2025 to 2026 financial directions to NHS England
Published 31 March 2025
Applies to England
© Crown copyright 2025
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Presented to Parliament pursuant to section 223D of the National Health Service Act 2006.
© Crown copyright March 2025
ISBN 978-1-5286-5562-0
The Secretary of State for Health and Social Care gives these financial directions to NHS England in respect of the financial year ending on 31 March 2026, in exercise of the powers conferred by sections 223D, 223E and 223O of the National Health Service Act 2006 (‘the 2006 Act’).
The directions at Annex A1 specify the total revenue resource use limit in accordance with section 223D(1)(b), which is £205,111 million. The directions at Annex A1 also specify the total capital resource use limit in accordance with section 223D(1)(a), which is £4,857 million.
The directions at Annex A2, made under section 223E(1) and (3) of the 2006 Act, set out certain additional budgetary limits to which NHS England must adhere. These stem from budgetary controls that HM Treasury applies to the Department of Health and Social Care (DHSC). The limits imposed by the directions in Annex A2, and other sub-limits, are summarised within these directions.
The directions at Annex A3, made under sections 223O of the 2006 Act, relate to particular resources or uses of resources that must or must not be taken into account in relation to each limit. The directions at Annex A4, in reference to Consolidated budgeting guidance 2025 to 2026, set out the matters that relate to administration for the purposes of the directions in Annex A2.
The meaning of various expressions in these directions and further detailed guidance on those definitions and inclusions can be found in HM Treasury’s consolidated budgeting guidance for 2025 to 2026.
Signed by authority of the Secretary of State for Health and Social Care.
Andy Brittain
Member of the Senior Civil Service
Department of Health and Social Care
31 March 2025
Annex A1: directions under section 223D of the 2006 Act
Total revenue resource use limit
NHS England must exercise its functions with a view to ensuring that the total revenue resource use in the relevant financial year does not exceed £205,111 million.
In these directions, ‘total revenue resource use’ means the use of revenue resources by integrated care boards (ICBs) and NHS England (NHS England Group), and NHS trusts and NHS foundation trusts (NHS providers), other than use of resources between these bodies. NHS provider charitable fund resource use is included in this definition. This refers to small charities, funded by donations by the public, with a single corporate trustee (the NHS body it is associated with).
This does not refer to independent charities in England, which are not consolidated into DHSC’s accounts.
Table 1: breakdown of calculations used to reach the NHS England Group and NHS providers’ total revenue resource use limit
| Line | Matters | Specified amount (£ million) |
|---|---|---|
| 1.1 | Revenue departmental expenditure, other than depreciation and impairments | 195,593 |
| 1.2 | Depreciation and impairments within revenue departmental expenditure | 4,868 |
| 1.3 | Revenue annually managed expenditure | 2,650 |
| 1.4 | Technical accounting and budgeting | 2,000 |
As Table 1 includes NHS England Group and NHS providers, line 1.2 includes £4,375 million for depreciation in NHS trusts and NHS foundation trusts funded by ICBs’ expenditure on healthcare services with those trusts. Line 1.2 also includes £100 million for spending on impairments in NHS trusts and NHS foundation trusts.
Total capital resource use limit
NHS England must exercise its functions with a view to ensuring that the total capital resource use in the relevant financial year does not exceed £4,857 million. In these directions, ‘total capital resource use’ means the use of capital resources by NHS England Group and NHS providers. NHS provider charitable fund resource use is included in this definition.
There are also specific exclusions set out in Annex A3 as per section 223O of the 2006 Act.
Table 2: breakdown of calculations used to reach the NHS England Group and NHS providers’ total capital resource use limit each the
| Line | Matters | Specified amount (£ million) |
|---|---|---|
| 2.1 | NHS provider system capital that is allocated through ICBs (this is part of overall NHS provider operational capital) | 4,450 |
| 2.2 | NHS England capital departmental expenditure | 394 |
| 2.3 | NHS England capital annually managed expenditure | 13 |
Budgets for NHS national programmes and NHS provider system capital that is not allocated through ICBs are not included in this table as they are not included in the total capital resource use limit (see Annex A3 for further detail).
Annex A2: directions under section 223E(1) and (3) of the 2006 Act - additional controls on resource use
NHS England must ensure that the relevant revenue resource use and the relevant capital resource use in the relevant financial year, which is attributable to the matters in the ‘Matters’ column of the table below, shall not exceed the amount specified in relation to those matters in the corresponding entry in the ‘Specified amount’ column.
In these directions, ‘relevant revenue resource use’ and ‘relevant capital resource use’ means the respective use of revenue and capital resources by NHS England Group. The resource use of NHS providers are not included in the limits imposed under section 223E(1) and (3).
