1. Introduction

1. The purpose of this guidance is to support integrated care boards (ICBs) and NHS trusts and foundation trusts (‘NHS trusts’) to develop multi-year revenue finance plans, as well as the agreement of contract arrangements for 2026/27. It should be read alongside the medium-term planning framework, 2026/27 to 2029/30 capital guidance and ICB allocations for 2026/27 to 2028/29, as well as the draft 2026/27 NHS Payment Scheme (NHSPS) and  draft 2026/27 NHS Standard Contract which are both subject to consultation. The final 2026/27 NHSPS and NHS Standard Contract will be published following the conclusion of their respective consultations.

2. As set out in the 10 Year Health Plan for England, ICB allocations will move towards their target distribution (‘fair share’) over the period of the NHS revenue settlement to 2028/29. Deficit support funding for ICBs and NHS trusts will also be removed.

3. To deliver on the ambitions in the 10 Year Health Plan, ensuring better care for patients and greater value for taxpayers, it is imperative that we maintain a consistent and rigorous focus on driving improvement, cutting waste and getting value from every pound spent over each year of the multi-year planning period. To support this, the NHSPS consultation proposes to continue the 2% general efficiency factor in 2026/27.

4. This guidance sets out where the information required to complete plans is confirmed and where planning assumptions should be used. It also makes clear where information is available for 2026/27 only and separate assumptions should be used for 2027/28 and 2028/29. Throughout the guidance, we distinguish between the actions that ICBs and NHS trusts should take. In some places, we use ‘organisations’ to refer to actions that both ICBs and NHS trusts should take.

5. Further supplementary schedules and technical guidance will be made available to the relevant organisations alongside this guidance. This will include schedules setting out the adjustments that should be applied to contracts between ICBs and NHS trusts in line with this guidance, including for the central technology licence funding transfer (see section 10.2), charge-exempt overseas visitors adjustment (see section 10.3), adjustments for ICB surpluses (see section 3.2), and the adjustment for systems with under target allocations and deficit support funding (see section 4.1).

6. There are proposed ICB mergers and boundary changes in the East of England, London and South East regions, which if approved are expected to take effect from 1 April 2026. The 2026/27 to 2028/29 ICB allocations therefore reflect the intended allocations to the proposed new ICB bodies. Where ICB mergers and boundary changes are proposed, ICB plans should therefore be completed and submitted on behalf of the proposed new ICB bodies expected to take effect from 1 April 2026. Section 8.2 sets out the steps that should be taken to ensure contracts are agreed appropriately for the proposed new ICB organisations. The ICB financial apportionment arrangements for NHS trusts have been reviewed and these will be updated where required in April 2026 to align to the proposed new ICB bodies. Please note that the NHS Organisation Data Service will issue organisation codes for the proposed new ICB bodies in January 2026, subject to the final decision to proceed with the proposed ICB mergers and boundary changes. The temporary codes in published allocations are included for indicative purposes only and should not be used further. Net neutral allocation adjustments will be permitted during the planning process where issues are identified with the attribution of GP registered populations to the proposed new ICB boundaries, and these should be raised via the NHS England region where identified.

7. Where ICBs plan to operate under shared leadership and governance arrangements (‘ICB clusters’) in 2026/27, including where proposed mergers and boundary changes are expected to take effect from 2027/28, they should continue to agree plans and contracts as separate statutory bodies.

2. Financial planning

8. ICBs and NHS trusts will be required to submit financial plans for 2026/27, 2027/28 and 2028/29 at organisation level only. As set out in the updated NHS finance business rules from 2026/27 and the current NHS Oversight Framework for 2025/26, all ICBs and NHS trusts are required to maintain a breakeven financial position as an organisation in each financial year. ICB and NHS trust boards must agree final operational and financial plans before they are submitted to NHS England.

9. ICB financial plans will be the source of information to support ICB budget uploads and in-year financial reporting. NHS trust financial plans will be used to support in-year financial reporting of income and expenditure, efficiency delivery and capital. Contract information will be collected in both ICB and NHS trust financial plan submissions.

10. ICBs and NHS trusts are required to work together to agree plans that address the healthcare needs of the populations they serve, in accordance with national and local priorities, and ensure that resources are used effectively and efficiently in support of this. As set out in the NHS planning framework, ICBs and NHS trusts are expected to use all reasonable endeavours to proactively collaborate with each other in the agreement of local priorities and planning assumptions. ICBs and NHS trusts will be expected to submit plans that show a mutual alignment of contract information and planning assumptions. Where it has not been possible to agree planning assumptions or contract values through local discussion, this should be raised with the NHS England regional team in advance of final plan submission. As part of the overall approach to managing risk, where ICB and NHS trust plans within the same system are not consistent or there is not appropriate triangulation between finance, activity or workforce, NHS England will reject the relevant plan submissions, requiring local resolution and re-submission by the respective organisations in an expedited timescale. Failure to agree aligned plans locally, demonstrated by escalating unresolved issues to NHS England regions or plans being rejected due to misalignment, will be viewed as a failure of the leadership of the relevant organisations.

11. In accordance with the requirement to manage a breakeven financial position, ICB and NHS trust boards must ensure they have a robust approach to risk management in place. Organisations will be required to demonstrate a comprehensive understanding of financial risk and an agreed approach to managing and mitigating risks in year, which must be assured by the board as part of the final plan submission process. Financial plan submissions will require organisations to have assessed risk and identified robust mitigations that are actionable within the control of the organisation. Risks and mitigations should be quantified in plans where appropriate. ICBs should consider where it is appropriate to set local contingencies to manage risks to expenditure that may not otherwise be mitigated. Where organisations go off plan in year, there will be a requirement to review the risk management approach and, where it is determined that the organisation did not plan for or mitigate risks as effectively as it could, improvements will need to be agreed and implemented.

12. ICBs and NHS trusts should ensure that plan phasing is credible and realistic. Consideration should be given to where efficiency and productivity delivery can be brought forward to avoid plans that assume delivery of a significant amount of efficiency in quarter 4 each year.

3. Finance business rules

3.1 Updated NHS finance business rules

13. NHS England has published updated NHS finance business rules guidance, which will apply from 1 April 2026. The finance business rules have been updated to support the new NHS operating model set out in the 10 Year Health Plan for England and the guidance has been published alongside the medium-term planning framework to enable organisations to complete medium-term plans. However, the extant ICB and system finance business rules will continue to apply for the remainder of the 2025/26 financial year.

14. Both ICBs and NHS trusts will be required to deliver financial breakeven as individual bodies in future years, which reflects a change from the current business rules where ICBs and NHS trusts are required to support the delivery of financial breakeven in aggregate across their system. Consequently, the joint financial objective set by NHS England in the current business rules for ICBs and NHS trusts to exercise their functions with a view to ensuring that local revenue resource use does not exceed income in each financial year (referred to as the ‘system breakeven duty’) is removed from 1 April 2026.

15. ICBs and NHS trusts must continue to collaborate to support the delivery of locally agreed priorities. As part of this, ICBs and NHS trusts will be required to work together to agree plans that address the healthcare needs of the populations they serve, in accordance with national and local priorities, and ensure that resources are used effectively and efficiently in support of this. This includes each organisation taking proactive steps to ensure that plans are mutually aligned. As set out in the NHS Oversight Framework, NHS England will hold NHS trusts accountable for the effective delivery of services and hold ICBs accountable for the effective commissioning of services for the local population, including the delivery of these locally agreed plans.

16. The updated NHS finance business rules guidance clarifies how the cumulative system positions in the current business rules will be carried forward into the updated business rules from 2026/27. Where systems have a cumulative system surplus at the end of 2025/26, this will be carried forward as a surplus when establishing the opening ICB cumulative position from 2026/27 and may be accessed in accordance with the ICB drawdown policy set out in the updated business rules.

17. To support the transition to the new NHS operating model, ICB repayments of cumulative system deficits will be paused in 2026/27 and 2027/28. Where the ICB delivers a breakeven revenue position in both 2026/27 and 2027/28, NHS England will consider wiping the historical system cumulative deficit (up to and including 2025/26) where the ICB is considered to have demonstrated sound financial management over recent years (including delivery in years prior to 2026/27). Where this is agreed, the ICB cumulative position will be established at nil and adjusted to include any ICB surpluses delivered in 2026/27 and 2027/28. Where the ICB does not deliver a breakeven revenue position in both 2026/27 and 2027/28 or is not assessed as having demonstrated sound financial management, NHS England reserves the right to carry forward the system cumulative deficit (up to and including 2025/26) to the new ICB cumulative position, adjusted to include 2026/27 and 2027/28 ICB positions.

