They should also offer the option to receive some or all the personal budget as a direct payment.
  • Councils use a system to decide on the amount of your personal budget.
  • Your council may decide that you need to make a contribution towards the cost of your support. They will do a financial assessment to decide if you must pay some or all of the cost.

Wales

  • Councils do not have a legal duty to provide a personal budget, but they must plan your care and support with a focus on your preferences and desired outcomes.

Northern Ireland

  • Each trust sets its own policy on awarding a personal budget.

Ways you can receive your personal budget

There are three main ways you can choose to receive and use your personal budget. 

You can also choose to receive it in a combination of these different ways, sometimes called a “mix and match” approach.

Direct payments

This means some, or all, of your personal budget is paid directly to you.

It gives you more flexibility, choice and control over the services you use, and from whom you get them.

Your direct payment is normally paid into a bank account created especially for this purpose.

What are direct payments?

A direct payment is one of the ways you can receive your personal budget from your council to help you pay for the care and support you need.

Choosing to have your personal budget as a direct payment gives you more control over the services you use and where you get them from.

You can choose to receive all, or part, of your personal budget as a direct payment so that you can buy services or pay someone to support you.

You can spend your direct payment on any services as long as they are legal, keep you safe and healthy, and meet your eligible needs.

Your council will pay your direct payment into your bank or building society account.

Direct payments do not count as income and will not affect your benefits.

How to get a direct payment

You can get a direct payment if:

  • You have eligible social care needs.
  • You can make decisions for yourself.
  • You ask for a direct payment.
  • You can manage a direct payment alone or with help.
  • It will help to meet your eligible needs.

Your council has a legal responsibility to offer you the option of a direct payment.

If you cannot make decisions, you can still get direct payments if a family member, carer or friend is willing to manage your direct payment for you.

You may have to pay for some of your care and support depending on your financial circumstances. Your local authority will carry out a financial assessment to decide this.

Benefits of direct payments

A direct payment can help you to live more independently.

It gives you more flexibility, control and choice than if your support is arranged for you by your council.

Disadvantages of direct payments

If you receive direct payments, you have to arrange your own care and support.

You also have to make sure that you comply with tax and employment law, as you may be directly employing the people who support you. 

This can be time-consuming and a big responsibility. 

Can another person receive my direct payment on my behalf?

Yes, you can nominate another person to receive your direct payments on your behalf. 

Your local authority should give you more information about how to do this. 

Are direct payments means tested?

Yes. Your local authority will carry out a financial assessment of you to work out how much of your care and support you can pay for yourself. 

This will determine how much money is in your personal budget, and so how much you receive as direct payments.

The council manages your personal budget

In this scenario, your council holds your personal budget for you and commissions services on your behalf.

Your council should put you at the centre of all decisions, work with you to design your support plan and decide how the personal budget is spent.

An Individual Service Fund (ISF) manages your personal budget

In this option, your council gives your personal budget to a third party support provider, who uses the money to plan your support.

These support providers are often called Individual Service Funds (ISFs).

Not every council offers an ISF, and you should check with your local council if you feel this would be a good option for you.

Mix and match

You might want some of the benefits of direct payments, but also feel unsure about your ability to manage the whole budget yourself. 

In these cases, the council can provide you with a combination of payments. This is sometimes called a “mixed package” or “mix and match” approach.

A combination of payments may consist of a smaller direct payment, with some care and support arranged by your council or a support provider. 

This allows you to try out direct payments before deciding whether to move to a full direct payment.

What can I spend my personal budget on?

You can use personal budgets for different kinds of support if they meet your assessed needs or agreed outcomes.

In general, you will have more freedom to make your own choices if you receive your personal budget as a direct payment.

Direct payments give you the freedom to buy support and/or equipment in the way that you think is most appropriate.

You cannot use your social care personal budget to buy services that the NHS should provide.

Examples of things you can buy with your direct payment:

  • Care and support to help you live in your own home.
  • Employing a personal assistant to help you do different activities.
  • Transport costs to meet eligible needs.
  • Support in college or in a job.
  • Travel training.
  • Short breaks and leisure activities.

You can also use direct payments to pay a close relative to meet your eligible needs as long as they do not live with you.

Your council should help you to use direct payments to arrange your own care. If you are having problems using your direct payments, contact your local council. If you’re not happy with the support you receive, you may wish to complain. Your local council will have a complaints procedure you can use.

Examples of things you cannot buy with your direct payment:

  • Health services, including treatment from the NHS.
  • Household bills, for example gas or electricity bills.
  • Gambling or anything illegal.
  • Permanent accommodation or long-term care in a care home (while this was included in the Care Act 2014, allowing people to use their direct payments in this way has been postponed until 2020).

Employing your own support staff

Like many people, you may decide to use your direct payment to directly employ personal support staff.

If you choose to do this, your council should make sure the direct payment covers the full costs of directly employing support staff. This includes maintaining tax and National Insurance records, DBS checks, holiday pay and training costs.

If you pay to hire someone, like a personal assistant, you become their employer. Contact your council for information about becoming an employer.

Using a support provider

Another option is to choose a support provider, like Sense, to take on all the employment duties and responsibilities and include this in the amount it charges.

Your chosen support provider should work alongside you, and, if appropriate, your family, to make sure that you play a full part in the recruitment and supervision of staff and identifying training needs.

Can I use direct payments to pay a family member?

You can sometimes use your direct payments to employ a family member to care for you, as long as they don’t also live with you. You can’t usually use direct payments to pay a spouse or family member who lives in your household.

The rules about this are different in different areas, so it’s best to check with your local authority. 

What if I’m not eligible for a personal budget?

Your local authority must carry out an assessment to find out what your care and support needs are, and your financial situation.

This assessment will show what your eligible needs are. The council uses this information to decide how much you’re expected to pay towards your care, and how much is allocated to your personal budget.

If you disagree with the decision that your local authority makes about your personal budget, you could make a complaint. 

Mind has more information about how to complain about health and social care.

To find out more about other sources of financial support, visit our information about benefits for disabled people. 

What if my direct payment is not enough to meet my needs?

Your council should review your situation within six months. This is to make sure you have enough money to buy services and manage your direct payment.

After that, your care and support plan should be reviewed at least once a year.

If you feel you are not getting enough money through your direct payment, tell your council. They may be able to help.

If not, you can get help from an advocate who can act as your spokesperson and make sure you are heard.

Sense does not provide an advocacy service, but our information and advice service can signpost you to a local advocacy service or a direct payments support service commissioned by your local authority.

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This content was last reviewed in July 2023. We’ll review it again in 2025.