The Additional Roles Reimbursement Scheme (ARRS) is widely misread as free money for extra staff. It is not. It is a reimbursement of defined employment costs up to a capped maximum, with real tax and VAT consequences for whoever does the employing. This guide takes the practical employer view: which roles are reimbursable, how the cap works, who can legally employ the staff, and how each model changes the payroll, the NHS pension, the Employment Allowance and (the expensive one) the VAT supply-of-staff position. It closes with how the reimbursement should sit in the accounts so it nets against the cost rather than inflating profit.

For where ARRS sits in the wider Network Contract DES, see our guide to PCN funding and the Network Contract DES. For how leadership pay to an individual doctor is taxed and pensioned (a different question from reimbursed staff), see PCN clinical director payments.

What ARRS Is, and the One Thing Practices Get Wrong

ARRS is a Network Contract DES funding stream that reimburses the employment cost of defined additional roles, introduced to expand the general-practice workforce. The core correction to make up front: it is a reimbursement up to a maximum, not a grant and not free money. The network must actually incur the cost (employ or engage the person and pay them) before it can claim, and anything above the per-role cap is the network's own cost.

Getting that framing right changes how everything downstream is handled, from the payroll to the accounts. Treating ARRS as free money is what leads practices to overstate their profit, mishandle the VAT and assume a reimbursement that does not match the cost.

It sits inside the wider Network Contract DES alongside core PCN funding, enhanced access, the capacity and access payments and the Investment and Impact Fund, but it behaves differently from those streams because it is tied directly to an employment cost the network has actually incurred. That tie is the whole point: the funding follows the staff, the staff have to exist and be paid first, and the claim has to match what was spent. Once you hold that, the rest of the scheme (who employs the people, how the payroll runs, what happens above the cap, and where the VAT risk sits) follows logically rather than as a set of disconnected rules.

Which Roles Are Reimbursable

The recognised role families include clinical pharmacists and pharmacy technicians, first-contact physiotherapists, paramedics, social prescribing link workers, care coordinators, health and wellbeing coaches, mental-health practitioners, nursing associates, and others. The scheme has broadened over time, and the exact current list is set in the Network Contract DES guidance, so confirm it at source.

For 2025/26 there was a notable change: the previously separate GP ARRS pot was merged into the main ARRS as a short-term measure, practice nurses were added, and there is no cap on the number of GPs who can be engaged. Treat that as the position for that year and confirm the current rules for the year you are reading in, because the role list and the per-role maxima are uplifted and revised rather than fixed.

The broadening of the scheme is not just a list-management detail; it changes the planning. Adding salaried GPs and practice nurses, and removing the cap on the number of GPs, means a network can now use ARRS funding for roles that look much more like core general-practice staff than the original additional roles did. That makes the employment-model and accounting questions more important, not less, because the sums involved are larger and the staff are more central to how the practices run. It also means the role list you worked from last year may not be the role list that applies this year, so the safe habit is to confirm the current roles and maxima in the Network Contract DES guidance each time rather than carrying forward an assumption.

Reimbursement Up to a Maximum, Not Free Money

The mechanic is straightforward once you hold the framing. ARRS reimburses the actual salary plus defined employer on-costs (employer National Insurance and employer pension) up to a maximum per whole-time-equivalent for each role. If the post is paid above the cap, the excess is funded by the network from its own resources.

As an illustration only, the reimbursable amount for a GP was around £82,418 plus on-costs for 2025/26 (increased by £9,305 in-year). Treat that as a snapshot for that year, not a fixed figure, and confirm the current amount at source.

There is also a cash-flow discipline. The network pays the staff first and then claims reimbursement, so there is a working-capital cost and a reconciliation requirement: the claim must match the actual cost incurred. A network that does not reconcile its claims to its payroll can find itself out of pocket or over-claimed, neither of which is comfortable.

The reconciliation point is worth labouring, because it is where money quietly leaks. The reimbursement is of actual cost up to the cap, so a claim built from budgeted or estimated salaries rather than the real payroll figures will drift away from reality over a year: leavers, joiners, pay rises, changes in hours and changes in the pension on-cost all move the actual figure. A network that claims a round number each month and never trues it up against the payroll can end up either having under-claimed (leaving money on the table) or having over-claimed (which has to be repaid). The practical answer is to reconcile the claim to the payroll regularly, treat the reimbursement and the staff cost as two sides of the same item, and carry any above-cap excess as a known net cost rather than a surprise at year-end.

