PCN Funding Explained: The Network Contract DES and How the Money Flows

Primary care network money does not arrive in your practice bank account the way core contract money does. It is paid under the Network Contract DES to a single nominated payee for the whole network, commonly a lead practice or a GP federation, and only then shared out under the network agreement. Some of it never arrives as cash at all, because it has been spent centrally on staff working for your patients. That is why the practice statement and the network's entitlement rarely match, and why network income has to be read as its own layer before it can be reconciled or taxed correctly.

For the employment, payroll and VAT detail of ARRS staff, see our guide to ARRS reimbursement and employing PCN staff. For how clinical director and leadership pay is taxed and whether it is pensionable, see PCN clinical director and leadership payments.

What a Primary Care Network Is, and Why Funding Flows Differently

A primary care network (PCN) is a group of neighbouring GP practices, typically covering around 30,000 to 50,000 patients, that come together to deliver services at scale. A PCN is usually a collaboration defined by the Network Contract DES, and not automatically a separate legal entity. That distinction matters more than it first appears: it shapes who holds the money, how it is shared, and the VAT position when staff are employed centrally and shared between practices.

The idea behind networks is scale. Some services (extended-hours access, additional clinical roles, structured care for particular patient groups) are easier to run and fund across a population of tens of thousands than within a single list of a few thousand. So the network is a way of delivering and resourcing at that larger scale while each practice keeps its own list, its own contract and its own identity. For the partners, the practical effect is that a second stream of funding, with its own rules and its own paperwork, now sits alongside the familiar core contract income, and the two need to be understood and accounted for separately.

The key idea is that there are two separate layers of funding sitting on the same group of partners:

• The practice's own core contract funding: the Global Sum weighted by the Carr-Hill formula, QOF, practice-level enhanced services and any dispensing income, all paid to the individual practice under its own GMS or PMS contract. Our guide to how GMS funding works explains this layer.
• The network layer on top, paid under a different agreement (the Network Contract DES) to the network and not to the individual practice.

Same partners, two separate funding routes. Keeping them apart is the first step to understanding your accounts. It also explains why a practice manager can find that the practice bank statements do not tell the whole story: a meaningful part of the network's money may sit with another practice or with a federation before any of it reaches your own account, and some of it may never arrive as cash at all because it has been spent centrally on shared staff on your behalf. Reading the network layer correctly is what lets you reconcile what the practice actually receives against what the network as a whole has been paid.

A PCN is, in the typical case, a contractual collaboration: the member practices have signed the Network Contract DES and a network agreement between themselves, but the network is not necessarily a company or a partnership in its own right. Some networks do set up a separate vehicle (a company limited by guarantee, a community interest company, or a GP federation that already exists), and some do not. Whether there is a separate entity, and what kind, affects who can be the legal employer of shared staff, who holds the bank account, who carries liabilities, and how the VAT rules apply. None of that changes the practice's own core contract, but it shapes the network layer entirely.

The Network Contract DES: a Directed Enhanced Service the Practices Opt Into

A Directed Enhanced Service (DES) is a nationally directed, voluntary extension to the core GMS or PMS contract that practices choose to sign up to. The Network Contract DES is the vehicle through which practices participate in a PCN and draw the network funding.

It is participation-based. A practice that signs up earns a network participation payment (for 2026/27 this is £1.761, applied to the practice's contractor weighted population at 1 January 2026 under paragraph 10.3.5 of the Network Contract DES specification, and uplifted annually, so confirm the current figure at source before you rely on it). Note the base: it is the weighted population, not the raw registered list, so the payment does not track a simple headcount.

Because the Network Contract DES is an enhanced service on top of the core contract, the money and the obligations are additional to, and accounted for separately from, the Global Sum and QOF. That is why a practice can be doing well on its core contract and still need to understand a quite separate set of network rules and payments. Our guide to practice-level enhanced services covers the practice's own enhanced services, which are distinct from the network DES.

It also helps to be clear about the word voluntary. A Directed Enhanced Service is voluntary in the sense that a practice is not contractually forced to sign up, but in practice the network funding (and the staff it pays for) is significant enough that almost every practice participates. So the realistic position for most partners is not whether to be in a network, but how to make sure the network funding is being recognised, shared and taxed correctly once you are. The voluntary framing matters most at the edges: a practice that chooses not to participate, or that leaves a network, gives up the participation payment and the network funding that comes with membership, and the partners should understand that trade-off before making the decision.