3.2 Revenue financial plan limits and deficit support funding

18. NHS England will set every ICB and NHS trust a revenue financial plan limit (‘plan limit’) for 2026/27, 2027/28 and 2028/29. This is a change from 2025/26, where plan limits were issued to systems. Where ICBs and NHS trusts have a surplus or breakeven plan in 2025/26, they will be set a breakeven plan limit for 2026/27 to 2028/29. Where ICBs and NHS trusts have a deficit plan limit, non-recurrent deficit support funding will be made available in the relevant years so that organisations can submit a breakeven financial plan after the inclusion of deficit support funding for each year in the planning period. The deficit support funding for organisations will reduce over the period, with all ICBs and NHS trusts expected to move to breakeven without deficit support funding as set out in the 10 Year Health Plan.

19. Where ICBs have a surplus plan position in 2025/26 that is supporting a deficit system financial position (and the system has received deficit support funding in 2025/26), this will need to be released in 2026/27 to NHS trusts in the system to ensure that the plan limits set by NHS England reflect a fair and consistent deficit improvement requirement for all organisations. NHS England will issue a schedule showing how impacted ICBs should distribute this funding in contracts with the relevant NHS trusts in 2026/27.

20. ICBs and NHS trusts must submit plans that deliver the required plan limit position for 2026/27 to 2028/29, and that are assured and accepted by NHS England, to be able to access deficit support funding where it is required. Deficit support funding will be issued to organisations in year subject to delivery of the agreed plan position. To support transparency, ICBs and NHS trusts receiving non-recurrent deficit support funding will be required to show their in-year and forecast outturn revenue position including and excluding deficit support funding as part of reporting, including in public board reports and to NHS England.

21. ICBs and NHS trusts that have breakeven or surplus financial plans for 2026/27, not including deficit support funding, will be able to access segments 1 or 2 of the updated NHS Oversight Framework, subject to the overall assessment of the organisation against other domains. ICBs and NHS trusts that have a deficit plan limit in 2026/27 and receive deficit support funding will be subject to the financial override in the NHS Oversight Framework. The financial override will mean the organisation will be limited to a segment no higher than segment 3, with the associated intervention and support arrangements.

3.3 Consequences for plan delivery

Organisations with breakeven financial plan limits

22. ICBs and NHS trusts with a breakeven plan limit that deliver the agreed plan position in 2026/27 and future years will continue to be able to access segments 1 or 2 of the NHS Oversight Framework, subject to their overall assessment, as described above. Where an ICB delivers a surplus, this will be applied to the ICB cumulative position as set out in the updated NHS finance business rules, and available for drawdown in future years subject to agreement with NHS England.

23. Where an ICB or NHS trust with a breakeven plan limit does not deliver the plan position and records a year-end deficit position, the organisation will then become subject to the financial override in the NHS Oversight Framework. The organisation will be expected to recover its financial position in future years without deficit support funding. Furthermore, the ICB deficit will be applied against the ICB cumulative position and subject to repayment in future years in line with the updated NHS finance business rules.

Organisations with deficit financial plan limits

24. ICBs and NHS trusts with a deficit plan limit that deliver the agreed plan position each year of the planning period will not face further financial consequences. They will continue to access non-recurrent deficit support funding in the following year where required, subject to the organisation having submitted a plan for the following year that delivers the required plan limit and is accepted by NHS England. Where they successfully return to a breakeven position, the organisation will no longer be subject to the financial override in the NHS Oversight Framework, as described in the sub-section above.

25. There is no further deficit support funding available for organisations beyond the planned values issued by NHS England. Where an ICB or NHS trust is set a deficit plan limit and does not deliver the plan position, there will be in-year and future year consequences, summarised below and shown in Table 1.

• The deficit support funding made available to the organisation in year will be reduced by an amount proportionate to the variance to plan excluding deficit support funding (capped at the total value of the planned deficit support funding).
• For ICBs, the value of the variance to plan position (excluding deficit support funding) will be applied as a deficit against the ICB cumulative position and subject to repayment in future years in line with the updated NHS finance business rules.
• For NHS trusts, the value of any deficit plan limit in the following year will be adjusted so that any non-recurrent deficit support funding available to the organisation in the following year is reduced by an amount equal to the current year variance to the planned position (excluding deficit support funding). The reduction in the deficit support funding for the following year will be capped at the total value of planned deficit support funding for that year.

Table 1: In-year and future year consequences for ICBs and NHS trusts with deficit plan limits not delivering plan position

4. ICB revenue allocations

4.1 Overview

26. NHS England has published ICB allocations for 2026/27 to 2028/29. They include ICB allocations for ICB core programme, delegated specialised services, primary medical care services, pharmacy, ophthalmic and dental (POD) services and the ICB running cost allowance. Where applicable, the allocation schedules show the target allocations (‘fair share’), base growth and convergence adjustment for each ICB. The allocations for 2026/27 should be treated as final but may be adjusted for in-year events where required. The allocations for 2027/28 and 2028/29 are set on an indicative basis and should be used to form medium-term plans. Further guidance is provided in the relevant sub-sections below on the baseline adjustments, base growth and additional adjustments applied to each allocation and in the specialised services section (section 5) for ICB specialised services allocations.

27. The resource made available to the NHS must be distributed in a way that supports equal access for equal need in accordance with the NHS Constitution, as well as NHS England’s duties to reduce health inequalities amenable to healthcare. ICB allocations are therefore expected to move towards a target distribution (‘fair share’) over the period of the multi-year settlement. To support this, a consistent convergence policy applies to the ICB core programme, ICB specialised services and ICB primary medical care allocations where there are needs-based target formulas. The convergence adjustment applied to each ICB allocation depends on its distance from the target allocation. The maximum convergence applied will be +/-0.5% where ICB allocations have a distance from target of more than +/-3%. Convergence is tapered so that adjustments are lower where allocations are closer to target. Further technical guidance on the needs-based formulas and how these are used to generate ICB target allocations will be published on the ICB allocations webpage in due course.

28. In addition, a baseline adjustment (shown in Table 2 in section 4.2) will be applied to some ICB core programme and ICB specialised allocations by exception where ICB allocations are under target by more than 2.5% and the ICB or the NHS trusts they have contractual relationships with are separately receiving deficit support funding. The purpose of this adjustment is to recognise where funding currently being issued through deficit support funding can reasonably be transferred into recurrent allocations to support moving to a fair share distribution of resource without impacting on national affordability. For these ICBs, additional funding will be provided in 2026/27 equal to the value of the deficit support funding the relevant organisations would be due to receive or the value of the adjustments required to take the ICB core programme and specialised allocations to a distance from target of -2.5% (the lesser thereof). NHS England will issue a supporting schedule showing where ICBs and NHS trusts should make adjustments to contract values to fund the impact of this adjustment. The 2026/27 plan limits of the relevant ICBs and NHS trusts will be reduced or brought to breakeven as required to recognise the additional funding being made available in commissioner allocations.

4.2 ICB core programme

Allocation adjustments

29. Tables 2 and 3 below summarise the adjustments applied to ICB core programme allocations in 2026/27, 2027/28 and 2028/29. As set out in Table 2, the baseline adjustments include the impact of recurrent funding made available in 2025/26, including recurrent in-year adjustments. The baseline adjustments are subject to base growth and convergence towards a target (‘fair share’) distribution from the year in which they are applied. The additional allocation adjustments (see Table 3) are applied after base growth and convergence, such that the distribution of this funding is not subject to movement to target (‘fair share’).

30. The funding issued in 2025/26 ICB core programme allocations for Covid-19 testing will be moved into recurrent baseline allocations for 2026/27. ICBs should agree the relevant Covid-19 testing funding in contracts with providers for 2026/27 and future years in line with the government guidance on Covid-19 testing in NHS settings.

31. ICB recurrent baseline allocations will be adjusted to include recurrent elective recovery funding on a target (‘fair share’) distribution. Further elective recovery funding will be made available to commissioners as an additional non-recurrent allocation adjustment in 2026/27 to 2028/29. The funding will support all areas of England to meet the constitutional standard for elective care in the settlement period. This includes funding for elective and diagnostic activity, with associated performance improvements expected against the 18-week referral-to-treatment and 6-week diagnostic waiting time standards. All ICBs will have access to at least the same level of elective recovery funding in 2026/27 as they received in 2025/26. The non-recurrent allocation will be subject to clawback where the required improvements in performance are not planned for and delivered.

32. Revenue funding for community diagnostic centre (CDC) sites opened using SR21 funding issued in previous years will continue to be issued in 2026/27 to 2028/29 as an additional allocation adjustment (see Table 3). Activity in new CDC sites opened using SR24 or SR25 capital funding should be funded from commissioner allocations. Further guidance on the utilisation of CDC funding is set out in section 7.2.

