Care Homes and Home Care: Costs, Margins and Benchmarks

Social care is the most labour-intensive part of the economy covered in these guides. The ONS Annual Business Survey splits it into nursing homes, residential care homes, and care without accommodation, which is mostly home care (domiciliary care) and day services for older and disabled people.

The figures

Source: ONS Annual Business Survey, 2024 results (published 26 May 2026). It covers businesses registered for VAT or PAYE, so the smallest sole traders are not included. Averages are pulled up by the largest firms. For sole traders and partnerships, the owners’ own pay is not in staff costs: it comes out of what is left.

Home care is the extreme case. Staff costs took 77.0% of turnover in 2024, leaving about £4 in every £100 after staff and bought-in costs. Care homes have more buildings, food and utilities to pay for, but still spend over half of turnover on staff.

The ONS figures cover private-sector providers registered for VAT or PAYE. They do not include councils' own services.

How it has changed since 2019

Nursing homes: turnover rose 36% between 2019 and 2024, against a 24% rise in consumer prices, so it grew in real terms. The number of businesses rose 5%. Staff costs went from 54.5% to 57.4% of turnover, and what was left after staff and bought-in costs went from 20.5% to 19.4%.

Residential care homes: turnover rose 44% between 2019 and 2024, against a 24% rise in consumer prices, so it grew in real terms. The number of businesses rose 3%. Staff costs went from 54.0% to 54.8% of turnover, and what was left after staff and bought-in costs went from 19.2% to 18.8%.

Home care and day care: turnover rose 36% between 2019 and 2024, against a 24% rise in consumer prices, so it grew in real terms. The number of businesses rose 14%. Staff costs went from 71.8% to 77.0% of turnover, and what was left after staff and bought-in costs went from 7.4% to 3.9%.

What this means for a care provider

• Every pay rise lands on the bottom line. When most of turnover is wages, the National Living Wage rise each April is the single biggest change in costs. Fee negotiations with councils and private clients need to start from it.
• Rota efficiency is the main lever. In home care, paid travel time between visits and short visits that cannot be combined are major costs. Planning runs by area increases the share of paid time spent with clients.
• Agency staff and overtime. Covering gaps with agency workers or overtime costs far more than directly employed staff. Track the cause of each gap.
• Absence matters. In a care rota, a short-notice absence usually means overtime or an agency worker.

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Guides that fit this sector

• True cost of an employee: with 2026 to 2027 employer NI and pension.
• Overtime cost: when covering gaps costs more than recruiting.
• Bradford factor: measuring short-term absence, and the legal care it needs.
• Staff turnover cost: what each leaver costs to replace.