The Funding Streams Inside the Network Contract DES

The DES does not arrive as a single lump. It carries several distinct streams, each with its own basis and its own rules. Taking them one at a time:

Core PCN Funding

Core PCN funding is a per-registered-patient payment (and partly a per-adjusted-population payment) that funds the running of the network. It now also rolls in the clinical director, leadership and management funding, which was combined into core PCN funding to give networks more autonomy over how they are led and resourced. For 2026/27 core PCN funding is £3.059 per patient, split between a registered-list element (£2.311 on the PCN registered list size at 1 January 2026) and an adjusted-population element (£0.748 on the PCN adjusted population at the same date), per Table 1 of the Network Contract DES specification 2026/27, and uplifted annually, so confirm the current figure at source. The split between registered list and adjusted population matters because the two measures are not the same: the registered list is your headcount of patients, while the adjusted population weights that figure, so a network's core funding does not move in a simple straight line with patient numbers. How the leadership element is then paid to an individual director, and whether it is pensionable, is covered in our guide to PCN clinical director payments.

Staff Reimbursements: the Additional Roles Reimbursement Scheme (ARRS)

ARRS is the network's staff reimbursement strand, and it repays the actual employment cost of defined additional roles up to a maximum for each role, claimed by the network once it has employed the people and incurred the cost. Which roles qualify, who employs the staff, and how the payroll, pension, VAT and accounting are handled all sit in the guide to ARRS and employing PCN staff.

Enhanced Access

Enhanced access funding pays for appointments delivered outside core hours across the network. For 2026/27 it is £8.903 multiplied by the PCN's adjusted population at 1 January 2026, per Table 1 of the Network Contract DES specification 2026/27, paid to the nominated payee in 12 equal monthly instalments. Note that it runs on the adjusted population, the same weighted measure used for part of core funding, so two networks with identical headcounts can receive different amounts. It is one of the streams that drives joint working between practices, because the access offer is delivered at network level and not practice by practice. In accounting terms it usually comes with matching costs (the staff and premises used to run the extended-hours sessions), so, like ARRS, the headline funding figure is not all profit; the net contribution is what reaches the partners.

What Happened to the Capacity and Access Payments

If you are looking for the capacity and access payments, they are no longer a PCN-level entitlement. For 2026/27 NHS England repurposed the PCN-level capacity and access payment, worth £292 million, to fund a new practice-level GP reimbursement scheme. The capacity and access support payment and the capacity and access improvement payment have both left the DES: neither has an entitlement section in the 2026/27 specification and neither appears in Table 1. The only trace left is a historical reference at section 7.3.9, which relaxes an ARRS recruitment restriction for staff whose posts were funded through the capacity and access payment under a previous year's DES. For your accounts the consequence is that money which reached you through the network layer in earlier years now reaches you at practice level instead.

The Investment and Impact Fund (IIF)

The Investment and Impact Fund is the network's achievement fund and it remains a live entitlement for 2026/27 under section 10.6 of the specification. There are 58 points available across all indicators and each point is worth £198.00, so full achievement is worth £11,484 to a network at national average list size and national average prevalence. Each indicator's earnings are then scaled by a prevalence adjustment and a list size adjustment, both using registered unweighted list size at 1 January 2026, so a larger network with higher prevalence earns more from the same performance. The indicators are set out in Annex D of the specification, the calculation in Annex C, and the total indicator achievement payment is paid to the nominated payee by 31 August 2027. Because it depends on hitting targets and on a declaration made after the year end, it is recognised in the accounts only when the income is reasonably certain, not assumed up front.

Care Home and Other Premia

The DES also carries additional premia, for example a per-bed care home premium, recognising particular service responsibilities. As with every other stream, the amounts are set in the contract documents and uplifted, so treat any figure as current-year and confirm at source. The care home premium in particular recognises the extra work of supporting residents in care settings, and it is allocated on a defined basis and not as a flat sum: for 2026/27 it is £133.158 per bed for the year, paid at £11.0965 per bed per month, on beds in the network's aligned care homes. So a network with more care home beds in its area will see a different figure from one with fewer. The general rule holds across all of these premia: read the current contract documents, because last year's amounts will have moved.

