Open consultation

DHSC group accounting manual 2026 to 2027 consultation exercise

Published 26 January 2026

Applies to England

Overview

All bodies within the Department of Health and Social Care accounting boundary (DHSC group bodies) must publish annual reports and accounts. Clear and transparent reporting helps the entity, as well as the users of the entity’s annual report and accounts, understand and scrutinise the year’s operations and outcomes.

DHSC and NHS England have powers to direct:

• the form in which the annual report and accounts should be prepared
• the information that should be included
• the methods and principles that should be followed in their preparation

In determining the form and content of the accounts we must, by statute, aim to ensure the accounts present a true and fair view.

In order to achieve this, DHSC issues a group wide annual report and accounting manual every year, the group accounting manual (GAM), containing the requirements DHSC group bodies need to follow when preparing their annual reports and accounts (ARAs).

The NHS foundation trust annual reporting manual (FT ARM) establishes the annual reporting requirements for NHS foundation trusts. The FT ARM contains the formal accounts direction, but foundation trusts will follow the GAM for accounts requirements.

The GAM requires DHSC group bodies to follow the requirements of international financial reporting standards (IFRS), as adopted by the United Kingdom, interpreted and adapted by HM Treasury’s financial reporting manual (FReM).

Therefore, the GAM only includes detailed accounting guidance for specific circumstances, including but not limited to where DHSC group bodies are:

• required to depart from IFRS or the FReM
• required to make specific disclosures in addition to IFRS and the FReM
• faced with particular circumstances that IFRS or the FReM do not address

Updates to the GAM follow the same principle and, on that basis, are required where IFRS or the FReM have changed, or when DHSC group bodies are required to make specific extra disclosures.

Some content for the 2026 to 2027 GAM is not yet available, such as HM Treasury discount rates. The draft GAM indicates where this is the case, and the manual will be revised later in the year once this content is known. An additional guidance document published alongside subsequent updates of the 2026 to 2027 GAM will detail the changes made within the manual.

2026 to 2027 consultation

This consultation relates to the draft GAM for the 2026 to 2027 financial year. See the DHSC group accounting manuals collection page for the documents being consulted upon.

The consultation period will run from 26 January 2026 to 23 February 2026.

The 2026 to 2027 GAM will be published later in 2026, once we have considered consultation responses and further refined the guidance offered in the GAM.

Post-consultation changes will be made in collaboration with the relevant sector finance leads. The publication of the GAM is subject to approval by the financial reporting advisory board (FRAB).

Principal changes proposed in the draft GAM

There is one significant change to the accounting requirements for the 2026 to 2027 financial year. This relates to the updates stemming from the non-investment thematic review. For 2026 to 2027, the DHSC GAM aligns its guidance to the FReM requirements on international accounting standard (IAS) 16 valuation cycles for property, plant and equipment (PPE). Accordingly, the previous GAM departure that deferred implementation of the revised valuation cycle approach (pending FRAB consensus) is withdrawn.

This document summarises the changes introduced into the draft 2026 to 2027 GAM and provides consideration of prospective updates to both the 2026 to 2027 GAM and future iterations.

Change to the classification, valuation cycles and valuation methodologies of PPE

HM Treasury’s thematic review has proposed changes to the classification, valuation cycles and valuation methodologies of PPE accounted for under IAS 16.

In relation to classification, changes introduced in the 2025 to 2026 FReM removed the distinction between specialised and non-specialised assets held for their service potential and reclassified these assets using terminology aligned to international public sector accounting standards, as assets held for their operational capacity. This approach was embedded in the FReM and reflected consistently within the GAM.

In respect of valuation cycles, the review proposed mandating a specific approach, either undertaken as a single revaluation every 5 years or through a rolling programme of valuations over a 5-year cycle, with indexation applied in the intervening years.

For non-property assets, appropriate indices are to be applied as the basis for valuation and entities may determine the most appropriate index to apply. DHSC and NHS England are considering whether centrally procured indices could be made available to support consistency across DHSC group bodies.

These proposals were positively received through consultation and endorsed by FRAB and were incorporated into the 2025 to 2026 FReM.