Who Employs ARRS Staff (the Model Decides Everything That Follows)

This is the central question, because ARRS staff need a legal employer and the choice of employer drives the payroll, the pension, the Employment Allowance and the VAT. There is no single right answer; it is a tax, VAT, HR and risk decision per network.

Single Lead (Host) Practice Employs

One member practice is the legal employer and the staff work across the network. This is the simplest model to run, but recharging that staff resource to the other practices is the classic VAT trigger (see the VAT section below).

A federation, a company limited by guarantee, an LLP or a flat PCN company employs and deploys the staff. This concentrates the employment in one place, which can simplify HR, but it raises the supply-of-staff and Cost Sharing Group questions covered in the VAT section.

Joint or Shared Employment

All member practices are co-employers under one contract, or a concurrent-employment or shared-workforce model is used. NHS England guidance describes this as avoiding the supply-of-staff VAT problem, because there is no supply of staff between separate organisations and the salaries stay within PAYE, outside the scope of VAT. The trade-off is legal complexity and joint-and-several employment liability.

Direct Practice Employment and Other-Provider Models

The DES has, over successive years, broadened who may employ (a Core Network Practice, the PCN, or another provider with commissioner approval), so confirm the current-year position at source. Some roles are deployed in from a trust or a community pharmacy under a separate arrangement rather than employed by the network at all.

The point to hold on to is that the employer model is not an administrative afterthought. It is the decision that sets the VAT, pension and Employment Allowance outcome, and it is specialist territory.

A useful way to think about it is to follow one consequence through each model. Take VAT: in the single-lead-practice model the staff resource is recharged from the lead practice to the others, which is the classic supply-of-staff trigger; in the separate-entity model the entity supplies staff to its members, which raises the supply-of-staff and Cost Sharing Group questions; in the joint or concurrent model there is no supply between separate organisations, so the salary movement does not create a VAT supply at all. Now take the Employment Allowance: a GP practice that is the employer can generally claim it, but a separate PCN company or federation has to look at its own facts. And take the pension: scheme access can be straightforward where an NHS-pension-employing body is the employer and less so where a non-NHS entity is. The same staff, the same funding, but three quite different sets of consequences depending on who signs the employment contract. That is why the model is chosen first and the detail follows.

The Payroll, Pension and Employer-Cost View

PAYE and RTI. ARRS staff are employees of whoever employs them, run through PAYE under the usual real-time-information rules. For the underlying payroll operation (PAYE, RTI, auto-enrolment, NHS pension administration), see our guide to GP payroll services; this page is about the ARRS-specific layer on top.

NHS pension. ARRS staff can generally access the NHS Pension Scheme where they are employed by an NHS-pension-employing body within the network, and the employer pension cost is one of the on-costs ARRS reimburses up to the cap. Scheme access depends on the employment model and the employing body, so confirm the position at source rather than assuming universal access for every model, particularly where a non-NHS-body entity is the employer.

Employer National Insurance. The employer pays secondary Class 1 NIC at 15% on pay above the £5,000 secondary threshold (from 6 April 2025). This employer NIC on ARRS posts is itself part of the reimbursable on-costs up to the cap, so it should not be a net cost where the post is within the maximum.

The Employment Allowance Question

The Employment Allowance is £10,500 (2025/26) and is not available where the only employee is a single director (which is not the issue here, since a practice or a network entity has staff). The harder point is the public-sector restriction: an employer that does more than half its work in the public sector generally cannot claim. The important carve-out is that HMRC treats providers of NHS primary medical services (GP practices) as falling outside that restriction, so a practice can generally claim.

The position for a separate PCN company or federation employing ARRS staff is fact-sensitive and can differ from the practice's. So the safe framing is this: a GP practice can generally claim the Employment Allowance, but a separate PCN company or federation should take advice on its eligibility and confirm the current treatment in HMRC's Employment Allowance guidance before assuming it. This is not a blanket yes.

The VAT Trap on Shared ARRS Staff (the Expensive One)

Lead with the risk. When one entity (a lead practice, a federation or a PCN company) employs staff and then recharges or supplies them to other member practices for consideration, HMRC is likely to treat that as a standard-rated supply of staff at 20%, not exempt medical care. Because GP practices make mostly exempt and outside-the-scope supplies, that VAT is largely irrecoverable, so it is a real cost leak out of general practice.