Throughout, every per-patient, per-population or per-role figure is uplifted annually and set in the contract documents. Treat any number you read (including the 2026/27 figures above) as a snapshot, and confirm the current figure in the Network Contract DES specification and the GP contract documents.

How the Money Actually Reaches the Practices: the Nominated Payee

The network does not usually receive the DES funding into a dozen separate practice bank accounts. Instead it nominates a payee to receive the funding on its behalf. This is commonly a lead (host) practice, but it can be a GP federation or another legal entity the practices have set up.

The payee receives the funding, and the network then distributes it between the member practices, or spends it directly (for example on shared staff), under the network agreement. The network agreement is the document that governs how the money is shared, who carries which costs, and how shared staff are deployed. It is worth reading carefully, because it determines what actually lands in each practice's accounts.

The choice of nominated payee is not just an administrative convenience. Where a single lead practice is the payee, that practice carries the network's money through its own books and bank account, which raises practical questions: how the funds are kept separate from the lead practice's own income, how and when they are distributed to the other members, and how the arrangement is documented so that the money is clearly the network's and not the lead practice's. Where a federation or a separate company is the payee, the money sits outside any individual practice, which can be cleaner but introduces its own accounting and governance layer. Either way, the partners in each member practice should be able to see, from the network agreement and the network's own records, what they are entitled to receive and on what basis.

Distribution between practices is rarely a simple equal split. A network may share core funding by registered list size, allocate enhanced-access funding to whichever practices deliver the appointments, hold ARRS centrally because the staff are employed centrally, and pay the Investment and Impact Fund out only to the extent it is earned. The result is that two practices in the same network can receive quite different amounts, for entirely legitimate reasons. Understanding the basis of your own practice's share is what lets you check that the figure arriving is the figure the agreement says it should be.

How the money sits in the payee, and how it moves between practices, has tax and (particularly for shared staff) VAT consequences. The employment of shared staff is exactly the area where a careless structure can create an irrecoverable VAT cost, covered in the ARRS and employing PCN staff guide.

How PCN Income Is Recognised in the Accounts

Mapping the streams onto the practice accounts:

• Participation and distributed core funding are recognised as network income.
• ARRS is handled as a reimbursement against the matching staff cost, so it should largely net off instead of inflating profit. Posting the income without the matching cost overstates profit and distorts every partner's tax; our ARRS guide covers the discipline in detail.
• Achievement funds (the Investment and Impact Fund) are recognised when reasonably certain, not assumed.

Whatever lands in the practice is trading income, and this is the point that catches partners out: 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 profit flows to tax, and our guide to profit sharing and tax planning explains how the profit is split between partners.

The ARRS netting point deserves a second look, because it is where PCN income most often distorts the accounts. If the network employs staff centrally and your practice never sees the cash, the practice accounts may correctly show neither the income nor the cost. But where your practice is the employer, or where reimbursement passes through your books, the income and the matching staff cost should both appear and largely cancel out. Booking the reimbursement as income without the cost, or vice versa, makes the practice look more (or less) profitable than it is, and because partners are taxed on profit share, that error feeds straight through to their tax bills. The discipline is to match the reimbursement to the cost it relates to, and to recognise only the genuine net position, with any above-cap excess shown as the real cost it is.

Achievement-linked funds need their own judgement. The Investment and Impact Fund depends on hitting targets and is not paid until after the year end, so it should be recognised only when the income is reasonably certain, never assumed at the start of the year. Recognising it too early overstates profit and risks a later write-back if the targets are missed. This is an accounting-estimate question that the practice and its accountant should agree consistently from year to year.

For the mechanics of where each PCN line sits in the books, see our GP accounting guide and GP bookkeeping guide; for running the practice and network payroll, see GP payroll services.

Is PCN Income Subject to VAT, and Is It Pensionable?

VAT. Core NHS network income to the practices is outside the scope of VAT, so the funding itself does not create a VAT problem. The exposure sits elsewhere: the way shared ARRS staff are employed and recharged between practices can create a standard-rated supply of staff, and because practices make mostly exempt and outside-the-scope supplies, that VAT can be largely irrecoverable. The detail (the control test, the registration threshold, joint employment and cost sharing groups) is in the ARRS and employing PCN staff guide.