33. An additional allocation will be issued in 2026/27 to 2028/29 for the continued implementation of the National Institute for Health and Care Excellence (NICE) funding variation (FV) for the management of obesity (see Table 3). The funding is to support the associated cost of weight loss drugs in primary and secondary care for the identified priority cohorts and is distributed to ICBs with reference to obesity prevalence. Further information on the primary care patient management costs will be made available at a later date and are not part of this allocation. The allocation is subject to clawback where ICBs do not make sufficient progress in implementing the interim commissioning guidance. The funding for 2028/29 will be issued indicatively and subject to change, pending an evaluation by NICE of the initial 3-year rollout.

34. NHS England has increased the current £19 per head of population ICB cost of commissioning limit to reflect the pay assumption and the impact of other pay-related cost pressures on ICB operating costs. The limit will be £19.40 in 2026/27, £19.80 in 2027/28 and £20.21 in 2028/29. This limit is inclusive of ICB administration and in-scope programme spend. An additional allocation adjustment has been made to ICB core programme allocations to reflect the required reduction from 2026/27 (see Table 3). The ICBs within each region will be permitted to make net neutral adjustments during the planning process. Further adjustments may be required in due course as decisions are made about proposed restructuring processes. Limits on ICB administration spend will continue to apply and will be published in the ICB running cost allowance (RCA), as set out in section 4.5.

Table 2: ICB core programme baseline adjustments for 2026/27

Table 3: ICB core programme additional allocation adjustments (after growth and convergence)

Base growth

35. Table 4 below sets out the base growth funded in ICB core programme allocations for each year of the planning period. This includes the estimated NHS cost uplift factor (CUF) for each year, as well as the general efficiency factor set at 2% each year. The CUF includes a pay planning assumption of 2% in each year (2.1% inclusive of pay drift). This assumption is set as a placeholder for planning purposes only. Government will announce NHS pay awards for 2026/27 in due course. Further information on the calculation of the CUF in 2026/27 can be found here: NHS England » NHS Payment Scheme.

Table 4: ICB core programme base growth

Cost uplift factor (CUF)

36. As set out in the sub-section above, the cost impact of the CUF in the NHSPS is funded in commissioner allocations through base growth. For the purpose of medium-term planning, ICBs and NHS trusts may refer to the planning CUF values for 2026/27, 2027/28 and 2028/29, which are provided in Tables 5, 6 and 7 below with a breakdown of the key components. The 2026/27 planning CUF provided below aligns to the draft CUF set out in the 2026/27 NHSPS consultation. The CUF is presented in the tables below to 2 decimal places. However, unrounded values are used when setting commissioner allocations and unit prices in the NHSPS. The figures below do not include the 2% general efficiency factor referred to in Table 4.

Table 5: NHS cost uplift factor for 2026/27 planning

Table 6: NHS cost uplift factor for 2027/28 planning

Table 7: NHS cost uplift factor for 2028/29 planning

4.3 Primary care allocations

ICB primary medical care allocations

37. NHS England has set ICB primary medical care allocations for 2026/27 to 2028/29 for the purposes of completing medium-term ICB financial plans. ICB recurrent baselines have been adjusted to include additional allocations issued in 2025/26, including where funding for staff employed under the Additional Roles Reimbursement Scheme (ARRS) has transferred from SDF, the recurrent impact of NHS pay awards in 2025/26, as well as all other recurrent adjustments applied in 2025/26.

38. The ICB primary medical care allocations include funding for activity growth in all 3 years. Funding for pay and non-pay inflation has been held back for the purpose of setting planning allocations, subject to the conclusion of the agreement of contractual arrangements for general practice services in 2026/27. For the purposes of completing medium-term plans, ICBs should assume cost and activity growth in line with the growth in the published allocations in all years. Once agreed, the details of the GP contract and any payment changes for 2026/27 will be communicated to ICBs, including any financial implications.

39. ICB primary medical care allocations are subject to a convergence policy that moves ICB allocations to a target distribution (‘fair share’) over time. A consistent convergence policy has been set for ICB core programme, specialised services and primary medical care allocations, as set out in section 4.1 above.

ICB delegated pharmacy, ophthalmic and dental services (POD) allocations

40. NHS England has set ICB pharmacy, ophthalmic and dental services (POD) allocations for 2026/27 to 2028/29 for the purposes of completing medium-term ICB financial plans. Once the contractual arrangements for the services commissioned using the POD allocation are agreed, NHS England will communicate this to ICBs, including any financial implications. For the purposes of completing medium-term plans, ICBs should assume cost and activity growth in line with the growth in the published allocations in all years.

41. ICB recurrent baselines have been adjusted to include additional allocations issued in 2025/26, including the recurrent impact of NHS pay awards in 2025/26, as well as all other recurrent adjustments applied in 2025/26. Funding for lateral flow device (LFD) testing in the community and funding transferred from SDF for dental and eye checks have been issued after base growth in 2026/27 to 2028/29. LFD testing funding has been updated for the change in the eligible population and latest activity.

42. For those ICB mergers and boundary changes planned for 2026/27, allocations have been recalculated with reference to weighted populations derived using the ICB core programme target formulas. As set out in section 1, allocation adjustments between ICBs will be permitted on a net neutral basis during the planning process, where issues are identified with the attribution of POD allocations to new ICB boundaries, noting the payment rules for POD services. Requests to make adjustments should be raised via NHS England regions.

43. Guidance on the ICB dental services ringfence is provided in section 9.3.

4.4 ICB Service Development Fund (SDF) allocations

44. SDF allocations, including confirmed and indicative bundles, will be issued to ICBs and pre-populated in ICB planning templates. Technical guidance on the SDF allocations will also be provided.

45. In 2025/26, a significant amount of the ICB SDF allocations transferred into ICB core programme allocations as an additional allocation adjustment to support local flexibility. This allocation adjustment has been moved into recurrent ICB baselines from 2026/27 (see Table 2).

4.5 ICB running cost allowance (RCA) allocations

46. NHS England has set ICB RCAs for 2026/27 to 2028/29, which will also be published as part of ICB allocations. The RCA sets limits on ICBs for all administration spend. The values are a maximum and any underspends in RCA can be utilised as programme revenue expenditure. ICBs will be set a single RCA value for 2026/27 to 2028/29, including for commissioning functions delegated by NHS England in previous years. This represents a change from 2025/26, where the administration limits associated with delegated commissioning functions were issued separately.

5. Specialised services

5.1 ICB allocations

47. ICB delegated specialised services allocations are published as part of ICB revenue allocations (see section 4). A consistent convergence policy applies across the ICB core programme, ICB specialised services and ICB primary medical care allocations, as set out in section 4.1. As in 2025/26, the convergence policy for ICB specialised allocations is weighted to apply only to acute specialised services and is subject to the acute specialised needs-based target formula. Funding for specialised mental health services in ICB allocations will continue on the current basis, where convergence is not applied and base growth is applied uniformly for these services. Work will continue in 2026/27 to further refine our approach to developing a needs-based formula that covers specialised mental health services.

48. Adjustments have been made to specialised services allocations to reflect the following changes:

• Specialised elective recovery funding is now allocated on a population basis for each ICB footprint, rather than a host provider basis. This aligns specialised elective recovery funding with the approach for funding other delegated specialised services and elective recovery funding in ICB core programme allocations.
• The 2026/27 NHSPS consultation proposes removing a number of drugs from the excluded high-cost drugs list and moving reimbursement into NHSPS unit prices. Commissioner allocations will be adjusted to ensure ICBs receive funding for this change.
• Where allocations for specialised top-ups relates to delegated services, this has been moved into ICB specialised allocations on a host basis. This has been enacted outside the convergence application as a post-convergence adjustment.
• A minor adjustment has been made to some ICB specialised allocations for identified values relating to services for armed forces patients in the baseline data, to align with the reporting of this activity through the commissioner assignment methodology. A corresponding allocation adjustment will be made to armed forces commissioner allocations. The impact of this change will be net neutral from a provider perspective.

49. Planning for both acute and mental health services delegated to ICBs will be in the appropriate ICB financial planning template. Allocations for retained services will be provided to NHS England regions and they will work closely with national colleagues to plan for these services over the planning period.

5.2 Contracting

50. As in 2025/26, NHS England regions are encouraged to agree with ICBs that acute specialised services will be contracted within ICB-led contracts, with delegated services becoming the responsibility of ICB commissioners and NHS England joining ICB contracts as an associate named commissioner in relation to retained services. Where delegated services are included in ICB-led contracts, there will be no need for further action to assign commissioning responsibilities.

5.3 Specialised mental health services

51. Currently, delegated specialised mental health services remain under a mental health provider collaborative contracting model, delivered by NHS-led provider collaboratives for specialised mental health, learning disability and autism services (MHPCs). The current contract ends in April 2026 but ICBs have an option to extend this to April 2027.

52. The scope of services delivered under this model remains the same as in 2025/26. MHPCs have the flexibility to review service provision and are encouraged to establish service models that treat patients closer to home and to make and reinvest savings locally. ICB commissioners are therefore expected to fund the relevant allocation growth in full to MHPCs, so that collaboratives can determine the best use of the resources for the population through their lead provider arrangements.