The reason it bites so hard is the recoverability problem. A normal trading business that incurs VAT on a purchase can usually recover it, so VAT is broadly neutral for it. A GP practice cannot, because its income is mostly exempt medical care and outside-the-scope NHS funding, which gives it little or no right to recover input VAT. So if a lead entity adds 20% VAT to a staff recharge, the receiving practices generally cannot reclaim that 20%; it is simply an extra cost on top of the salaries. On a sizeable shared-staff bill across a network, that can amount to a substantial sum each year, taken straight out of money that was meant to fund patient-facing roles. That is why the supply-of-staff question is not a technicality to leave to the year-end; it is a live cost risk that should be settled when the employment model is chosen.

The Control Test

The distinction HMRC applies turns on control. If the employing entity merely provides personnel who then work under the direction and control of the recipient practices, that points to a taxable supply of staff. If the entity retains control and is itself delivering a healthcare service to the patient using its staff, that can be an exempt supply of medical care. NHS England has suggested ARRS services might be exempt regardless of structure, but that has not been formally agreed by HMRC, so reliance carries risk.

Why the 90,000 Pounds Threshold Matters

If the employing entity's taxable turnover, including the value of any taxable staff supply, exceeds £90,000 in a 12-month period, VAT registration becomes compulsory. Core NHS income and genuine exempt medical care do not count towards the threshold, but a taxable staff supply does. Our guide to GP VAT registration covers the threshold and the partial-exemption basics.

The Models That Reduce the Risk

Two structures are commonly used to reduce the exposure. Joint or concurrent employment means there is no supply of staff between separate organisations, so no VAT on the salary movement. A properly constituted Cost Sharing Group (a separate entity supplying its members at cost, for their exempt activities, with no profit and no distortion of competition) can be VAT-exempt. Both are options that need specialist VAT advice and have strict conditions; neither is a guaranteed fix.

The On-Trust Misconception

It is worth noting neutrally that labelling fund movements as held "on trust" addresses the movement of money but does not by itself change the VAT liability of the underlying supply. That is a point on which specialist advice is needed rather than a settled answer, so do not rely on it as a structuring solution without checking it properly.

The reason this catches networks out is that it confuses two different questions. Whether money is held on trust for the member practices speaks to who beneficially owns the funds; whether there is a taxable supply of staff speaks to what one organisation is providing to another for consideration. A trust arrangement can be perfectly sensible for governance and for keeping the network's money separate from a lead practice's own income, but it does not, on its own, answer the VAT question, because the VAT question turns on the nature of the underlying supply (staff under the recipient's control, or a healthcare service the supplier itself delivers), not on the label attached to the cash. So a network that has tidied up the ownership of the money should not assume it has also dealt with the VAT; the two need to be checked separately, and the VAT analysis is the specialist one.

How the Reimbursement Should Sit in the Accounts

The discipline is simple to state and easy to get wrong. ARRS income should be recognised against the matching staff cost so it largely nets off, rather than being booked as profit with the cost hidden elsewhere. Any above-cap excess is a net cost to the network. Misposting overstates profit and distorts the partners' tax. Our GP accounting guide and GP bookkeeping guide cover the posting, and our guide to the complete list of GP tax deductions covers staff costs and employer NIC as practice expenses.

A worked way to think about it: if the network employs an additional role at a cost within the cap, the income and the cost should both appear and broadly cancel, leaving little or no effect on profit. If the post is paid above the cap, the reimbursement covers the cost only up to the maximum, and the excess shows as a genuine net staff cost that reduces profit. If, instead, the reimbursement is booked as income and the salary is buried among general staff costs without being matched to it, the accounts will show a profit that was never really there. The aim is always to present the true net position, so that the partners are taxed on real profit rather than on an accounting artefact.

The reason the posting matters so much is the underlying tax rule: whatever lands in the practice is trading income, and a GP partner is taxed on their share of the practice's taxable profit, not on their drawings. Our GP partnership tax complete guide explains how that flows through to each partner's bill.

How We Help GP Practices and PCNs

We help practices and primary care networks treat ARRS as what it is: a reimbursement that should net against the cost. That means recognising the income against the matching staff cost, identifying any above-cap excess as a net cost, choosing the employer model with the VAT, pension and Employment Allowance consequences in view, and flagging the points (the supply-of-staff VAT risk, the eligibility of a PCN entity for the Employment Allowance, NHS pension access by model) that need specialist input before they crystallise into a cost. We work with your practice manager and your network so the claims reconcile to the payroll and the accounts tell the truth.

You can browse our other GP practice management guides for the rest of the PCN picture. For tailored support, see our services for GPs or get in touch.