For 2026 to 2027, DHSC is proposing to align the GAM with this FReM position on valuation cycles. This would remove the previous divergence whereby the GAM retained earlier valuation cycle guidance pending wider agreement on valuation methodology changes. Under this proposal, NHS bodies following the GAM would be expected to apply the FReM valuation cycle approach for PPE accounted for under IAS 16.

In relation to valuation methodologies, FRAB has now reached conclusions on the outstanding issues that were not resolved at the point the 2025 to 2026 FReM was finalised. In particular, FRAB has concluded that, where land is integral to specialised operational capacity assets, the land element should be valued on a basis consistent with the modern equivalent asset (MEA) approach applied to the associated buildings under a depreciated replacement cost (DRC) methodology.

FRAB has also confirmed its endorsement of the removal of ‘alternative site’ valuation from MEA approach under DRC methodology, with implementation to take effect from 2028 to 2029. This provides clarity on the end-state valuation methodology for PPE held for operational capacity and allows entities to plan for transition away from alternative site assumptions.

As a result of these conclusions, DHSC considers that the conditions are now in place to:

• align fully with the FReM valuation cycle requirements for IAS 16 PPE
• update GAM guidance to reflect the FRAB conclusion that land integral to specialised operational capacity assets is valued on a basis consistent with DRC and MEA

DHSC recognises that these changes may have material impacts for some NHS bodies, particularly in respect of estate valuations and financial planning. However, it is considered that aligning the GAM with the now settled FReM position and providing clearer expectations ahead of the 2028 to 2029 change will reduce uncertainty and implementation risk compared with further deferral.

Consultation questions on the changes stemming from non-investment asset review

If you have any comments on the proposal to align the GAM with HM Treasury’s FReM valuation cycle requirements for PPE accounted for under IAS 16 from 2026 to 2027, please provide them. (Optional)

If you have any other comments regarding the guidance in the GAM relating to PPE and the outputs from the non-investment asset review, please provide them. (Optional)

Change to accounting for gains and losses on absorption

Following updates to the FReM, the treatment of gains or losses arising from transfers under absorption accounting has been revised. Previously, such gains or losses were recorded as non-operating items through net expenditure.

From 2026 to 2027, in line with the updated FReM, GAM mandates that gains or losses arising from absorption accounting should be recorded directly in reserves, rather than through net expenditure. Revaluation reserves will continue to be transferred in full.

This change reflects the view of the technical working group and HM Treasury that gains or losses on absorption are non-operating in nature and do not represent income or expenditure. Recording these amounts in reserves provides a more accurate reflection of their nature.

Consequently, following the update to the GAM, which now requires all gains or losses arising from absorption accounting to be recorded directly in reserves, the previous guidance on modified absorption accounting is no longer applicable. The standardised approach in the revised FReM supersedes the need for a separate modified absorption method, and the relevant paragraphs will be withdrawn from the 2026 to 2027 GAM.

Consultation question on the change to accounting for gains and losses on absorption

Please explain whether or not you support including the change that gains or losses arising from absorption accounting should be recorded directly in reserves rather than income and expenditure in the 2026 to 2027 GAM. (Optional)

Other comments on the GAM

If you have any other general comments on the GAM, please provide them. (Optional)

Prospective change to the GAM

There is one prospective change to the GAM that preparers should be aware of. DHSC would welcome comments about this.

Removal of alternative sites from PPE valuations

For DHSC group bodies, valuation assumptions must be consistent with service delivery requirements and the locational requirements of the service being provided.

Entities should note that the FReM position is moving to remove ‘alternative site’ valuation from DRC and MEA methodologies from financial year 2028 to 2029. The GAM will reflect this change without the option for an early adoption.

Consultation question on the prospective change to the GAM

If you have any comments on the removal of alternative sites from PPE valuations in 2028 to 2029, please provide them. (Optional)

Consultation questions

About you

In what capacity are you responding to this survey?