53. In 2025/26 ICBs were expected to achieve the specialised services Mental Health Investment Standard (MHIS) whereby all ICB specialised allocations for mental health were expected to be spent on mental health services. The ICB specialised services MHIS will continue in 2026/27 to 2028/29, and the relevant values will be pre-populated in ICB planning templates. As in 2025/26, where spend is moved from specialised services into community mental health services as part of a shift to community and preventative services, this can be reported against the specialised MHIS. In line with the approach for all delegated specialised spending, ICBs must meet the clinical quality and output requirements set by NHS England.

5.4 Retained specialised services

54. A review has been completed of commissioning functions currently retained by NHS England, including retained specialised services, to consider which may be suitable for delegation or transfer at a future point. Further information will be shared in due course where proposals are brought forward. Any future proposals to transfer statutory commissioning functions would require legislative change and therefore be subject to Parliament’s approval.

55. NHS England will complete 2026/27 to 2028/29 commissioner plans for retained specialised commissioning functions. NHS England direct commissioners will build on existing joint working arrangements in each region to ensure there is closer collaboration with ICBs and that they are engaged in the process of planning for retained services, noting that NHS England retains responsibility for commissioning decisions for these retained services.

5.5 Payment rules for specialised services

56. NHS England will continue to align payment arrangements for delegated specialised services with those for other services commissioned by ICBs. Low volume activity (LVA) values will be set for acute specialised services but not for specialised mental health services, as in 2025/26.

57. Where services and payments are best managed at a provider level, and where there are limited standardised activity or data flows, NHS England regional teams will continue to work with a nominated lead ICB for each provider to develop ICB-level payment arrangements. This includes spend on clinical networks for specialised services, which need to be planned for as separately identifiable components within commissioner financial plans. The value of this funding for each network should be separately identified in contracts.

High-cost drugs

58. In 2026/27, arrangements for excluded specialised high-cost drugs will be the same as in 2025/26. ICBs should assume that:

• NHS England will continue to hold allocations for all specialised high-cost drugs that are excluded from NHSPS unit prices. Reimbursement against opening provider income baselines will be funded by a central reserve for all specialised high-cost drugs. This will apply to all specialised commissioning high-cost drugs spend, regardless of whether the drugs are used for services for which NHS England has retained responsibility for commissioning or this responsibility has been delegated to ICBs.
• Most specialised high-cost drugs will be reimbursed on a cost and volume variable basis according to in-year reported trust expenditure data. A small number will continue to be reimbursed on a fixed payment basis, which will be based on forecast spend in 2025/26 and projected savings opportunities over the life of the planning period.
• Costs relating to hepatitis C, cancer drugs funded from the Cancer Drugs Fund (CDF) and other medicines funded from the Innovative Medicines Fund (IMF) will be reimbursed in line with the actual expenditure trusts submit in year. Where it has been agreed to separately fund treatment costs associated with specialised high-cost drugs, such as CAR-T treatment, NHS England will continue to pay for these.

59. Providers, ICBs and NHS England all have a shared obligation to work together to release efficiency savings through reducing variation, optimising medicines value and improving the adoption of and compliance with the best value products and frameworks. The use of a reference price for anti-VEGF drugs will be recommended from April 2026 to maximise the significant biosimilar savings opportunity. A similar approach will be considered for other high value opportunities. NHS England will continue to consider financial initiatives that incentivise faster realisation of savings and we will consider whether to move some high-cost drugs from a cost and volume variable basis to fixed payment arrangements.

60. Ensuring the continued improvement of drug data quality is essential. Accurate and complete provider data is critical for assuring compliance with the prior approval process and for validating payments. NHS England will continue to monitor data quality and work with providers and ICBs to ensure improvement plans are in place.

High-cost devices

61. NHS England will continue to hold the budget and provide reimbursement for specialised high-cost devices that are excluded from NHSPS unit prices. Purchase via NHS Supply Chain will continue to be mandated for most devices and there will be no reimbursement for devices purchased outside this route, unless in exceptional circumstances.

62. NHS England, working with colleagues at NHS Supply Chain, will focus on the variation in device choices across providers, particularly where this is unwarranted and leads to differential costs or access to technologies. NHS England will work with providers and ICBs to highlight and address this variation. Where appropriate, reference pricing within device categories will be developed and implemented to incentivise best value decisions. Providers, commissioners and suppliers will be required to work together to invest in innovation and maintain spend within budgetary limitations.

63. NHS England will set indicative plans for each provider for an affordable level of growth, which will then be monitored in year to support greater understanding of changes in device usage. Management actions will be agreed where indications suggest plans are on course to be exceeded.

64. Where prior approval processes are mandated in clinical policies, NHS England will put in place processes to monitor the link between reimbursed device purchases and the appropriate completion of the forms. This will provide a clearer picture of where device usage aligns with clinical policy as well as supporting conversations around equity of access across the country and the effective use of limited resources.

65. NHS England will continue to work closely with NHS Supply Chain to consolidate procurement and purchasing arrangements. This will ensure that all providers can access the very best prices for excluded high-cost devices and for those that are reimbursed in NHSPS unit prices.

Other payment arrangements

66. Further detail on payment arrangements for all specialised services is covered in the draft 2026/27 NHSPS published for consultation. This includes new payment models for radiotherapy and genomics services.

6. NHS England direct commissioning

6.1 Vaccinations, screening and child health information systems (CHIS)

67. NHS England will continue to issue allocations to regional commissioners so that they can commission public health services, as part of the NHS public health functions agreement (Section 7A). Regional commissioners will continue to produce financial plans at ICB level to support closer collaboration between NHS England and ICBs on the commissioning of vaccination, screening and CHIS services. These plans will inform the future development of ICB-level allocations.

68. Since 1 April 2024, healthcare providers delivering public health services have been required to report activity through standard contract monitoring to their commissioners. In addition to supporting contract oversight, this data will be used to disaggregate contract values to ICB level in preparation for future service delegation. Providers should therefore achieve full compliance with this reporting requirement.

Diabetic eye screening

69. From 1 October 2025, all regions will have implemented optical coherence tomography (OCT) within the digital surveillance component of the post-screening pathway, in line with the national service specification for NHS diabetic eye screening (DES). As outlined in the 2025/26 revenue finance and contracting guidance, ICB allocations have been adjusted to reflect the full-year effect of fewer referrals for hospital-based treatment, following upfront investment in the screening pathway. Regions and providers should continue efforts to stabilise the cost of OCT delivery, offset by savings from the interval extension introduced in October 2023. The NHSPS includes non-mandated prices for all DES services, including OCT, to support cost-effective commissioning across the full screening pathway.

Bowel cancer screening

70. Early adopters of lowering the FIT (faecal immunochemical test) threshold to 80 µg Hb/g in bowel cancer screening – commonly referred to as the FIT80 threshold – will expand during 2026/27. Full national implementation is planned for 2028/29. Funding to support this expansion is incorporated into the allocations for 2027/28 and 2028/29. Regional commissioners and NHS trusts are advised to reflect this implementation trajectory in their medium-term planning

Cervical screening

71. From 1 July 2025, the recall interval for individuals aged 25 to 49 who test negative for HPV was extended from 3 to 5 years. This change is expected to reduce laboratory activity and associated capacity requirements from 2028/29 onwards. Regional commissioners and providers should work together to establish a clear trajectory for scaling laboratory services in line with this anticipated reduction. In parallel, the national rollout of HPV self-testing for under-screened populations, which is due to be launched in quarter 4 2025/26, will continue throughout 2026/27. Financial planning should reflect both the implementation of self-sampling and the longer-term efficiencies associated with the interval extension.

Vaccination programmes

72. Policy and operational requirements of the 2026/27 flu and Covid-19 campaigns will be communicated through the annual system letters, following agreement with government. As part of the ongoing integration of Covid-19 vaccination into routine seasonal immunisation services, Covid-19 funding will be baselined recurrently within regional allocations. As with other vaccination programmes, funding may be adjusted in future years to reflect changes in eligible cohorts.

73. Following recent Joint Committee on Vaccination and Immunisation (JCVI) advice and subject to acceptance by government, commissioners and providers may be expected to expand the eligible cohort for the RSV vaccination programme in 2026/27, to include all individuals aged 80 years and over as well as all residents of older adult care homes.

74. Regions will continue to receive funding to improve access and inequalities across vaccination programmes. They should collaborate with ICBs to target resources to areas of greatest need. All initiatives supported by public health funding should be subject to evaluation, with learning actively shared between regions to maximise the effectiveness of this investment.

Digital services

75. Adoption of enhanced digital technology remains a key enabler for improving access and uptake across vaccination and screening services. Regions and providers should work together to ensure full adoption of NHS Notify for vaccination and screening communications, enabling a reduction in non-digital communication methods and the realisation of associated efficiency savings.

