Enhanced and Locally Commissioned Services: Extra GP Practice Income and How It Is Taxed

Beyond the core Global Sum and QOF, a GP practice can earn a long tail of extra income from enhanced services. These split into two families: nationally directed schemes (DES) that a practice can opt into, and locally commissioned services (LES, sometimes called locally commissioned or local enhanced services) that vary by area and Integrated Care Board. They are optional, they sit on top of the core funding, and they can add up to a meaningful slice of practice income.

This guide explains what these streams are, who commissions them and how a practice decides whether a service is worth signing up to. It then covers how this income is taxed as ordinary practice trading profit, and where the VAT line falls (most enhanced work is NHS care and outside scope, but some clinic-style work can be standard-rated). The aim is a partner who can look at a list of enhanced-service offers and understand the income, the tax and the decision. Enhanced services sit on top of the core funding explained in how GMS funding works, and they are not the same as QOF, as we set out below.

Where enhanced services sit in GP funding

The clearest way to place enhanced services is against the rest of the income picture. The Global Sum (the core per-weighted-patient payment, explained in how GMS funding works) and QOF (the quality framework, explained in QOF income explained) are the core lines. Enhanced services are additional, optional income on top of those, commissioned separately and not baked into the core contract.

Importantly, this is still practice trading income like the rest. It belongs to the partnership, feeds the practice's profit and is taxed on each partner's profit share, exactly as covered in our GP partnership tax complete guide. The fact that it is optional and separately commissioned changes how it is earned, not its fundamental tax character.

The reason this stream matters out of proportion to its size is that it is the part of practice income the partners can most directly influence. The core Global Sum moves largely with the list and the annual uplift, and QOF rewards quality the practice was largely going to pursue anyway. Enhanced services, by contrast, are genuine choices: the practice decides which to take on, can build a service around its team's skills, and can grow or drop a service as capacity allows. That makes enhanced services a real lever in GP practice management, but only if the practice prices each one properly and tracks whether it is actually contributing to profit or quietly absorbing staff time.

Directed Enhanced Services (DES)

What a DES is

A Directed Enhanced Service is a nationally agreed and directed service that commissioners must offer to all practices in England. The funding and specification are set nationally, so a DES looks broadly the same wherever it is offered. The practice itself chooses whether to sign up: being offered a DES does not oblige a practice to deliver it.

Examples

It helps to have concrete examples, but they must be read as a snapshot, not a fixed list. DES examples have included childhood and seasonal vaccination and immunisation programmes, the Network Contract DES delivered through primary care networks, and other nationally directed schemes. Treat these as examples only: the DES roster changes year to year as schemes are added, amended or retired, so a practice should always work from the current national specifications and never assume a particular service is still running on the same terms.

Because a DES is nationally specified, the practice broadly knows what it is signing up to: the service requirements and the funding are set out centrally, so the variation between practices is mostly in how efficiently each delivers the service, not in the deal itself. That is helpful for planning, because the practice can model the income and the delivery cost against a known specification. The flip side is that the practice has little room to negotiate the terms; the decision is essentially whether to take the nationally set deal or not, given its own capacity and cost base.

Where the Network Contract DES fits

One DES is worth naming specifically. The Network Contract DES is the directed enhanced service that funds primary care networks and the additional roles within them. It is a substantial and distinct topic in its own right, covering how networks are funded and staffed. The detail sits in PCN funding explained.

Local Enhanced Services / Locally Commissioned Services (LES / LCS)

What a LES is

A Local Enhanced Service (also called a locally commissioned service) is a service a local commissioner develops to supplement the core contract. The commissioner is the Integrated Care Board (ICB), often acting after consulting the Local Medical Committee (LMC). Because a LES is local and not nationally agreed, its scope and funding vary across the country: a service offered in one area may not exist, or may be paid differently, in another. As with a DES, the practice chooses whether to sign up.

Examples

Typical LES examples include minor surgery, contraceptive and coil or implant fittings, phlebotomy, near-patient testing, ambulatory blood-pressure monitoring, some mental-health and substance-misuse work, and wound care. These are typical examples and are locally variable: there is no national fixed LES list, so a practice should look at what its own ICB actually commissions. Some of these services exist in one area and not another, and the same service can be specified and priced quite differently between commissioners.

How a LES is priced and paid

A LES is locally negotiated. Payment is often per item (for example per minor-surgery procedure or per fitting), sometimes per patient, and sometimes as a block payment for providing the service to the local population. The commissioner pays the fee. The practical planning point is that the practice should model whether the fee covers the staff time and overhead of delivering the service, because a poorly priced LES can cost more to deliver than it pays.

The payment basis changes the risk the practice carries. A per-item fee tracks activity, so the practice is paid for what it actually does, but it also means the income is only worthwhile if the volume is there; a service that is offered but rarely used earns little while still tying up training and equipment. A block payment gives certainty of income but puts the volume risk on the practice, because the fee is fixed whether ten or a hundred patients come forward. Neither basis is better in the abstract; the practice has to match the basis to its expected demand and its appetite for risk. A well-judged LES decision is partly a clinical one and partly a straightforward piece of costing.

