How to start a domiciliary care agency in the UK

This guide is for registered managers, nurses, care coordinators and business owners planning to open a domiciliary care (home care) agency. To start one in England you need to set up a legal entity, register with the Care Quality Commission (CQC) for the regulated activity of personal care, appoint a registered manager, recruit and vet carers, and have enough cash to pay staff for several weeks before councils or clients pay you. Smart Funding Solutions is a broker, not a lender: we arrange funding for care businesses through a panel of 300+ lenders. Once you are trading, our page on domiciliary care agency finance covers invoice finance, working capital and growth funding in detail.

01Step 1: Decide your model and structure

Before registering anything, settle three decisions that shape everything else:

• Who you will serve. Older people needing help to stay at home, people with learning disabilities or mental health needs, hospital discharge, end-of-life care or live-in care. Each needs different skills, staffing and policies.
• Who will pay. Local authority contracts, NHS commissioners, private self-funders, or a mix (see below).
• Your legal structure. Most agencies trade as limited companies, which lenders and commissioners generally prefer. CQC can register an individual, a partnership or an organisation, and each type has different requirements.

Some founders start through a home care franchise, which provides systems and a brand in exchange for fees; our page on franchise loans covers how those are funded. Others buy an existing agency, which brings clients, staff and a track record, although a change of legal provider usually means a new CQC registration.

02Step 2: Register with the regulator

England: the Care Quality Commission

Providing personal care to people in their own homes is a regulated activity, and you must be registered with CQC before you start. CQC explains who has to register and how to apply. Registration typically involves:

• An application as the provider, including a statement of purpose describing your services, who you will support and where.
• For organisations, a nominated individual who is responsible for supervising how the regulated activity is managed.
• A registered manager in most cases, who applies to CQC separately, is interviewed and must have the right experience and qualifications to run the service day to day.
• Enhanced DBS checks for the applicants, and evidence that you have the policies, procedures and systems to meet the fundamental standards, including safeguarding, recruitment, medication and complaints.
• Suitable office premises from which the service is managed.

Allow several months for registration, and check CQC's current guidance for timescales: you cannot provide personal care until you are registered, so this period is pure cost. Registered providers also pay an annual CQC fee.

Wales, Scotland and Northern Ireland

Home care is regulated separately in each nation. In Wales, domiciliary support services register with Care Inspectorate Wales, and a responsible individual must be named; domiciliary care workers must also register with Social Care Wales. In Scotland, care at home services register with the Care Inspectorate, and the workforce registers with the Scottish Social Services Council. In Northern Ireland, domiciliary care agencies register with the Regulation and Quality Improvement Authority. Check the relevant regulator's current requirements before you start.

03Step 3: Recruit, vet and train your team

Staffing is the business. Plan for safer recruitment checks including enhanced DBS checks and references, induction training aligned to the Care Certificate, ongoing supervision, and on-call cover outside office hours. Pay must meet the National Minimum Wage and National Living Wage once working time is properly counted, and in home care that includes time spent travelling between visits. Getting this wrong is one of the most common compliance problems in the sector, and commissioners and lenders both look for it.

Recruitment of care workers from overseas has been heavily restricted by changes to the immigration rules, so plan on recruiting locally and check current Home Office guidance before relying on sponsorship.

04What does it cost to start a domiciliary care agency?

Costs vary with size and location, so build your own budget rather than relying on headline figures. Plan for:

• Set-up and registration: company formation, CQC application preparation, policies and procedures (bought in or written), DBS checks.
• Office: rent, deposit, fit-out, IT and phones.
• Systems: care management and rostering software, electronic call monitoring, payroll.
• Insurance: employer's liability (a legal requirement once you employ staff), public liability and professional indemnity.
• People before revenue: the registered manager's salary during registration, recruitment advertising, training and uniforms.
• Vehicles for carers in rural areas, if you provide them.
• Working capital: the cash to cover payroll before your first payments arrive, often the largest figure of all.

A business plan written for funding, with monthly cash flow projections, makes it far easier to see how much you need and to explain it to a lender.