76. MAVIS, a digital tool designed to help school-age immunisation service (SAIS) teams manage their vaccination programmes, will become available free of charge to providers through a phased rollout. Providers should work with their regional commissioner, alongside the national MAVIS team, to agree the implementation timeline. Savings from the cessation of legacy technology arrangements should be identified within contracts and re-invested in initiatives that strengthen uptake and access to school-age immunisation services. This includes targeted efforts to support the national ambition to eliminate cervical cancer by 2040 through increased HPV vaccination uptake.

6.2 Health and justice

77. As set out in section 5.4, a review has been completed of commissioning functions currently retained by NHS England, including health and justice services. Further information will be shared in due course where proposals are brought forward. Any future proposals to transfer statutory commissioning functions would require legislative change and therefore be subject to Parliament’s approval.

78. Allocations for health and justice services will be issued for 2026/27 to 2028/29 and NHS England commissioners will complete 3-year commissioner plans for these services.

6.3 Armed forces

79. Healthcare for serving members of the armed forces and their families registered with defence medical services, as well as veterans’ mental health and prosthetic services, will continue to be commissioned by NHS England.

7. Other revenue

7.1 Education and training

80. In the interim period until the 2026/27 education and training tariff is published by the Department of Health and Social Care (DHSC), NHS trusts should refer to the education and training planning assumptions set out in the financial planning technical guidance to complete plans.

7.2 Community diagnostic centres (CDCs)

81. From 2026/27, the responsible commissioner for CDC activity will change so that activity is chargeable to commissioners based on patient GP registration. This will mean that CDC services can be commissioned as part of population-based commissioning arrangements. This will be set out in the Who pays? guidance that NHS England will publish for 2026/27 in due course. The relevant CDC prices in the NHSPS should continue to be used.

82. Commissioner funding for CDC activity is included in ICB core programme allocations (see section 4.2). Adjustments have been made to ICB allocations to reflect the above change in commissioner responsibilities. Where ICBs have received CDC revenue funding, they will be expected to continue to fund CDC sites as part of their contract arrangements with providers. This is to support continuity of existing CDC capacity. Where ICBs do not intend to use this funding to commission diagnostic activity, they should discuss this with their NHS England regional team during the planning process.

7.3 Revenue support for capital

Depreciation and amortisation

83. As in 2025/26, additional revenue funding will be available for in-scope depreciation and amortisation costs above system-level baselines. The 2026/27 to 2028/29 baselines have been calculated based on 2025/26 baselines, uplifted for growth funded through ICB core programme allocations. A specified limit will not be applied to the resource that systems can access for expenditure above their baseline. However, where systems have high levels of growth, they will be asked to explain how their expectations align with their capital position before resources are confirmed.

84. Indicative allocations for financial reporting purposes will be based on plan expenditure and final allocations will be confirmed each year end based on latest available forecast outturn expenditure. Where depreciation funding is issued that is not required for depreciation expenditure, the allocation will be recovered by NHS England. ICBs and trusts may therefore need to adjust the fixed element of their aligned payment and incentive (API) arrangement in year to reflect a change in funding where actual spend differs from plan.

85. A schedule of the system baselines will be issued and baselines will be included in ICB planning templates. Funding will populate in ICB planning templates based on plan spend inputs.

Public dividend capital (PDC) dividend relief for assets under construction

86. As set out in DHSC guidance, PDC dividend relief for assets under construction (AUC) is solely at the discretion of DHSC, in consultation with NHS England, and is targeted at large nationally directed schemes that create material revenue impacts for providers, such that trusts do not pay PDC dividend charges on assets that are under construction and not yet operational.

87. New Hospital Programme schemes are eligible for AUC PDC dividend relief. In addition, government has agreed that this relief will be applied to a further set of limited schemes. Where this is the case, the trust will have received a letter from DHSC confirming eligibility for AUC PDC dividend relief.

88. Further information relating to capital investment is available here: NHS England » Capital guidance.

8. Payment and contracts

8.1 NHS Payment Scheme (NHSPS)

89. NHS England will open a consultation on the 2026/27 NHS payment scheme (NHSPS). The 2026/27 NHSPS will apply to all secondary healthcare – for acute, ambulance, community and mental health services.

90. For the purposes of medium-term planning, ICBs and NHS trusts may refer to the draft NHSPS and unit prices in the consultation to set indicative assumptions. ICBs and NHS trusts should refer to the final 2026/27 NHSPS published following the conclusion of the consultation before they agree final contract values or final medium-term financial plans.

91. As in 2025/26, the draft 2026/27 NHSPS subject to consultation includes rules for the 4 payment mechanisms set out in Table 8.

Table 8: Summary of proposed 2026/27 NHSPS payment mechanisms

92. The normal arrangement for payment is that the provider bills the patient’s responsible commissioner for their treatment, as set out in the Who pays? guidance published by NHS England. ICBs operating a joint contract with a provider may agree to ‘aggregate’ their payments (so that one ICB makes payment to the provider on behalf of all the ICBs, with recharging between the ICBs). ICB-to-ICB recharging is only appropriate if all parties agree to this in a specific contract. It should not be used for non-contract activity payments or to circumvent LVA arrangements. Where transactions are needed, they should be done in the most cost-effective way – for example, invoice payment file (IPF) – and their volume should be minimised.

Planning approach for 2027/28 and 2028/29

93. For the purposes of completing plans for 2027/28 and 2028/29, ICBs and NHS trusts should assume the payment arrangements set out in the NHSPS for 2026/27 continue for these years. Organisations should assume that payment values (including LVA payment values) are adjusted for the indicative planning CUF for 2027/28 and 2028/29 set out in section 4.2 and a 2% general efficiency factor.

94. NHS England will consult on a new NHSPS for 2027/28 before it is introduced. Changes to payment arrangements may also be proposed for future years, including for the introduction of new arrangements announced as part of the 10 Year Health Plan. Where any changes to prices or payment arrangements are confirmed in the final NHSPS for 2027/28 or 2028/29, guidance will be issued that clarifies where ICBs and NHS trusts are required take account of any changes in 2027/28 and 2028/29 plans.

API fixed payment review

95. The 2026/27 NHSPS consultation proposes that providers and commissioners with API payment arrangements must continue their work to ‘deconstruct block payments’ and to review fixed payments for all services. Funding for individual services should be identified, including for services not funded on an activity basis and where payments for services are in excess of the unit price value of activity being undertaken. The difference in funding between baseline contract values and the combined value of these elements should be agreed.

96. For acute services commissioned by ICBs (including specialised services), the NHSPS consultation proposes the following:

• The outcome of work to deconstruct blocks and review fixed payments should be used to inform prospective adjustments when setting the fixed payment value, and to inform contract discussions and areas of focus in future years.
• To avoid destabilising providers or commissioners, the value of any identified differences in funding should not immediately be applied in full as an adjustment to the fixed payment value. However, it should be considered when applying local efficiency requirements, including convergence.
• Any adjustments as a result of work to deconstruct blocks and review fixed payments should be set at a reasonable level for the trust and an affordable level for the commissioner. They should be considered in aggregate, alongside other funding adjustments including allocations convergence, organisation deficit reduction, market forces factor (MFF) changes and activity growth.
• Commissioners and providers should agree adjustments to 2026/27 fixed payment values for agreed funding differences of up to +/- 2.5% of total contract values, such that those funding differences are reduced. These adjustments should be additional to those made for service changes, activity changes, net CUF and CNST, and additional baseline adjustments (where applicable), but should be inclusive of other pricing changes, including updated MFF values.
• Where NHS trusts are already expected to deliver efficiency as a result of reduced deficit plan limits, adjustments for agreed funding differences should be moderated, so that the combined efficiency requirement from deficit reduction and adjustments for agreed funding differences is no more than 2.5% of the total contract value.
• Adjustments exceeding +/- 2.5% should only be agreed in exceptional circumstances.
• Providers and commissioners must collaborate to ensure that any funding changes do not destabilise services. This should be supported by clear commissioning intentions, including any necessary decommissioning decisions, along with detailed demand and capacity plans. These plans must be aligned between providers and commissioners before any funding changes can be reinvested into alternative services. This approach ensures both parties are aligned in managing resources effectively while safeguarding service delivery and patient care.
• Where adjustments in fixed payments are agreed to be actioned over time, a plan should clearly document what changes are expected and when they will be actioned.
• Intra-system and inter-system contract values with NHS trusts should be treated equally.
• The new fixed payment should be split by broad service categories plus any residual amount.

97. Further guidance on the proposed approach to reviewing the fixed payment is set out in the NHS provider payment mechanisms annex in the 2026/27 NHSPS consultation.

