Most GP partners know their practice belongs to a primary care network and that money arrives through it, but few have actually seen how the Network Contract DES channels that money or how it lands in the practice accounts. This guide maps the flow end to end: the Network Contract DES as a voluntary Directed Enhanced Service that member practices sign up to on top of their core contract, the named funding streams inside it, the nominated payee that receives the money on the network's behalf, and how it is then recognised in the practice and in the partners' profit share.

This page stays at the funding-flow altitude. 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 rather than 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 (a point we hand off to the ARRS guide).

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 rather than to the individual practice. That is what this page is about.

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.

The legal-entity point is worth dwelling on for a moment, because it underpins the rest of the page. 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 per registered patient (for 2025/26 this was around £1.76 per registered patient, uplifted annually, so confirm the current figure in the Network Contract DES specification rather than treating that number as fixed).

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 2025/26 core PCN funding was around £2.999 per patient, split between a registered-list element (around £2.266) and an adjusted-population element (around £0.733), 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 largest stream by value nationally. In one paragraph: it reimburses the actual employment cost of defined additional roles, up to a maximum per role, claimed by the network. State it plainly, because practices routinely get it wrong: ARRS is a reimbursement, not free money and not a grant. The network must actually employ or engage the people and incur the cost before it can claim, and anything above the per-role maximum falls on the network. The roles it covers (clinical pharmacists, first-contact physiotherapists, paramedics, care coordinators, social prescribing link workers and others, with salaried GPs and practice nurses brought in for 2025/26) and the per-role maxima are set in the Network Contract DES guidance and revised each year, so confirm the current list at source. The whole employment, payroll, VAT and accounting question is covered in our guide to ARRS and employing PCN staff.

Enhanced Access

Enhanced access funding pays for appointments delivered outside core hours across the network, paid per adjusted population. It is one of the streams that drives joint working between practices, because the access offer is delivered at network level rather than practice by practice. In accounting terms it often 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.

Capacity and Access Payments

The capacity and access payments have two parts: a support component and an improvement component that is linked to achievement against agreed measures. The achievement-linked element behaves more like a variable payment than a guaranteed one, which matters for how it is recognised in the accounts.

The Investment and Impact Fund (IIF)

The Investment and Impact Fund is an achievement-based fund tied to a small set of indicators. Because it depends on hitting targets, 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 rather than as a flat sum, 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 rather than assuming last year's amounts still apply.

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 illustrative 2025/26 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 rather than 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 achievement-linked funds (the Investment and Impact Fund, the improvement element) only to the extent they are 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, which is why we treat it in full in our ARRS and employing PCN staff guide rather than half-answering it here.

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 rather than inflate 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, the improvement element of the capacity and access payments) 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 and the improvement element of the capacity and access payments depend on hitting targets, so they should be recognised only when the income is reasonably certain rather than assumed at the start of the year. Recognising them 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.

VAT and Pension in One Breath

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. We do not teach it here; 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. A limited company cannot hold an NHS contract and company income is not NHS pensionable. Clinical director and leadership pay is a special case: whether it is pensionable depends on how it is paid, which is exactly what our PCN clinical director payments guide works through.

How We Help GP Practices and PCNs

We work with GP practices and primary care networks to make the funding flow visible: separating the practice's own core funding from the network layer, recognising each DES stream correctly in the accounts, netting ARRS reimbursement against the matching staff cost so profit is not overstated, and feeding the result cleanly into each partner's profit share and tax position. We help networks read the network agreement and the nominated payee arrangement for their tax and VAT consequences, and we flag the points (shared-staff VAT, clinical director pay) that need specialist input before they become a cost.

If you are weighing partnership, our guide to the financial implications of becoming a GP partner is a useful companion, and you can browse our other GP practice management guides for the rest of the picture. For tailored support, see our services for GPs or get in touch.