Author and Publication
Author: Nellie Supports Ltd
Publication Date: 15/05/2026
Citation
39 Essex Chambers, Mental Capacity Guidance Note: Carrying out and recording capacity assessments.
Copywright
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Abstract
This guide explains the two-stage test for mental capacity under the Mental Capacity Act 2005 as applied in England and Wales. It sets out the functional question of understanding, retaining, using or weighing information and communicating a decision, the impairment and disturbance limb, and the causal link required by A Local Authority v JB, with practical guidance on recording a defensible assessment.
The Two-Stage Test for Mental Capacity Explained
The two-stage test is how the Mental Capacity Act 2005 decides capacity. Stage one is the functional question: can the person understand, retain, use and weigh the information relevant to the decision, and communicate their choice? Stage two is the diagnostic and causal question: if they cannot, is that because of an impairment of, or a disturbance in the functioning of, the mind or brain? Both stages must be satisfied and connected: the inability must be because of the impairment. This guide explains each stage, the order modern practice applies them in and the errors that undo reports.
What the two-stage test is
The Mental Capacity Act 2005 decides capacity through a two-stage test. In modern practice the assessment starts with the functional question: can the person understand, retain, use or weigh the information relevant to this decision, and communicate their choice? If they cannot, the second question follows: is that inability because of an impairment of, or a disturbance in the functioning of, the mind or brain? Both limbs must be satisfied and connected before anyone concludes that capacity is absent. Working functionally first keeps the diagnosis from leading the conclusion.
Stage one: the functional question
The functional stage asks whether the person can understand the information relevant to the decision, retain it long enough to decide, use or weigh it as part of the process of deciding, and communicate the decision by any means. A person is unable to make the decision if any one of these is missing. The information must be specific to the actual decision rather than capacity in general, and the assessor must first take all practicable steps to support the person to decide for themselves.
Stage two: the impairment and the causal link
Only once a functional inability is identified does the assessor ask why. This stage requires an impairment of, or a disturbance in the functioning of, the mind or brain, whether permanent or temporary: dementia, a brain injury, a learning disability, mental illness, delirium, intoxication or the effects of a stroke. It does not need a formal diagnosis, but the assessor should identify what the impairment or disturbance actually is rather than assume one from the person's circumstances, and must be satisfied that the functional inability is because of it.
The causative link between the two stages
The two stages are not separate boxes to tick. Following A Local Authority v JB (2021), the inability to make the decision must be caused by the impairment or disturbance. An assessment that records an impairment and a functional difficulty, but does not explain how one causes the other, is incomplete. This causal link is where many reports fall down.
Understanding and retaining information
Understanding means grasping the salient features of the decision and its reasonably foreseeable consequences, not every detail. Retention need only last long enough to make the decision, and a person who can hold information briefly may still have capacity. Notes, reminders and other support can help with both, and should be offered before any conclusion is reached.
Using and weighing the information
Using or weighing is often the decisive element. It asks whether the person can bring the relevant information to bear, balance the options and consequences, and reach a decision through a reasoning process. A person who can repeat information but cannot use it, for example because a delusion or compulsion overrides it, may be unable to make the decision.
Communicating the decision
The final element asks whether the person can communicate their decision by any means, including speech, writing, signs or assistive technology. This element is rarely the deciding factor, but it matters for people with severe physical or communication impairments, where every practicable method of communication should be tried before concluding that they cannot communicate a choice.
Recording the assessment properly
A defensible record states the decision, the relevant information, the support provided, what the person said and did, the impairment identified, the functional analysis element by element, the causal link, and the conclusion. It should distinguish direct observation from reported information and acknowledge any limitations in the evidence.
Key takeaway
The two-stage test requires both an impairment and a resulting inability to make the specific decision, with a clear explanation of how the first causes the second. Applying the stages mechanically, without that causal reasoning, is the most common flaw in capacity assessments and the easiest to challenge.
Frequently asked questions
Which stage comes first in practice?
Modern practice asks the functional question first: what exactly can the person not do in relation to this decision? Only then does the assessor ask whether an impairment causes that inability, which stops the diagnosis leading the conclusion.
Does failing one element mean a person lacks capacity?
Failing any one of understanding, retaining, using or weighing the information, or communicating a decision, is enough for the functional stage, but only where the inability is caused by an impairment. An inability caused by fear, pressure or missing information is not incapacity under the Act.
What is the relevant information for a decision?
Relevant information is the specific information the person actually needs for this decision: its nature, the realistic options and the reasonably foreseeable consequences of deciding either way or not deciding at all. It changes decision by decision.
Related mental capacity assessment pages
These internal links help readers move from this guide to the most relevant Nellie Supports service page, assessment option or legal framework page.
Need the two-stage test applied and evidenced?
Nellie Supports provides independent, decision-specific mental capacity assessments across England and Wales through a permanent employed team of registered professionals, with a same working day response to every enquiry and every report peer reviewed before delivery. Call 0333 987 5118 or visit the mental capacity assessment service page.