Pension. NHS-derived profit is pensionable for a GP partner via the Type 1 Annual Certificate of Pensionable Profits, and our guide to GP pension contributions and tax relief covers the wider picture. The contract itself sits with GPs, their partnerships, or a company limited by shares whose shareholders all meet the qualifying conditions, which a doctor's ordinary personal service company does not, and income routed through a company is not NHS pensionable, which our PCN clinical director payments guide works through in full, along with whether clinical director and leadership pay is itself pensionable.

What Is the PCN DES, and Who Pays for It?

The PCN DES is the Network Contract DES, and the body that pays it is your integrated care board (ICB). The 2026/27 specification defines the commissioner as the organisation responsible for contract managing a practice, and states that this is an ICB. NHS England directs the service and sets the national prices; your ICB contract manages it and makes the payments.

This is an NHS DES, not a grant you apply for. The commissioner pays a PCN's payment into the bank account of the nominated payee. The network agreement records the arrangements with that payee, including whether it receives the money as agent or as trustee for the other practices.

One strand breaks that pattern, and it is the one most often misread in the accounts. The network participation payment goes directly to each core network practice, not to the nominated payee. For practices covered by the Statement of Financial Entitlements it is paid under the SFE, not under the DES. So when you reconcile network money, expect part of it in your own bank account and part of it in somebody else's.

Timing is fixed and predictable. Each entitlement is calculated for the year and split into 12 monthly instalments. Your practices are entitled to an instalment only for the months in which the network delivers the DES requirements. This is the DES GP practices sign up to each year, so a mid-year change in delivery shows up as a change in monthly cash.

What Does the PCN Funding Model Pay For in 2026/27?

The PCN funding model is a set of separate entitlements with separate bases, calculated once for the year and then paid monthly. What each one is measured on decides how much of it you can predict.

Network Contract DES funding streams, PCN DES 2026/27 specification, effective 1 April 2026

Stream	What the payment is measured on	How it reaches the practice
Core PCN funding	Partly PCN registered list size, partly PCN adjusted population, both taken at 1 January 2026	12 equal monthly instalments to the nominated payee, calculated automatically by PCSE Online
Network participation payment	The practice's own contractor weighted population at 1 January 2026	Direct to each member practice, in 12 instalments, under the SFE
Enhanced access	PCN adjusted population	12 equal monthly instalments to the nominated payee
Care home premium	Beds in the network's aligned care homes, updated monthly from the CQC care directory, with residents coded	Monthly, at a per-bed rate, through PCSE
Additional roles reimbursement (ARRS)	Employment costs actually incurred, capped for each role	Claimed by the network; the mechanics sit in the ARRS guide linked above
Achievement payments	Indicator achievement declared for the network after the year end	A single payment after 31 March, once the declaration is accepted

The core line is the one practice managers ask about most, because it is not a single per-patient rate. For 2026/27 it is calculated in two parts. One part is multiplied by the PCN registered list size at 1 January 2026, the other by the PCN adjusted population at the same date.

Those are two different populations. The registered list is a headcount. The PCN adjusted population is a weighted figure taken from the ICB primary medical care allocation formula, which is not the Carr-Hill weighting under your core contract. That is why a statement line described as PCN core funding does not move in a straight line with patient numbers.

One change is worth putting in front of your partners for 2026/27. NHS England has repurposed the PCN-level capacity and access payment, worth £292 million, to fund a new practice-level GP reimbursement scheme. Money that reached you through the network layer in earlier years now reaches you at practice level. Identify which income lines are affected before you compare this year against last.

What Can PCN Money Actually Be Spent On?

There is no national list of permitted purchases, and the specification explains why. DES payments are not payments for specific services: they are made in consideration of the network delivering the requirements of the specification. The test for any item of spend is therefore whether it is defensible, not whether it appears on an approved list.

Two things do the constraining. The specification requires a network and its practices to adhere to the financial probity standards in place across the NHS. The deployment of resources has to stand up to wider scrutiny as an efficient and effective use of NHS funding. The network agreement does the rest, because that is where the member practices set out who decides on spend and who carries which costs.

The commissioner is responsible for post payment verification and can audit the network's claims and its expenditure against the DES. So whether the network can buy shared equipment for its member practices is a network decision you should be able to evidence. Record the decision, the DES requirement it supports, and the basis on which the cost is shared.

Some strands narrow the discretion by themselves. The care home premium is paid on coded care home beds. Enhanced access money pays for appointments in the network standard hours of 6.30pm to 8pm on weekdays and 9am to 5pm on Saturdays.