Proposals for the 2026/27 NHS Payment Scheme

98. The 2026/27 NHSPS consultation proposes the introduction of a blended payment model for urgent and emergency care (UEC), comprising a fixed payment for planned activity and a variable payment set at 20% of NHSPS unit prices for activity above or below plan. This would mean providers are paid 20% of relevant prices for activity above plan and the fixed payment reduced by 20% of prices for activity below plan. A ‘break glass’ clause is included where activity is significantly different to plan. The draft 2026/27 NHSPS recommends that same day emergency care (SDEC) activity is included in the UEC blended payment model and proposes a national unit price for SDEC activity. The draft 2026/27 NHSPS also proposes a separate blended payment model for radiotherapy services, with a fixed payment for planned activity and a variable payment set at 50% of NHSPS unit prices for activity above or below plan. For both the proposed UEC and radiotherapy blended payment arrangements, providers and commissioners should agree the value of planned activity that will comprise the fixed payment and compare that with the value of actual activity delivered when calculating the variable payment due in year. Default assumptions for UEC activity will be made available to inform planned activity levels. For the purposes of financial planning, ICBs and NHS trusts should therefore ensure that the value of activity in their 2026/27 plan aligns to the activity levels agreed as part of the fixed payments for UEC and radiotherapy services in 2026/27.

99. The 2026/27 NHSPS consultation proposes that elective activity continues to be paid for using NHSPS unit prices, with the relevant MFF value applied, as in 2025/26. It proposes the introduction of a new unit price for patient-not-present activity (such as post-referral triage, validation, review of diagnostic results and setting out care plans) that results in the stop of an RTT clock. It also proposes to maintain the pause of the nationally mandated CQUIN scheme for 2026/27, meaning there would be no variable payments relating to achievement of CQUIN criteria.

100. The 2026/27 NHSPS consultation proposes that the fixed element of API payment arrangements will include those services not covered by the proposed blended or variable payment arrangements, as well as any excess costs, above national prices, for any services covered by variable or blended payments. The fixed payment will need to identify funding for individual services, including where services are not funded on an activity basis and where payments for services exceed the unit price value of activity being undertaken. The proposals for how commissioners and providers ‘deconstruct blocks’ and review fixed payment arrangements are set out in the sub-section above.

101. The 2026/27 NHSPS consultation proposes that low volume activity (LVA) arrangements apply for almost all relationships between commissioners and NHS providers with an annual value of less than £1.5m, and includes draft LVA values for 2026/27.

102. The 2026/27 NHSPS consultation proposes to move to the second step of the two-step transition path for MFF values, following the 2025/26 update to the data used to calculate MFF values. The updated MFF values must be applied to NHSPS unit prices or local prices. It proposes that providers and commissioners should discuss any changes in MFF values and agree how the effects should be applied to the fixed element in API payment arrangements (further guidance is provided in the NHS provider payment mechanisms annex).

103. The 2026/27 NHSPS consultation proposes the introduction of new best practice tariffs (BPTs) to incentivise quality and cost-effective care and support referral-to-treatment (RTT) priorities. There would continue to be a mix of elective activity BPTs (paid for on an activity basis) and annual BPTs (paid for in the fixed element).

104. The 2026/27 NHSPS consultation also includes proposals:

• to manually adjust price relativities for ophthalmology and non-elective stroke and pneumonia services
• to adjust the lists of excluded high-cost drugs and devices, which includes moving payment for some drugs that are currently excluded into NHSPS unit prices
• to introduce prices for ADHD and autism services

105. Commissioners and providers should refer to the 2026/27 NHSPS consultation when open for the proposed payment arrangements in full.

8.2 NHS Standard Contract

106. Fully populated contracts in the form of the 2026/27 NHS Standard Contract must be put in place between commissioners (ICBs and NHS England) and every provider of NHS non-primary healthcare services (NHS trusts and non-NHS organisations). Contracts should be completed and signed by 31 March 2026 for contracts starting on 1 April 2026.

107. Contracts for all NHS commissioned healthcare services – other than primary medical services, primary dental services, primary ophthalmic services and pharmaceutical services – must be in the form of the NHS Standard Contract, regardless of the type of provider commissioned to provide the services. Further detail on NHS contracting is set out in the NHS standard contract technical guidance. It is especially important that, following an appropriate process under the NHS Provider Selection Regime and NHS England’s patient choice guidance, ICBs promptly sign their proposed contracts with non-NHS providers of elective physical and mental health services. Prompt contract signature by 31 March 2026 will ensure that such providers can continue to deliver services without any risk of interruption.

108. The proposed NHS Standard Contract 2026/27 will be published in early November for consultation and we aim to publish the final contract before the end of the calendar year.

Collaborative commissioning

109. To minimise bureaucracy and duplication, it is important that commissioners continue to collaborate in setting up and managing their contractual arrangements with providers, with multiple commissioners often signing the same single contract with a large provider. Model collaborative commissioning agreements are available on the NHS Standard Contract webpage of the NHS England website to facilitate this.

Managing the agreement of contracts for ICB mergers and boundary changes

110. Where ICB mergers and boundary changes are proposed for 2026/27, if the whole of one ICB moves into a receiving ICB, all its continuing contracts will transfer to that single receiving ICB. ICBs whose responsibilities are being received by more than one ICB should consider how their contracts may be affected by the changes and agree with the receiving ICBs whether contracts will continue and which ICB they will transfer to. All transfers will be enacted by the transfer scheme, which is a legal instrument made by NHS England. NHS England is supporting ICBs and has shared a due diligence checklist indicating the steps that ICBs should take to complete their contract transfers. Further information is available in Implementing integrated care board mergers and boundary changes to take effect in April 2026 and 2027 (transfer of contracts is dealt with in section 4 of that guidance).

111. ICBs should continue to complete the necessary work to ensure that all contracts are signed by 31 March 2026 so they can transfer via the transfer scheme. Contracts signed by this date must be signed by the appropriate officer of the existing ICB, in accordance with the existing ICB’s usual governance processes. Contracts signed after this date must be signed by the appropriate officer of the receiving ICB, in accordance with the new ICB’s processes.

Contract agreement

112. The agreement of contracts is an essential discipline to support effective delivery. The inability to promptly agree a contract may be a sign that plans are not robust or aligned. Commissioners and providers are expected to agree and sign all their contracts by 31 March 2026, and local NHS leaders must seek to work together to ensure this is achieved. Inability to agree contracts before the start of the year will be viewed as a failure of local leadership.

113. Regional teams will proactively monitor progress towards contract agreement and signature. Where there is a risk that a contract between a commissioner and an NHS trust will not be agreed, the issues preventing agreement must be escalated to, and discussed by, the ICB chief executive (or for contracts involving NHS England as commissioner, the NHS England regional director) and the NHS trust chief executive.

114. Where contracts between ICBs and NHS trusts (whether within a region or across regional boundaries) or NHS England and NHS trusts have not been agreed by the deadline for plan submission, the affected organisations will be required to submit a single joint statement of the issues in dispute to the relevant NHS England regional director(s) of finance. The regional team(s) will work with all parties to resolve the dispute and, where required, will have access to expertise from NHS England’s national team to clarify the application of relevant national rules and guidance.

115. In exceptional circumstances, the issues in dispute will be escalated by the regional director(s) of finance to NHS England’s national team, who will then provide binding advice to the disputing parties. The expectation is that all contract disputes between commissioners and trusts will be resolved, with all contracts subsequently signed no later than 22 April 2026.

9. Key financial commitments

9.1 Better Care Fund

116. As announced in the 10 Year Health Plan, the Better Care Fund will be reformed to focus on integrated services. The DHSC will shortly set out further detail on the approach to reform. Any changes to NHS and local authority minimum contributions to pooled funding will not be introduced before 2027/28.

117. The minimum overall NHS contribution made by ICBs to the BCF will increase by an average of 3.0% in 2026/27. The BCF policy framework and BCF allocations will confirm the minimum overall NHS contribution for each ICB. For 2027/28 and 2028/29, the indicative increase for the minimum overall NHS contribution made by ICBs is an average of 3.2% and 3.3% respectively.

118. The minimum NHS contribution to adult social care will increase by 4.4% in 2026/27. For the purposes of medium-term planning, ICBs should assume an indicative increase to the minimum NHS contribution to adult social care of 4.8% in 2027/28 and 4.7% in 2028/29.

119. BCF allocations must be pooled into a Section 75 agreement alongside grants paid to local government.

9.2 Mental Health Investment Standard (MHIS)

120. ICBs are required to meet the Mental Health Investment Standard (MHIS) for the ICB core programme allocation. ICB core programme MHIS values will be set for 2026/27 to 2028/29 based on flat real funding growth and will be pre-populated in ICB plans.

