The short answer: the 2026-27 rate and why it matters
The standard NHS-funded nursing care rate for 2026 to 2027 is 267.68 pounds a week, up 5.4 percent from 254.06 pounds, and it applies from 1 April 2026. A small closed group of residents assessed on the pre-October 2007 higher band get 368.24 pounds a week. The NHS pays this to the home for every resident it has assessed as needing care from a registered nurse, and it sits on top of the resident's fee rather than replacing any of it. The rate was confirmed in the government's announcement of the 2026 to 2027 nursing funding boost.
The reason it matters more than a 5.4 percent line on a rate card suggests is the margin underneath it. Nursing homes run tight, and FNC income for a full home runs into six figures a year, so it is often the single item that moves the home from a loss to a surplus. If it is buried inside the fee income, an underpayment for one resident, or a rate that the local Integrated Care Board is slow to apply, can sit hidden for months. Getting the number right, and seeing it clearly, is a finance job, and it is one of the things we set up first when we take on a home. LOYALS is a King's Cross firm of accountants and business consultants in London, and for nursing homes we build the accounts around this income rather than treating it as an afterthought. A good starting point for how the pieces fit together is our care home accountants page.
What NHS-funded nursing care is and who pays it
NHS-funded nursing care is a weekly payment the NHS makes towards the cost of care delivered by a registered nurse in a care home that is registered to provide nursing. It is not means-tested, it does not touch the resident's own money, and it is paid by the resident's Integrated Care Board, in most cases straight to the home. The rules sit in the government's national framework for NHS continuing healthcare and NHS-funded nursing care, which also sets out how a person is assessed.
Not every resident attracts it. FNC is for people who need the input of a registered nurse, which a home can only provide if it is registered with the Care Quality Commission for nursing care as a regulated activity. A resident who needs only personal or residential care does not get FNC, and a resident on NHS Continuing Healthcare has their whole package funded rather than just the nursing element, so they are outside FNC too. In a nursing home most residents are funded, but not all, and the exact count is what drives the income figure. The decision, in practice, runs like this.
Because the payment follows an assessment made by the Integrated Care Board, the home does not control how many of its residents are funded, but it very much controls whether it is billing correctly for the ones who are, and whether the money that arrives matches what it should. That reconciliation is where the finance function earns its place, and it is part of what we cover in a home's monthly management accounts.
What the 2026-27 rate does to a 30-bed nursing home P&L
Here is the point most rate announcements miss: on a nursing home P&L, FNC is rarely the icing, it is closer to the whole cake. Take an illustrative 30-bed home running at 90 percent occupancy, so about 27 residents, of whom 24 are assessed as needing nursing care. At 267.68 pounds a week across 52 weeks, those 24 funded residents bring in roughly 334,000 pounds of FNC in the year. Set that against a home whose fee income and costs are finely balanced and the picture is stark.
| Line | Annual |
|---|---|
| Resident fees, self-funder and council | £1,760,000 |
| NHS-funded nursing care, 24 residents at £267.68 a week | £334,000 |
| Total income | £2,094,000 |
| Nursing and care staff | £1,180,000 |
| Agency staff cover | £110,000 |
| Catering, housekeeping and admin | £300,000 |
| Food, utilities and supplies | £180,000 |
| Property, repairs and equipment | £160,000 |
| Insurance, registration and overheads | £95,000 |
| Total operating cost | £2,025,000 |
| Operating surplus with FNC | £69,000 |
| Operating result without FNC | −£265,000 |
Read the last two lines together. With FNC the home makes about 69,000 pounds, a margin of roughly 3 percent, which is normal for the sector and leaves very little room. Take FNC away and the same home loses 265,000 pounds. The nursing income is not padding the result, it is holding the result up. That is why a home that treats FNC as a rounding item inside its fee total is flying blind on the one number that decides whether it is viable.
The same shape holds at other sizes. A smaller home with fewer funded beds feels it just as sharply, because its fixed costs, the building, the registered manager, the minimum safe staffing, do not fall away in proportion. If you want to see how the fee side of that balance behaves, our guide on the council and self-funder resident mix works through the other half of the income line, and occupancy and voids covers what happens when beds sit empty.
The 5.4 percent uplift and when the cash actually lands
The uplift itself is worth having but modest per home. Moving 24 funded residents from 254.06 pounds to 267.68 pounds a week adds roughly 17,000 pounds across the year, which on the P&L above is a quarter of the whole surplus arriving from a single rate change. That is real money for a business running at 3 percent, and it is a reason to make sure every funded resident is actually being billed at the new rate from the day it applies.
The catch is timing. The rate applies from 1 April, so a home should invoice at 267.68 pounds a week from that date. When the Integrated Care Board confirms the uplift and actually pays it is a separate matter, and it does not always move at the same speed. Some boards apply the new rate promptly, others confirm it weeks later and settle the difference as a catch-up payment. We do not budget a rate rise into the cash forecast until the board has confirmed when it will be paid, because a home that spends the uplift in April and receives it in August has created its own cash squeeze. Bill at the new rate from April, keep the old rate in the forecast until the money is confirmed, and let the reconciliation catch the difference when it lands.
How to account for FNC every month
The rule we give every nursing home is simple: hold FNC as its own income line, and reconcile it to the Integrated Care Board every month. When it is netted into the fee line it becomes invisible, and invisible income is income that leaks. A monthly reconciliation compares three things: the residents you believe are funded, the amount the board should be paying for them at the current rate, and the money that actually arrived. Any gap between the second and third is either a timing difference to track or an underpayment to chase.
In practice that means keeping a live list of funded residents with their assessment dates, billing each one at the correct rate from the day it applies, and matching every remittance line back to a resident. It sounds mechanical, and it is, which is exactly why it gets skipped in a home where the manager is running the floor and the books are done once a year. A resident who leaves, a new admission who has not yet been assessed, or a board that pays a round sum without a breakdown all break the link between what is owed and what is received, and only a monthly check catches them while they are still fixable.
This is the operator-level habit that separates a home that knows its numbers from one that hopes. The homes that reconcile FNC monthly find the missing money within weeks. The homes that wait for the year-end find it, if at all, when it is too late to bill some of it. It is also why nursing income reconciliation is one of the first routines we put in place, and it runs inside the same monthly cycle as the rest of a home's tax planning and advisory work.
FNC, VAT and corporation tax
FNC does not carry VAT. Nursing care provided by a registered home is a welfare service that is exempt from VAT, which means the home does not add VAT to fees or to FNC, and it also cannot reclaim the VAT on most of the costs behind that care. That irrecoverable VAT is a genuine cost sitting inside the figures above, and it is one reason nursing home margins are tighter than they first look.
Corporation tax is different. FNC is taxable trading income, exactly like a resident fee, so it forms part of the profit the home is taxed on. For 2026 to 2027 the corporation tax rates are unchanged: profits up to 50,000 pounds are taxed at the 19 percent small profits rate, profits over 250,000 pounds at the 25 percent main rate, and profits in between get marginal relief, set out in the government's corporation tax rates and allowances. A single home making a 69,000 pound surplus sits just inside the marginal relief band, so the way the profit is calculated, and how many companies the owner controls, both matter. If the home is one of several companies you own, the marginal relief thresholds are shared between them, which can quietly push more of the profit into the higher rate.
Whether you run a single home or a small group, the thread through all of this is the same: the income that keeps a nursing home viable is paid by a third party on its own timetable, and it only stays visible if someone is watching it every month. That is the work our care home and nursing home accountants do, and it is why homes move to us when the once-a-year accountant stops being enough.