DES, LES, QOF and core funding: what is the difference?

Because these streams are easy to conflate, here is a tight comparison:

• Core Global Sum. Per weighted patient, automatic for the practice's registered list, the foundation of practice funding. See how GMS funding works.
• QOF. Quality points, opt-in, paid for measured quality of care rather than for delivering a specific extra service. See QOF income explained.
• DES. Nationally directed, must be offered to every practice, opt-in, funding set nationally.
• LES. Locally commissioned by the ICB, opt-in, scope and funding variable by area.

The headline distinction to keep clear is that QOF rewards quality, while enhanced services pay for delivering specific additional services. They are not the same thing, and they should be recorded as separate lines in the accounts.

One more clarification avoids a common muddle. The Network Contract DES sits in the DES column above, but because it funds primary care networks and the roles within them, its money does not flow to a practice in the same way as a simple practice-level DES or LES. How network funding reaches practices is set out in PCN funding explained.

How enhanced-services income is taxed

Enhanced-services income is ordinary practice trading income. It is part of the partnership's taxable trading profit, allocated to partners under the profit-sharing agreement and taxed on each partner's profit share, with Class 4 National Insurance, through the partnership return (SA800) and the partnership pages (SA104). The full mechanics of that flow are in our GP partnership tax complete guide.

There is no separate tax regime for enhanced services. It is taxed as profit when earned. The flip side is that the costs of delivering the service (the staff time, the consumables, the equipment) are deductible against that income in the usual way, which is part of why the marginal cost matters so much to the sign-up decision. For the full picture see our complete list of GP tax deductions.

Timing and accruals

Where a service is delivered in one accounting period but paid in the next, the income should be accrued like any other practice income, so the profit reflects what was earned in the period, not when the cash happened to arrive. This keeps the partners' profit share accurate, especially for block or end-loaded payments. The broader accounts that house this are covered in our GP accounting guide.

The VAT line on enhanced and private-feeling services

VAT is where enhanced services can occasionally surprise a practice. The general position is reassuring: most enhanced services are NHS-commissioned medical care, so they are exempt or outside the scope of VAT, and that income does not count towards the VAT registration threshold. For the great majority of enhanced work, there is simply no VAT to worry about.

The watch-item is work whose primary purpose is not the protection, maintenance or restoration of health. Where a practice picks up work alongside its NHS services that is, for example, purely cosmetic, or administrative, or a third-party report with no care element, that work can be standard-rated even though a doctor provides it. This is the principal-purpose test, and it is the same line that runs through all medical VAT. It is a watch-item, not a reason to over-claim a VAT problem, and the detailed position is in our guide to GP VAT registration.

For the great majority of practices, the enhanced services they deliver are squarely on the exempt side of the line, because they are genuine NHS-commissioned medical care. The reason to keep the test in mind at all is that practices often pick up small amounts of clearly different work, and it is the standard-rated work, not the enhanced services, that can create a problem. A practice that earns a growing stream of non-therapeutic income (some private cosmetic clinic work, regular medico-legal reporting, or third-party medicals) needs to watch its taxable turnover, because once taxable (non-exempt) turnover crosses the registration threshold the practice must register for VAT, even though its NHS income is outside scope and does not count towards that threshold.

The practical point is one of bookkeeping discipline, not alarm. The practice should be able to identify, separately, any income that is standard-rated, so that it can monitor the taxable total and know well in advance if registration is approaching. Lumping all income together and assuming "it's all medical so it's all exempt" is precisely how a practice drifts over the threshold without noticing. Where there is genuine doubt about which side of the line a particular piece of work falls, it is worth getting a view before the volume builds, not after.

Should the practice sign up to an enhanced service?

Whether to take on a given enhanced service is a practice decision, not a tax rule. One question sits outside the costing: whether the service fits the practice's capacity, because work that displaces core appointments or stretches the team can cost more than it earns even at a fair fee. The rest is arithmetic, and the checklist below is how to do it.

The point is to judge whether the service earns its keep, not simply whether it is on offer. For help modelling the cash flow and the reserve around these decisions, see our GP financial planning guide; the pension angle is covered in GP pension contributions and tax relief.