121. As stated in section 5.3 above, ICBs will also be required to meet the MHIS that applies to ICB specialised services allocations in 2026/27 to 2028/29 and this will be pre-populated in ICB plans. As in 2025/26, where spend is moved from specialised services into community mental health services as part of a shift to community and preventative services, this can be reported against the specialised MHIS. In line with the approach for all delegated specialised spending, ICBs must meet the clinical quality and output requirements set by NHS England.

9.3 ICB dental services ringfence

122. The utilisation of ICB POD allocations is subject to a ringfence on budgets for dental services. NHS England reserves the right to direct that any unused resources are used to improve dental access. Exceptionally, any unspent allocation may be returned to NHS England. A separate schedule will be issued setting out the ringfence for dental services included in 2026/27 to 2028/29 ICB POD allocations.

9.4 Reducing temporary staffing expenditure

123. NHS trusts are expected to continue to make progress in reducing agency and bank staffing expenditure. Every NHS trust will be set a limit for both agency and bank staff expenditure in 2026/27, 2027/28 and 2028/29 and this will be pre-populated in NHS trust planning templates. Performance against the limits will be monitored at individual NHS trust level, not across the system the NHS trust is apportioned to.

124. All NHS trusts are expected to reduce expenditure on agency staff so that there is no agency spending in 2029/30. Limits will therefore be set based on reducing current agency spending (based on M6 forecast outturn) by 30% in 2026/27, 25% in 2027/28 and 25% in 2028/29. These limits are not expected to be updated in future years.

125. All NHS trusts are also expected to reduce expenditure on bank staff across the next 3 years. Each organisation will be set a limit that reduces current bank spending (based on M6 forecast outturn) by an amount that will range from 7.5% to 15% in each year from 2026/27 to 2028/29. NHS trusts with a higher proportion of bank spending (as a % of pay) will be required to reduce bank spending by more.

10. Other planning assumptions

10.1 All-age continuing care

126. NHS-funded all-age continuing care can be arranged through either a personal health budget or care services delivered by a social care provider. Both these commissioning arrangements support optimised care in the community. ICBs should locally, and in conjunction with their integrated care system, consider the sustainability of local social care providers. ICBs and providers should engage constructively in planning services for those in receipt of all-age continuing care, using the rules for local payment arrangements as set out in the NHS Payment Scheme, and follow the NHS Standard Contract terms and conditions relating to prompt payment of providers.

127. Government is expected to announce the NHS-funded nursing care (FNC) rate for 2026/27 in advance of the start of the next financial year.

10.2 Central technology licence adjustment

128. A funding transfer from ICB allocations for trust technology licences will be applied for trusts in the system that are part of the central licensing arrangement (see section 4.2). The funding transfer has been calculated using the same methodology as in 2025/26, updated to reflect where trusts have joined the central licensing arrangements. A separate schedule will be issued setting out the adjustment that ICBs should make to each trust’s API fixed payment value.

10.3 Charge-exempt overseas visitors (CEOV) and UK cross-border emergency activity

129. Commissioners have a legal responsibility to commission services for CEOVs and UK cross-border emergency care. They should provide the appropriate level of funding to providers through their commissioning contracts, as set out in the NHS Standard Contract. Information on determining the responsible commissioner for overseas visitor and UK cross-border activity can be found in the Who pays?

130. As set out in section 4.2, CEOV and UK cross-border emergency care allocation adjustments have been applied to the published ICB core programme allocations for 2026/27 to 2028/29. The adjustments are based on ICB submissions of their 2024/25 actual costs for CEOVs and 2024/25 Secondary Uses Service (SUS) reporting for UK cross-border emergency activity. They are updated for the relevant CUF and general efficiency factor in each year.

131. Accurate data collection of CEOV and UK cross-border emergency activity ensures that the allocation re-distribution is correctly informed. Providers should therefore use the overseas visitors charging categories (OVCC) in their patient administration system (PAS) to ensure this information is appropriately captured in SUS. Commissioners should be regularly reviewing this information to ensure it can support the timely and robust completion of the annual data collection.

10.4 Clinical Negligence Scheme for Trusts (CNST)

132. The CNST contributions charged by NHS Resolution will increase by 8% overall in 2026/27. However, the charges for each ICB and provider will vary, reflecting relative risk factors. ICBs and providers should expect to receive confirmation of 2026/27 CNST contribution charges shortly, in time for ICBs and NHS trusts to include the actual costs in final plan submissions.

133. ICBs and providers receive funding for CNST contributions in commissioner allocations and the NHSPS. Most CNST funding for providers in the NHSPS is funded through adjustments made to specific unit prices, so that prices reflect the relative risk of specialties. A relatively small residual amount of CNST funding, which is not attributed to a relevant HRG sub-chapter, is applied to all prices through the ‘unallocated CNST’ component of the CUF.

134. As in previous years, the overall CNST cost growth in 2026/27 is funded in commissioner allocations on a uniform basis. The base growth sub-section in section 4.2 sets out the CNST growth that is funded in allocations. The ‘unallocated CNST’ funding described in the paragraph above is funded in the CUF component of base growth, while the cost impact of the CNST funding paid to providers through unit price adjustments is funded in commissioner allocations through the overall base growth. An indicative forecast has been used to set the planning assumption for overall CNST cost growth of 5.9% and 5.5% respectively in the indicative commissioner allocations for 2027/28 and 2028/29.

135. ICBs and NHS trusts should ensure the fixed element of API contract arrangements is adjusted to reflect the relevant CNST adjustments to unit prices in the NHSPS for 2026/27. As a minimum, commissioners must uplift the part of the fixed element that relates to maternity services with reference to the CNST adjustments for maternity unit prices. This process should also be followed for all other service areas but, where it is agreed that this would be disproportionately resource intensive, an average CNST growth adjustment for non-maternity service areas could be calculated and applied. Further guidance will be set out in the NHS provider payment mechanisms annex of the 2026/27 NHSPS.

136. For 2027/28 and 2028/29 plans, NHS trusts may set local planning assumptions for the growth in income they will receive through the NHSPS that is attributable to CNST, based on their relative service mix. They may also set a local planning assumption for cost growth, based on their relative risk factors as an organisation.

137. The cost of claims raised against ICBs (or falling to them through their commissioning contracts) for incidents since 1 July 2022 will be charged to them in CNST contributions. It is not expected that this will cause material financial pressures in 2026/27. However, ICBs should ensure they are undertaking necessary due diligence when agreeing contracts, ensuring that commissioned providers have appropriate indemnity cover in place in line with the requirements of the NHS Standard Contract. In addition to any claim charges, ICBs will continue to make a nominal contribution of £1,000 to NHS Resolution as part of their membership of the CNST.

10.5 Emergency ambulance services

138. In 2025/26, the distribution of funding for activity growth in emergency ambulance services was agreed between ICBs and NHS England as part of the planning process. This approach will continue as part of medium-term planning for 2026/27 to 2028/29.

139. The 2026/27 ICB core programme allocations include a baseline adjustment to reflect the recurrent impact of the 2025/26 activity growth funding agreed as part of 2025/26 planning, distributed to ICBs on a population basis. The base growth applied to ICB allocations also includes the CUF and general efficiency requirement.

140. ICBs should ensure that, at a minimum, core emergency ambulance service contract values for 2026/27 include 2025/26 baseline contract values, reflecting the adjustment applied to ICB allocation baselines to distribute the 2025/26 activity growth funding on a population basis, as well as the 2026/27 CUF and efficiency requirement. A supplementary schedule will be issued to ICBs setting out how the 2025/26 activity growth funding should be issued in baseline provider contract values. ICBs should not apply a further adjustment to ambulance contract values to reflect convergence to commissioner allocations.

141. As in 2025/26, the funding for activity growth in emergency ambulance services for 2026/27 to 2028/29 will be held by NHS England and issued subject to agreement of plans and assurance of delivery. NHS England will work with emergency ambulance trusts and their commissioners during the planning round to agree a plan to deliver against a core set of metrics; these will include the number of hours on the road, clinicians in control rooms and the rate of hear and treat responses. An indicative value for activity growth funding for emergency ambulance services will be pre-populated in planning templates for all 3 years. As in 2025/26, the agreed activity growth funding will be issued in two stages in 2026/27, half at the start of the year following the agreement of plans and half on delivery of the milestones agreed with NHS England.

142. Emergency ambulance services are defined as 999 call handling, hear and treat and all face-to-face emergency ambulance responses (see and treat and see and convey).

10.6 Expenditure assumptions

National living wage

143. The CUF includes a headline pay growth assumption for each year. This funding should be held by organisations until government confirms the annual pay awards or there is further direction about any national living wage (NLW) increases. Where government confirms future changes to the NLW, these will be factored into future CUF updates. Organisations should put procedures in place to monitor salary sacrifice schemes and to ensure NLW rates are maintained.

NHS Property Services

144. NHS Property Services will issue annual budget schedules (ABS) based on the occupied space in early 2026. These will provide an estimate of anticipated expenditure for the 2026/27 financial year and include a line-by-line breakdown of property charges, with a comparison to the prior year budget and an explanation of any material variations.