Table 3: relevant revenue resource use limits
| Line | Matters | Specified amount (£ million) |
|---|---|---|
| 3.1 | Matters for which attributable expenditure is to be treated as within the revenue departmental expenditure limit, other than depreciation and impairments | 199,968 |
| 3.2 | Matters relating to depreciation and impairments for which attributable expenditure is to be treated as within the revenue departmental expenditure limit | 393 |
| 3.3 | Matters for which attributable expenditure is to be treated as annually managed expenditure | 250 |
| 3.4 | Technical accounting and budgeting matters, namely capital grants and Private Finance Initiative or Local Improvement Finance Trust schemes, as recorded in accordance with International Financial Reporting Interpretations Committee 12 (IFRIC 12) | 250 |
| 3.5 | Matters relating to administration: - that are specified in Annex A4 - for which attributable expenditure is to be treated as within the revenue departmental expenditure limit, other than depreciation and impairments Both criteria must apply |
1,842 |
| 3.6 | Matters relating to administration that: - are specified in Annex A4 - relate to depreciation and impairments for which attributable expenditure is to be treated as within the revenue departmental expenditure limit Both criteria must apply |
182 |
As Table 3 includes NHS England Group only, the £4,375 million for expenditure incurred by ICBs that ultimately funds depreciation in NHS trusts and foundation trusts is included in line 3.1.
Included in matters relating to administration, lines 3.5 and 3.6, are balances that specifically relate to revenue which is used within NHS England, excluding ICBs. These are detailed in Table 4.
Table 4: NHS England administration limits
| Line | Matters | Specified amount (£ million) |
|---|---|---|
| 4.1 | Matters relating to administration: - that are specified in Annex A4, insofar as they relate to NHS England resource use - for which attributable expenditure is to be treated as within the revenue departmental expenditure limit, other than depreciation and impairments Both criteria must apply |
760 |
| 4.2 | Matters relating to administration that: - are specified in Annex A4, insofar as they relate to NHS England resource use - relate to depreciation and impairments for which attributable expenditure is to be treated as within the revenue departmental expenditure limit Both criteria must apply |
111 |
Table 5: NHS England relevant capital resource use limit
| Line | Matters | Specified amount (£ million) |
|---|---|---|
| 5.1 | Matters for which attributable expenditure is to be treated as within the capital departmental expenditure limit | 394 |
| 5.2 | Matters for which attributable expenditure is to be treated as capital annually managed expenditure | 13 |
The NHS England Group does not hold any matters relating to depreciation and impairments for which attributable expenditure is to be treated as either within the capital departmental expenditure limit (CDEL) or as capital annually managed expenditure (CAME).
Table 6A: summary of the relevant revenue resource use limits imposed by the directions
| Line | Revenue resource use limits (£ million) | Total | Revenue departmental expenditure limit (excluding depreciation and impairments) | Revenue departmental expenditure limit (depreciation and impairments) | Revenue annually managed expenditure | Technical accounting and budgeting |
|---|---|---|---|---|---|---|
| 6A.1 | Total relevant revenue resource use limit[footnote 1] | 200,861 | 199,968 | 393 | 250 | 250 |
| 6A.1.1 | Spending by commissioners with NHS providers that funds depreciation costs (ringfenced within 6A.1) | 4,375 | 4,375 | 0 | 0 | 0 |
| 6A.1.2 | Individual placement support and NHS talking therapies (ringfenced within 6A.1) | 111 | 111 | 0 | 0 | 0 |
| 6A.2 | Total administration limit | 2,024 | 1,842 | 182 | 0 | 0 |
| 6A.2.1 | NHS England administration limit (ringfenced with 6A.2) | 871 | 760 | 111 | 0 | 0 |
Table 6B: summary of the relevant capital resource use limits imposed by the directions
| Line | Capital resource use limits (£ million) | Total | CDEL | CAME |
|---|---|---|---|---|
| 6B.1 | Relevant capital resource use limit | 407 | 394 | 13 |
These limits refer to the resource use of NHS England Group. The resource use of NHS providers is not included in the limits imposed under section 223E(1) and (3). In addition to the revenue departmental expenditure limit (RDEL) and CDEL, the following budgets are included:
- ‘revenue annually managed expenditure’ (RAME)
- ‘capital annually managed expenditure’ (CAME)
- ‘technical accounting and budgeting’
The additional budgets outlined above are of a technical nature. Annually managed expenditure covers provisions and some types of impairments expenditure. Technical accounting and budgeting is for the differences between accounts produced under International Financial Reporting Standards (IFRS) following HM Treasury’s consolidated budgeting guidance. These budgets are not included in the RDEL and CDEL budget calculations used to calculate growth in NHS England’s headline budget.
The adjustments in Table 6A for provider depreciation, individual placement support and NHS talking therapies are reflected within the relevant revenue resource use limit, and do not themselves represent resource use limits imposed under section 223E(1) and (3).