What Happens to a PCN Surplus at the Year End?

An undistributed balance sitting in the nominated payee's account on 31 March is not the payee's profit. The specification is direct about this: payments under the Network Contract DES are treated, for accounting and superannuation purposes, as gross income of the PCN's core network practices in that financial year. Where the money is paid to a nominated payee, how it is apportioned depends on the distribution arrangements in the network agreement.

That gives you a clean rule for the year end. Establish each practice's share of network income under the agreement. Recognise that share in that practice's accounts for the year the money relates to, and read the payee's bank balance as a holding position, not as income of the host.

Where the agreement is silent, or the dispersal of funds has fallen behind the entitlement, every member practice is exposed. A host that recognises the whole balance overstates its own profit and understates everyone else's.

The pension consequence runs along the same line, which is why the specification names superannuation alongside accounting. Network income forming part of your practice's NHS-derived profit is pensionable through the Type 1 Annual Certificate of Pensionable Profits, the certificate a GP provider or partner completes each year. A share recognised in the wrong practice is pensioned in the wrong practice, and correcting it later means an amended certificate, not a journal.

How Are PCN Payments Claimed and Declared Through CQRS?

Most network money is calculated for you, and the part that is not is declared through CQRS. CQRS is the Calculating Quality Reporting Service, the national system that calculates and records payments for quality schemes and enhanced services. Your practice uses it to indicate that it is participating in the Network Contract DES, and the network uses it to submit and declare achievement against the indicators.

Two features of that matter for your accounts. Achievement data is declared on the network's behalf by two nominated persons whom the commissioner has approved. A declaration is therefore a controlled act with a date on it, and that date is the evidence you want before you recognise achievement income.

The automatic capitation payments run on a different track, through PCSE Online, so a missing capitation line and a missing declaration are two different investigations. PCSE is Primary Care Support England, which administers GP payments and pension records in England. A local health board does the same job in Wales, and Scotland and Northern Ireland have separate arrangements.

Reconciling what the network declared against what actually landed is its own discipline, and it sits on the guide to reconciling practice income against the PCSE statement.

What Happens if a Practice Joins or Leaves the Network?

Membership changes are commissioner decisions with money attached to them. Where a practice may stop being a core network practice, the members must notify the commissioner as soon as they know. The commissioner then considers the consequences, including the effect on the network's financial entitlements. A practice leaving is likely to reduce the payments made to the PCN, because the main entitlements are calculated on list size and population.

• A practice that leaves after 30 April 2026 stops being eligible for the network participation payment from the month following the month it leaves.
• Where the membership changes before a payment is received, the commissioner pays the nominated payee as it stands at the payment date, and it is for the network to manage the distribution.
• The commissioner records network membership and can revisit the network area, the nominated payee and the level of payments as part of the same decision.

What the specification does not do is allocate the costs. It says nothing about which practice carries the cost of shared staff, of equipment, or of a service commitment after a member leaves, and it does not unwind money already paid. That allocation belongs to the network agreement and its schedules, where the practices set their own express terms on joining and leaving. Read those before you rely on an understanding reached around the table.

The same document answers the hosting question. Where your practice hosts an activity for the network, enhanced access sessions being the common case, what you recover is what the agreement says you recover. That recharge is trading income, set against the staff and premises costs you carried. Enhanced access money is taxed like the rest of the practice's income, through your share of the profit, which the GP partnership tax guide works through.

Reading Your Network Layer Against the Practice Books

Network money is only reconcilable once you hold three documents together: the DES specification, which fixes each entitlement and its basis; the network agreement, which decides what your practice's share of it is; and the payee's records, which show what was actually paid and when. A practice working from its own bank statement alone is reading the one furthest from the entitlement.

Two errors do most of the damage. ARRS reimbursement booked without its matching staff cost inflates profit and every partner's tax with it. A year-end balance left with the host is recognised in the wrong accounts, and since network income is pensionable through the Type 1 certificate, pensioned in the wrong practice too. Both are cheaper to catch in the year than after the certificate has gone in.

For the layer underneath, see how GMS funding works; for the staff strand, ARRS and employing PCN staff; and to check what landed against what was declared, reconciling practice income against the PCSE statement. If your network layer has never been read against the books, get in touch.