Introduction

1. This guidance sets out the finance business rules for integrated care boards (ICBs) and NHS trusts and foundation trusts (‘NHS trusts’) that will apply from 1 April 2026. The finance business rules include relevant statutory financial duties and other financial policy requirements set by NHS England and the Department of Health and Social Care (DHSC) that apply to ICBs and NHS trusts, as well as setting out how the impact of surpluses and deficits are managed in future years.

2. The finance business rules have been updated to support the new NHS operating model set out in the 10 Year Health Plan for England. This guidance has been published alongside the Medium term planning framework and associated revenue finance and contracting guidance to support organisations in completing medium-term plans. The extant Integrated care board and system finance business rules will continue to apply for the remainder of the 2025/26 financial period.

3. Both ICBs and NHS trusts will be required to deliver a breakeven revenue position as individual bodies in future years, which reflects a change from the extant business rules where ICBs and NHS trusts were required to support the delivery of breakeven in aggregate across their system. The NHS Oversight Framework 2025/26 already reflects the respective roles and responsibilities of ICBs and NHS trusts in the new operating model. It sets out how organisations will be segmented, including a financial override for all organisations in deficit, and the oversight consequences for organisations depending on their segmentation, aligned to the new NHS operating model. The finance and productivity domain shows that ICBs and NHS trusts will be held primarily accountable for organisational financial performance, with metrics for ICB and NHS trust plan positions and in-year variance to plan. It is expected that an updated NHS oversight framework will be published for 2026/27. NHS England has also published guidance on the provider capability assessment for NHS trusts (both trusts and FTs), which will include an assessment of productivity and financial performance (including delivery of the previous year’s plan).

4. This guidance covers the key changes from the existing ICB and system finance business rules to the updated business rules for ICBs and NHS trusts, the business rules that apply to ICBs, the business rules that apply to NHS trusts and how non-recurrent deficit support funding will be issued to ICBs and NHS trusts from 2026/27. The business rules for ICBs section of the guidance clarifies how components of the current business rules, including cumulative system positions, will be carried forward into the updated business rules that apply from 2026/27.

5. Once it takes effect in 2026/27, this version of the business rules guidance will continue to apply in future years until an updated version is published. The business rules have been set in accordance with the relevant duties and powers in current legislation. Where changes are required due to future legislative changes, these will be set out in an updated version of this guidance.

Key changes from ICB and system finance business rules

6. The joint financial objective set by NHS England in the previous version of this guidance 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. The updated NHS finance business rules from 2026/27 will introduce a new requirement for NHS trusts to deliver a breakeven revenue position as individual bodies each year (see Business rules for NHS trusts section), in line with the NHS Oversight Framework. The statutory duty for ICBs to breakeven as individual bodies continues to apply (see Business rules for ICBs section).

7. In order to support the transition to the new accountability arrangements, where an ICB or NHS trust does not deliver their organisation’s agreed plan position in 2025/26, NHS England may adjust the plan limit and associated deficit support funding set for organisations in 2026/27 as a consequence for not delivering the 2025/26 plan. This is alongside the consequences for ICBs and NHS trusts in deficit set out in the NHS oversight framework (the financial override).

8. 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.

Business rules for ICBs

ICB financial duties and requirements

9. The finance business rules that apply to ICBs are underpinned by the financial duties and requirements summarised in Table 1. This includes both statutory duties set in legislation and policy requirements set by NHS England and DHSC. This guidance will be updated as required where new policy requirements are set or existing requirements amended in guidance elsewhere.

10. The following sub-sections set out how the finance business rules enforce the ICB duties in Table 1, including how the impact of ICB deficits is managed in future years where the ICB does not achieve breakeven.

11. The 10 Year Health Plan includes proposals to reform the Better Care Fund (BCF) policy framework. The finance business rules will be updated to reflect this, where required, in due course.

Table 1: ICB financial duties and requirements

ICB risk management

12. In accordance with the ICB breakeven duty referred to in Table 1, ICBs are required to ensure they have a robust approach to risk management in place. ICB plans should demonstrate a comprehensive understanding of financial risk and how these risks will be managed and mitigated. ICBs should consider where it is appropriate to set local contingencies to manage risks to expenditure that may not otherwise be mitigated. As part of the risk management approach, ICBs and NHS trusts should agree contract values in advance of the start of the year and ensure these are reflected as part of aligned plan submissions. The revenue finance and contracting guidance will provide more detail on the approach to risk management for the relevant financial period where required.

ICB cumulative positions

13. From 2026/27, ICB surplus and deficit positions will be carried forward and maintained in the ICB cumulative position. This is a change from the extant ICB and system finance business rules, where the system position has been maintained in a system cumulative position.

Historic system cumulative positions

14. Where systems have a cumulative system surplus at the end of 2025/26, this historic surplus 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 below.

15. In order to support the transition to the updated business rules, 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 writing off the historic system cumulative deficit (up to and including 2025/26). The ICB will be required to have demonstrated sound financial management over recent years (including 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 over recent years, 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.