05Local authority, NHS and private clients

Where your income comes from shapes both your cash flow and your funding options.

Client type	How you win work	How you are paid	Cash flow effect
Local authority	Frameworks, tenders and spot purchasing	Usually in arrears, often four-weekly or monthly, after visit data is checked	Steady volumes but a long gap before payment
NHS commissioners	Continuing healthcare packages and discharge schemes	In arrears, on the commissioner's terms	Higher-acuity work, similar wait
Private self-funders	Local reputation, referrals, online	Directly by the client, sometimes in advance	Better cash flow, more marketing effort
Direct payment clients	Individuals choosing their own provider	By the client from their direct payment	Similar to private, smaller packages

New agencies are not rated by CQC until their first inspection, and some council frameworks only open periodically, so many founders begin with private and direct payment clients and spot-purchased council packages while they build a track record.

06The payroll-before-payment gap

A home care agency pays carers weekly or monthly for visits already delivered, while councils pay weeks later. Every new package widens the gap before it closes it.

Hypothetical example: an agency delivers 500 hours of council-funded care a week. If wages and on-costs come to £15 an hour, the weekly cost is £7,500. If the council pays four-weekly in arrears and processing takes a further two weeks, the agency could pay out around six weeks of wages, £45,000, before receiving its first payment. Double the hours and the gap doubles. These are round, illustrative figures; your own rates and terms will differ.

This is why growing agencies so often run short of cash despite being profitable on paper. Our guide to calculating working capital shows how to measure the gap for your own business.

07How funding works for a new agency

A business with no trading history cannot show lenders accounts, so early funding usually combines several sources:

• Your own investment. Lenders expect founders to put in meaningful money of their own, especially before registration.
• Start-up loans. Smaller loans for new businesses, usually assessed on the business plan and the founders' personal credit and experience. See start-up business loans.
• Asset finance for vehicles and equipment, where the asset itself supports the borrowing.
• Invoice finance once contracts start. Once you invoice councils or NHS commissioners, invoice finance can release most of each invoice's value within days rather than waiting for the payment run. It grows with your contracts, which suits a care agency well. Most providers will not fund invoices to private individuals, so it works best on public sector income.
• Working capital loans after a period of trading. Once you have several months of bank statements and management accounts, working capital loans can fund recruitment for a new contract or area.

Lenders will look at your CQC registration status, your registered manager's experience, how much income depends on a single council, and whether your payroll is compliant. A founder with years of management experience in home care is a much stronger proposition than one new to the sector.

08What makes a home care agency profitable?

Home care is a high-volume, low-margin business. The difference between an agency that builds a surplus and one that struggles usually comes down to a handful of operational numbers rather than the headline hourly rate.

• The gap between charge rate and pay rate. The rate you charge per hour has to cover carers' pay, employer's National Insurance and pension contributions, holiday pay, travel time and mileage, training, supervision and office costs before any profit is left.
• Travel time and rostering density. Visits clustered close together keep paid travel time down. Spreading clients across a wide area, especially in rural patches, can erode the margin on every call.
• Call length. Short visits carry the same travel time as longer ones, so a rota full of brief calls costs more to deliver per hour billed.
• Staff turnover. Every carer who leaves means fresh recruitment, DBS checks and induction training, and gaps covered with overtime. Retention is one of the biggest levers on cost.
• Client mix. Private and direct payment clients usually pay a higher rate than council packages, while council work brings volume. Many agencies balance the two.
• Office overheads against hours delivered. Management, coordination and systems are largely fixed, so they become a smaller share of each hour as volumes grow.

Build these into your plan as monthly figures, then test what happens if hours grow more slowly than expected or a council rate rise arrives late. Lenders will ask the same questions. Our guide to preparing a cash flow forecast for a business loan shows how to set out the assumptions so a lender can follow them.

09Related care businesses

If you are weighing up other services, our guide to starting a children's care home covers a very different, property-led model, and our care sector finance hub links to funding for care homes, supported living and other providers. When you are ready to discuss funding for your agency, send us your plans and we will explain what lenders are likely to need at each stage.