145. For the purpose of completing medium-term plans in advance of receipt of the 2026/27 ABS, the following assumptions, dependent on local knowledge, may be used as a guide:

• freehold rent is based on market values in 2016/17, subject to any contractual rent reviews
• leasehold rent (including PFI) will vary according to contractual arrangements with the superior landlord. In a small number of cases, the costs are contractually linked to the retail price index (RPI), so the respective ABS are not issued until March or April to allow inclusion of the appropriate RPI value
• business rates are set by the Valuation Office Agency (VOA). Assume any increase as set out by the VOA and that any outstanding change requests to the rateable value will be adjusted in year if approved by the VOA
• facilities management (FM) and services charges (SC) are mostly delivered by staff employed by NHS Property Services and therefore a pay inflation assumption should be applied
• utility charges are negotiated at scale by NHS Property Services using a dynamic sourcing strategy and therefore a local assumption on the likely rate of energy inflation should be applied

146. As in 2025/26, NHS Property Services customer teams will reach out to meet and discuss the ABS in more detail after issuing the 2026/27 ABS. This provides an opportunity to discuss the ABS, the space attributed, the level of service and any required new or changed services. In addition to price changes, the ABS may include volumetric changes that must be agreed. NHS Property Services can work with organisations on local value and cost efficiency opportunities.

147. At the end of 2026/27, an estimated annual reconciliation statement will be provided as part of the agreement of balances (AOB) process and to support any accruals. A final annual reconciliation statement will be provided in 2027/28 (mid May to late July) to adjust for the actual difference between the budgeted (2026/27 ABS) billed amounts and the actual 2026/27 cost. The same process is expected to take place in each future financial year. More information is available on the property billing support section of the NHS Property Services website.

Community health partnerships

148. ICBs and providers should work with community health partnerships (CHP) to optimise the use of the Local Improvement Finance Trust (LIFT) estate to maximise overall value for money. All CHP tenants have a dedicated portfolio manager, supported by a regional director, who can be contacted at any point in the year to discuss current or future charges and actions or decisions that can be taken locally to deliver more value from the estate.

149. In planning for the costs of NHS LIFT schemes in 2026/27 and future financial years, ICBs and providers should consider the terms of leases and other agreements with CHP, which are generally predicated from the RPI. CHP will engage with tenants in quarter 4 2025/26 to confirm 2026/27 charges through the issue of the annual budget statement, with year-end reconciliation statements issued as soon as possible after the end of the financial year. The same process is expected to take place in future financial years.

NHS Pension Scheme employer contributions

150. The current transitional approach for managing NHS Pension Scheme employer contributions will continue to apply in 2026/27. The total employer contribution will remain at 23.7% (23.78% inclusive of the administration charge) in 2026/27 and the contribution collected directly from employers will remain at 14.38%. The NHS Business Service Authority (NHSBSA) will continue to collect only 14.38% from employers and employers should ensure that their payroll provider continues to apply an employer contribution rate of 14.38% for 2026/27. Central payments will continue to be made for the remaining 9.4%.

151. The next scheme valuation will take place in 2025 and will determine both the employer contribution rate and the levy to be paid by employers from 1 April 2027. For the purposes of planning for 2027/28 and 2028/29, employers should assume that the current approach will continue. However, this remains subject to the outcome of the 2025 scheme valuation and future decisions by government.

10.7 Non-NHS income

Chargeable overseas visitors

152. Providers should continue to have regard to the mandatory requirement to identify overseas visitors accessing relevant services and to collect payment upfront for any chargeable patient not in need of urgent or immediately necessary care, unless an exemption applies, as outlined in the guidance for NHS service providers on charging overseas visitors in England published by DHSC. Activity should continue to be billed to the chargeable overseas visitor (COV) using the NHSPS or locally agreed unit prices. Systems should ensure that they have visibility of cost recovery as providers work to improve identification and cost recovery processes, as set out in Service Condition 36 of the NHS Standard Contract.

153. Since 2023/24, the risk share for non-payment has been set on an annual basis as part of the fixed element of API contracts. When agreeing the non-payment risk share arrangement, NHS trusts and commissioners should consider the level of funding within the prior year fixed payment, the historical rate of non-recovery of COV charges and an agreed rate of income recovery improvement.

Local authority commissioned services

154. DHSC intends to publish 3-year 2026/27 to 2028/29 local authority public health grant allocations along with the provisional Local Government Finance Settlement later this year and confirmed in early 2026. NHS trusts should seek to agree contract values for 2026/27 with local authority commissioners in advance of the start of the financial year. The services commissioned by local authorities are not governed by the NHSPS and therefore NHS trusts will need to locally agree any funding for inflationary pressures related to these services as part of these discussions. The process for agreeing contract values will be a matter for local negotiation between both parties and should be made in line with the terms of locally agreed contracts. Once NHS pay awards for 2026/27 are announced by Government, trusts should approach local authorities where required to agree any in-year contract changes in line with the terms of those contracts.

155. Please note, the 2025/26 public health ring-fenced grant circular, published on 10 July 2025, updated grant allocations to compensate for the additional in-year cost impact of the 2025/26 NHS pay awards for public health services commissioned by local authorities.

NHS Wales

156. Contracts between NHS trusts in England and NHS commissioners in Wales for 2026/27 should have regard to the CUF and unit prices in the 2026/27 NHSPS, as well as appropriate activity growth assumptions. Contracting baselines and any additional elective recovery activity will be locally determined between commissioners and providers, and providers should have due regard to the commissioning intentions of NHS Wales commissioners when agreeing contracts. Contracts should comprise either activity-based or API payment arrangements. Where there are funding arrangements for providers in England outside the scope of the NHSPS, commissioners in Wales are not required to recognise equivalent funding when agreeing contracts.

157. Where commissioners in England have contracts for 2026/27 with providers in Wales, they will be expected to fund uplifts equivalent to those applied in their contracts with NHS trusts in England.

158. For the purposes of medium-term planning, ICBs and NHS trusts in England may refer to the draft planning CUF provided in this guidance for 2027/28 and 2028/29 and seek to discuss indicative assumptions for future activity growth with providers or commissioners in Wales. However, any assumptions used to calculate contract income for 2027/28 and 2028/29 should be used for planning purposes only. Unless otherwise agreed by both parties this plan information would not reflect contractual commitments.

11. Cash regime

159. NHS England will issue ICBs with an annual cash drawdown limit as part of the overall group cash mandate. ICB cash drawdown should be for payments required for the month of the drawdown and will continue to be monitored against the cash drawdown requirement (CDR). It is expected that this will include minimal working capital requirements as the cash drawdown limit sufficiently covers these requirements. Accurate cash forecasting remains important as ICBs are encouraged to keep cash balances low but sufficient to cover committed outflows. ICBs should not make payments in advance of need or support cashflows through advance payments.

160. Commissioners will continue to pay trusts on the 15th of the month (or closest working day), which will maintain the efficient flow of cash. The primary payment method for transactions from NHS commissioners to NHS trusts will remain invoice payment file (IPF), with limited use of invoices and payment requests. NHS England expects that trusts will continue to have sufficient cash resource to meet working capital requirements without the need for further cash support. This will support prompt payment for goods and services received.

161. In instances where trusts may need revenue cash support, the principles set out in the DHSC guidance on financing available to NHS trusts and Foundation trusts continue to apply. This guidance confirms that revenue support is available in exceptional circumstances via the issue of public dividend capital (PDC). The issuing of PDC is contingent on financial performance and delivery of the cash plan. Conditions may be attached which require confirmation that trusts have robust measures in place on cost and cash controls, alongside evidence of management of unplanned expenditure. However, efficient transacting should ensure that requirements are kept to a minimum. Alternatively, within a system where a trust has a revenue or working capital cash need, DHSC can facilitate cash transfers between trusts within that system. This mechanism enables a trust to repay PDC to DHSC. Once repaid, DHSC will re-issue that PDC to another trust. Cash funding transfers must only be transacted via PDC and must not be made directly between trusts.

12. Further advice and support

162. Responses to frequently asked questions (FAQs) will be made available to ICBs and NHS trusts on the NHS planning page on the FutureNHS collaboration platform and updated on a regular basis.

163. Where queries arise that cannot be resolved by reference to the planning FAQs or through discussion with system partners and NHS England regional teams, please refer to the relevant contact points for your query below:

• financial planning process and templates – england.finplan@nhs.net
• NHS Standard Contract – england.contractshelp@nhs.net
• NHS Payment Scheme – england.pricingenquiries@nhs.net
• revenue allocations – england.finplan@nhs.net
• capital and cash – england.capitalcashqueries@nhs.net

164. For any queries that do not relate to any of the above areas, please email england.finplan@nhs.net.

Publication reference: PRN02148