A costing checklist for an enhanced-service offer

Fees for locally commissioned services are set by the ICB and are mostly unpublished, so the useful work is on the cost side. Build a per-episode cost for the service from these heads, then compare it with the offered fee at the volume the practice realistically expects:

• Clinical time, at the right grade. Minutes per episode for each person involved, costed at that person's own hourly cost including employer NIC and employer pension, or at partner drawings-plus-superannuation for GP time. A procedure delivered by a GP and one delivered by a practice nurse or healthcare assistant are different services on a cost sheet.
• Support time in the room. A chaperone or second pair of hands for minor surgery, coil and implant fittings and similar procedures. Costed the same way, per episode.
• Consumables and sterilisation. Single-use instruments, dressings, devices, specimen handling, autoclave loads and their reprocessing time. Take these from actual supplier invoices, not from a list price.
• Equipment. Purchase, lease, servicing, calibration and any accreditation or insurance attached to it, spread over the term in the ICB specification and not over the equipment's technical life.
• Training and accreditation. Course fees, competency sign-off and the backfill for the clinician while away, treated as a set-up cost to be recovered.
• Admin, booking and claims time. Invitation and recall, DNA follow-up, coding, the claim submission itself and chasing payment. This head is the one most often left out and it does not shrink when volume is low.
• Premises impact. The sessions the room is unavailable for core work, plus any adaptation, storage or waste-disposal cost the service creates.

Divide the total by expected episodes for a per-episode cost, and add the set-up heads separately so the practice can see how many episodes it takes to recover them. If the fee is per item, that number is the break-even volume; if it is a block payment, it is the activity level at which the block stops covering the work. Rerun it annually, because both the fee and the volume move.

Who commissions a local enhanced service now?

Local enhanced services in England are commissioned by the area's Integrated Care Board (ICB), usually after the Local Medical Committee has been consulted. That has been the position since 1 July 2022. On that date the Health and Care Act 2022 established integrated care boards and abolished the clinical commissioning groups (CCGs) that had commissioned local services before them.

This matters when a practice goes looking for the terms of a service. A specification, a fee schedule or a summary written before mid-2022 names a commissioner that no longer exists, and its terms cannot be relied on. The current ICB specification is the document that governs, and a CCG-era version of the same service is history.

Can anyone else be paid to deliver these services?

Yes, and that is part of what makes this income less secure than the core funding. An ICB can commission a service from a community trust, a hospital trust or another alternative provider, and local councils commission some public-health services directly. Practice-based counselling and care home schemes are the usual examples of work that has moved between providers in this way.

For the partners the risk is rarely that a competitor appears tomorrow. More practically, a locally negotiated service sits on a shorter and less certain horizon than the practice's registered-list income, because the ICB can retender it or stop commissioning it altogether.

What happens when an enhanced service is withdrawn?

Enhanced services are retired as well as created, and a commissioner is under no obligation to continue one beyond its term. The 2026/27 GP contract changes are a live illustration. NHS England is retiring the Advice and Guidance Enhanced Service and embedding its funding within core practice funding, while practices remain required to use advice and guidance before or in place of a planned care referral where that is clinically appropriate. The Weight Management Enhanced Service is retired in the same round.

Two enhanced services retired in the 2026/27 GP contract changes, and what each does to the practice's income line

Service	What happens for 2026/27	Effect on the income line
Advice and Guidance Enhanced Service	Retired, with its funding embedded in core practice funding and the activity kept as a contractual requirement	A separately identifiable income line disappears while the work continues, so a year-on-year comparison of the enhanced-services total misleads unless the change is noted against it
Weight Management Enhanced Service	Retired, so the separately commissioned fee for that work ends	Both the income and its delivery costs come out of the accounts, and any equipment or training bought for it is left to be recovered from something else

The accounting tail depends on the payment basis. An item of service fee, paid per procedure or per fitting, stops when the service does, and the only tail is work delivered before the end date and paid after it, which is accrued in the usual way. A block payment normally runs to a notice period, so the income is predictable to a date and then absent.

Set-up cost is the harder question. Equipment, training and accreditation are bought against an assumed life for the service, and a locally commissioned service has no guaranteed life beyond the term in the ICB specification. A practice that has just fitted out a room is exposed to a commissioning horizon it does not control. So the test at sign-up is how quickly the set-up cost is recovered, not whether it is recovered eventually.

Enhanced services are still worth taking on. What this changes is the discipline around them: treat the stream as a distinct and discretionary layer of income in the accounts, planned on the assumption that any individual service can be decommissioned, so the loss of one is a visible and expected event in the practice's numbers.

Keeping the enhanced-services layer visible

Everything above rests on one piece of bookkeeping: each enhanced service shown as its own line in the accounts, with its delivery costs against it, separate from the core Global Sum and QOF. A practice that runs its numbers that way can answer the only questions that matter about this income. Which services are contributing to profit and which are quietly absorbing staff time. Whether the income is accrued into the right period when delivery and payment fall either side of the year end. Whether any of it is standard-rated and counting towards the VAT threshold. What actually happens to the total when a service such as Advice and Guidance is retired.

None of that survives being reconstructed at year end from a bank statement. Both the national DES menu and the local ICB specifications change, and figures in any summary, including this one, should be checked against the current specification before a decision rests on them. If you want a second pair of eyes on an offer that has landed with your practice, or on how the layer is set out in your accounts, contact us.