Your local council might, but doesn’t have to, charge interest on the deferred payments to cover costs.
In England and Wales, the local council can set the amount it charges. But it can’t be more than a government-approved standard rate, linked to the ‘market gilt rate’ plus 0.15%. Currently, this equates to just over 1% a year.
The interest rate isn’t fixed – it’s reviewed every six months in January and July.
In Scotland, there are no interest charges while you have the deferred payment agreement. Interest is charged only when the agreement is terminated by the individual or from 56 days after their death. Interest should then be charged at a ‘reasonable rate’, which is set by the local council.
If the money isn’t repaid on time at the end of the agreement, the local council might charge extra interest until the debt is settled. There might also be an ongoing administrative fee plus interest.
In Northern Ireland, there’s no formal deferred payment system. But it might still be available – ask your local Health and Social Care Trust.
Find your local trust on the nidirect website