Drawdown of prior year surpluses

16. Where an ICB has a cumulative surplus in future years, meaning the net value of any prior year surpluses and deficits is a surplus in aggregate, the ICB may request to drawdown the surplus. NHS England will approve requests to access surpluses where it supports non-recurrent expenditure, subject to national affordability in the relevant financial year. As part of their request, ICBs will be asked to provide a rationale for how the investment will support local or national transformation objectives, as well as the financial sustainability of the ICB and local health economy.

Repayment of prior year deficits

17. Where an ICB has a cumulative deficit in future years, meaning the net value of any prior year surpluses and deficits is a deficit in aggregate, the deficit will be subject to repayment.

18. To support ICBs to stabilise expenditure, repayments of prior year deficits will not start until the second year after the year in which the deficit first arose. Repayments will then be made over a 3-year period, subject to an annual cap set at 0.5% of the recurrent ICB core programme allocation. The repayment will be pre-populated in planning templates and transacted through an in-year non-recurrent allocation adjustment at the start of the financial year.

19. Once repayments have been made and the ICB has maintained a breakeven position (including the impact of the repayment), any residual balance will be frozen at the end of the third year of repayments and written off where the ICB delivers breakeven for the following 2 years.

20. Where the ICB does not deliver breakeven in the years where repayments are made, then it will be considered to have failed to make the repayment in full. The cumulative position will be updated to account for the net value of the repayment transacted minus the value of the deficit, and repayments will continue for a further 3-year period. Likewise, if the ICB does not deliver breakeven in the 2 years following the repayments, when the residual balance is frozen, then NHS England reserves the right to reinstate the cumulative deficit and start the repayment process again.

Business rules for NHS trusts

Financial balance requirement for NHS trusts

21. As set out in paragraph 6 above, NHS trusts will no longer be subject to the joint financial objective for each ICB and its partner NHS trusts to seek to deliver system financial balance from 2026/27. NHS England will require each NHS trust to deliver breakeven in its revenue position in each financial year from 2026/27, unless agreed otherwise with NHS England in exceptional circumstances. NHS trusts must continue to collaborate with ICBs to support the delivery of locally agreed priorities, as described in paragraph 8.

22. As part of the transition to the new accountability arrangements, where an NHS trust does not deliver its agreed plan position in 2025/26, NHS England may adjust NHS trust plan limits (see following section), including any associated deficit support funding, in 2026/27 as a consequence for not delivering the 2025/26 plan.

23. Similarly to the expectations for ICB risk management set out in paragraph 12, NHS trusts are also required to ensure they have a robust approach to risk management in place. NHS trust plans should demonstrate a comprehensive understanding of financial risk and how these risks will be managed and mitigated. As part of the risk management approach, ICBs and NHS trusts should agree contract values in advance of the start of the year and ensure these are reflected as part of aligned plan submissions. The revenue finance and contracting guidance will provide more detail on the approach to risk management for the relevant financial period where required.

24. The 10 Year Health Plan sets an ambition for NHS trusts to move into surplus over the long term. Further information will be shared in due course on the proposed financial freedoms and flexibilities for new NHS foundation trusts, including access to prior-year surpluses.

25. The Health and Care Act 2022 provides NHS England with the statutory powers to direct how NHS trusts are apportioned to ICBs for the purposes of setting resource use limits and joint financial objectives. While we have removed the joint financial objective for ICBs and partner trusts to support system financial balance, and organisations will be held primarily accountable for organisation performance, there may be some cases where the apportionment relationships serve a practical purpose to convene local organisations as part of planning and in-year financial management. NHS England will therefore continue to use its financial apportionment powers to apportion all NHS trusts to an ICB (financial direction below), and maintain a published version of this information in the NHS Organisation Data Service Directory (see note 1 below). The ICB financial apportionment relationships will be updated to account for the impact of statutory changes to ICB boundaries from 1 April 2026.

Note 1: To refer to the full list of ICB financial apportionment relationships, access the ‘ICB financial apportionment’ tab within the file titled ‘ICB partner organisations’ on the Organisation Data Service webpage using the hyperlink provided.

Financial apportionment of NHS trusts to ICBs

Deficit support funding for ICBs and NHS trusts

26. As set out in the Medium term planning framework: revenue finance and contracting guidance for 2026/27 to 2028/29, all ICBs and NHS trusts will be expected to submit plans for 2026/27 to 2028/29 that meet the required revenue financial plan limit (‘plan limit’) set by NHS England. Where ICBs and NHS trusts have a deficit plan limit, non-recurrent deficit support funding will be made available so that organisations can submit a breakeven financial plan for the period. Deficit support funding will reduce over the planning 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.

27. The deficit support funding will be issued to organisations in year, subject to delivery of the plan position agreed with NHS England. 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 in public board reports and to NHS England.

28. 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 as summarised below. Further guidance on the in-year and future year consequences of plan delivery is set out in the Medium term planning framework: revenue finance and contracting guidance for 2026/27 to 2028/29.

29. 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).

30. 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 repayment policy set out above.

31. For NHS trusts, the value of any deficit plan limit in the following year will be adjusted so that the non-recurrent deficit support funding available to the organisation 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.

Publication reference: PRN02208