What Home Care Really Costs, and Where the Money Goes

If you have started looking into home care for a parent or a partner, the hourly rates can come as a surprise.

It is a common reaction, and an understandable one.

From the outside, an hour of home care can look like simply an hour of someone’s time, and it is fair to wonder why that costs what it does.

We think the best response to that question is an honest one.

So rather than ask you to take our word for it, we want to walk you through the figures published independently by the Homecare Association, the professional body for home care providers across the UK.

Their numbers tell the story far better than any sales pitch could.

Each year, the Homecare Association calculates a Minimum Price for Homecare: the lowest hourly rate at which a provider can deliver care legally, safely, and sustainably.

It is widely respected in the sector, and the Department of Health and Social Care even directs councils to follow the Association’s approach when they commission care.

For 2026/27, in the London Living Wage category that applies to us, that minimum price is £38.69 per hour.

It is worth being precise about what that figure represents.

The Association is careful to call it a minimum price, not a fair one.

In their own words, it does not reward the workforce as generously as the value of their work deserves.

It is simply the floor: the least it can cost to do this properly.

That distinction matters, because it reframes the whole question.

The honest version of “why does home care cost what it does?” is not “why so expensive?”

It is closer to “why is doing this properly so resource-intensive?” 

And the answer, overwhelmingly, is people.

Across the Association’s modelling, staffing makes up between 75% and 90% of the total cost of an hour of care.

Home care is, fundamentally, skilled human time, and skilled human time is rightly the most expensive part.

It helps to see the hour broken down.

Of the Homecare Association’s £38.69, only a portion is the Carer’s contact-time wage.

The rest covers everything that has to exist around that wage for the care to be safe, legal, and reliable.

Roughly three-quarters of the total goes to the Carer and the costs directly attached to employing them: their wages, of course, but also their travel time between visits, their waiting time, mileage, holiday pay, sick pay, employer’s National Insurance, and pension contributions.

These are not optional extras.

Travel time and waiting time are legally working time, and must be paid.

Holiday and pension are statutory.

They are simply what it costs to employ someone fairly and lawfully.

The remaining quarter covers the costs of running a safe, regulated service: the registered manager and care coordinators who plan and oversee care, the office team, recruitment and training, insurance, regulatory fees, IT and call-monitoring systems, and the like.

Within that same quarter sits a modest surplus, which the Association sets at just 4%, for the business to reinvest in quality and remain viable.

For context, most businesses in other sectors would expect a good deal more than 4% – in fact, closer to 10% (for instance, Microsoft's is closer to 40%).

Seen this way, the hourly rate is less a single charge than the sum of a dozen small, necessary parts.

One of the most important choices a care provider makes is how it pays its people, and there is more nuance to this than first appears.

The National Living Wage is the legal minimum an employer must pay, set by the Government.

The Living Wage, by contrast, is calculated independently, by the Living Wage Foundation, based on what people actually need to live on, and it is higher.

In London, where the cost of living is higher still, there is a separate, higher London Living Wage.

As a Living Wage Accredited employer, we have made a formal, audited commitment to pay our Carers at least the real Living Wage, rather than only the legal minimum.

There is a further point that often goes unnoticed, and it matters a great deal.

We pay this rate for every hour our Carers work, including their travel between visits and the time they spend training, not only for the time they are physically in a client’s home.

Some providers pay only for contact time, which quietly pushes a Carer’s real hourly earnings below the headline rate.

We do not play these games. 

A well-paid, fairly treated Carer is a Carer who stays, which is how you end up cared for by the same small team of Carers who genuinely know you, rather than a rotating cast of strangers.

All of this can sound abstract until you see it from the perspective of the person receiving care.

The economics are not really about spreadsheets.

They are about what happens, or does not happen, in someone’s living room each morning.

When a provider is funded properly, it can afford to pay Carers well, which means it can attract good people and keep them.

It can allow unrushed visits rather than rushing Carers from one fifteen-minute call to the next.

It can train its team properly, supervise them well, and give them the time to build a real relationship with the person they support.

The price of care and the quality of care are not two separate things.

They are deeply connected.

This is also why we are honest about our own pricing.

We work hard to keep our fees as fair and accessible as we reasonably can, while still meeting the standards that genuinely matter for safe, dignified, relationship-led care.

We are not the cheapest option in our area, and we would be wary of any provider in London claiming to deliver quality care at a price that left nothing for the people delivering it.

When a rate looks too good to be true, it is usually the Carer, and ultimately the client, who pays the difference.