• An individual sharing my personal views and experiences
• An individual sharing my professional views
• On behalf of an organisation

What is your name? (Optional)

Questions for people responding on behalf of an organisation

What is the name of your organisation? (Optional)

What is your role in the organisation? (Optional)

How many employees does your organisation have? (Optional)

• Fewer than 10
• 10 to 49
• 50 to 249
• 250 or more

Changes stemming from non-investment asset review

If you have any comments on the proposal to align the GAM with HM Treasury’s FReM valuation cycle requirements for PPE accounted for under IAS 16 from 2026 to 2027, please provide them. (Optional)

If you have any other comments regarding the guidance in the GAM relating to PPE and the outputs from the non-investment asset review, please provide them. (Optional)

Change to accounting for gains and losses on absorption

Please explain whether or not you support including the change that gains or losses arising from absorption accounting should be recorded directly in reserves rather than income and expenditure in the 2026 to 2027 GAM. (Optional)

Other comments

If you have any other general comments on the GAM, please provide them. (Optional)

Prospective change to the GAM

If you have any comments on the removal of alternative sites from PPE valuations in 2028 to 2029, please provide them. (Optional)

How to respond

We are keen to receive your views.

Please respond through our online survey.

Consultation responses must be submitted by 11:59pm on 23 February 2026.

If you have any questions about the consultation or its contents, please speak with your sector leads in the first instance. Contact your sector lead on the appropriate email below:

• NHS Providers: england.provider.accounts@nhs.net
• integrated care boards: england.yearendaccounts@nhs.net
• other arm’s length bodies: dh_gam@dhsc.gov.uk
• audit firms: dh_gam@dhsc.gov.uk

Privacy notice

Summary of initiative

The consultation on the group accounting manual 2026 to 2027 provides opportunity for practitioners using the GAM within the health sector to comment on the proposed guidance for the 2026 to 2027 financial year.

Data controller

DHSC is the data controller.

What personal data we collect

Questions about you including your name, email address, organisation you work for and size of your organisation are asked but are predominantly optional.

How we use your data (purposes)

You may be contacted by your email address, if you provide it. This would be to ensure our understanding is correct in relation to a free text response to one of our questions.

Legal basis for processing personal data

Under Article 6 of the United Kingdom General Data Protection Regulation (UK GDPR), the lawful bases we rely on for processing this information are:

(e) Public task: the processing is necessary to perform a task in the public interest or for your official functions, and the task or function has a clear basis in law.

Data processors and other recipients of personal data

Responses to the consultation may be seen by:

• DHSC staff running the consultation process
• DHSC’s third-party supplier (SocialOptic), who are responsible for running and hosting the online survey

International data transfers and storage locations

The information provided is stored securely by DHSC.

Storage of data by SocialOptic is provided via secure servers located in the UK.

Retention and disposal policy

In line with DHSC policies, corporate information regarding consultations is retained for 3 years and then deleted.

SocialOptic will securely erase the data held on its system one year after the online survey closes, or when instructed to do so by DHSC if the data has served its intended purpose (whichever happens earlier).

How we keep your data secure

Access to data is limited to those who run the consultation and shared no wider. Responses are referred to in a summarised and anonymised manner in the consultation response.

Your rights as a data subject

By law, data subjects have a number of rights and this processing does not take away or reduce these rights under the EU General Data Protection Regulation (2016/679) and the UK Data Protection Act 2018 applies.

These rights are:

• the right to get copies of information - individuals have the right to ask for a copy of any information about them that is used
• the right to get information corrected - individuals have the right to ask for any information held about them that they think is inaccurate, to be corrected
• the right to limit how the information is used - individuals have the right to ask for any of the information held about them to be restricted, for example, if they think inaccurate information is being used
• the right to object to the information being used - individuals can ask for any information held about them to not be used. However, this is not an absolute right, and continued use of the information may be necessary, with individuals being advised if this is the case
• the right to get information deleted - this is not an absolute right, and continued use of the information may be necessary, with individuals being advised if this is the case

Comments or complaints

Anyone unhappy or wishing to complain about how personal data is used as part of this programme, should contact data_protection@dhsc.gov.uk in the first instance or write to:

Data Protection Officer
1st Floor North
39 Victoria Street
London
SW1H 0EU

Anyone who is still not satisfied can complain to the Information Commissioner’s Office. Their website address is www.ico.org.uk and their postal address is:

Information Commissioner’s Office
Wycliffe House
Water Lane
Wilmslow
Cheshire
SK9 5AF

Automated decision making or profiling

No decision will be made about individuals solely based on automated decision making (where a decision is taken about them using an electronic system without human involvement) which has a significant impact on them.

Changes to this policy

This privacy notice is kept under regular review. This privacy notice was last updated on 26 January 2026.