Annex A3: directions under section 223O - resources and uses of resources that must or must not be taken into account
For the financial year ending on 31 March 2026, the following are the descriptions of resources or uses of resources specified, set out or described in the Consolidated budgeting guidance 2025 to 2026, published by HM Treasury, so far as applicable to the limit in question subject to the final paragraph in this annex:
- the descriptions of resources that must, or must not, be treated as capital resources or revenue resources for the purposes of the resource limits set by the Secretary of State for NHS England under sections 223D and 223E of the 2006 Act, and by NHS England for ICBs and their partner NHS trusts and NHS foundation trusts under sections 223M of the 2006 Act
- the uses of capital resources or revenue resources that must, or must not, be taken into account for the purposes of the resource limits set by the Secretary of State for the NHS England under sections 223D and 223E of the 2006 Act, and by NHS England for ICBs and their partner NHS trusts, and NHS foundation trusts under sections 223M of the 2006 Act
For the uses of capital resources pursuant to section 223O(b), the NHS provider system capital resources that are not directly allocated through ICBs and NHS national programmes capital resources are not to be taken into account for the purposes of 223D(1)(a) and 223M(1)(a).
Annex A4: matters relating to administration in revenue resource use
Subject to paragraph 1.7 of this annex, for the purposes of Annex A2 in these directions the following are matters that relate to administration:
1.1 The payment of remuneration, National Insurance, pensions, allowances or gratuities to the persons listed in paragraph 1.6, insofar as the payment is attributable to any of the activities referred to in paragraph 1.4 or 1.5.
1.2 The provision of education and training for the persons listed in paragraph 1.6, where the education or training relates to any of the activities referred to in paragraph 1.4 or 1.5.
1.3 Securing the provision of goods, facilities, or services for use by NHS England or an ICB in the exercise of its functions, including costs relating to:
- accommodation, including the cost of rent, rates, utilities, and maintenance
- information technology, including telecommunications and computer maintenance
- office services, including stationery, postage, and rental of office equipment
- management consultancy
- services to support arranging the provision of the services referred to in paragraph 1.7
- depreciation, amortisation, impairment, write-off, or other alterations in the value of assets
1.4 The costs incurred in the exercise of:
- NHS England’s functions in relation to ICBs
- NHS England or an ICB’s functions of arranging for the provision of the services referred to in paragraph 1.7, including costs that are incurred in the carrying out of activities designed to improve the exercise of those functions, but excluding costs incurred in relation to activities whose sole or primary purpose is to improve the quality of those services
1.5 The costs, other than those referred to in paragraph 1.1 to 1.4, which are incurred in the carrying out of the following administrative or support activities:
- human resources
- finance
- corporate, business and administrative support
- management and governance
- formulation and monitoring of policy related to the exercise of functions
- administration of grant payments
- legal and regulatory advice
- marketing and communications
- programme and project management
1.6 The persons referred to in paragraphs 1.1 and 1.2 are:
- employees of NHS England or an ICB
- non-executive members of NHS England
- members of an ICB
- members of committees of NHS England or an ICB and members of sub-committees of those committees
- members of an ICB who are individuals
- individuals authorised to act on behalf of a member of a ICB in dealings between the member and the ICB
1.7 The matters relating to administration do not include:
- payments made to persons providing services as part of the health service under arrangements made by NHS England or an ICB, in respect of the provision of such services pursuant to those arrangements
- payments made by NHS England or an ICB under or by virtue of section 12A of the 2006 Act
Annex B: relevant resource use limits 2019 to 2026 (excluding depreciation, annually managed expenditure and technical budget)
Revenue
The table below outlines the relevant revenue resource use limits for NHS England Group and NHS providers for years up to 2025 to 2026 in line with the outcome of phase one of the Spending Review 2025. The figures are adjusted annually to account for reallocation of resources, additional funding and changes of responsibility between government bodies.
Table 7A: NHS England Group and NHS providers’ total revenue resource use limits (excluding depreciation and impairments)
| Revenue resource use limits (£ million) | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 |
|---|---|---|---|---|---|---|---|
| Revised baseline[footnote 2] | 118,764 | 124,666 | 130,642 | 136,697 | 145,147 | 148,187 | Not applicable |
| Pensions adjustment | 2,851 | 2,851 | 2,851 | 2,851 | 2,851 | 2,851 | Not applicable |
| Additional COVID-19 and elective recovery funding | Not applicable | 19,988 | 16,295 | Not applicable | Not applicable | Not applicable | Not applicable |
| Funding agreed Spending Review 2021 to Spring Budget 2024 | −281 | −373 | −1,815 | 15,680 | 15,118 | 13,812 | Not applicable |
| Subtotal - NHS RDEL budget as per Spring Budget 2024 | 121,334 | 147,132 | 147,973 | 155,228 | 163,186 | 164,850 | Not applicable |
| Health Education England (HEE) adjustment | Not applicable | Not applicable | Not applicable | Not applicable | 5,100 | 5,303 | Not applicable |
| Additional pensions adjustment | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | 1,965 | Not applicable |
| Funding agreed at Autumn Budget 2024 to support 2024 to 2025 pay deal and elective recovery | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | 9,296 | Not applicable |
| Subtotal - NHS RDEL budget as per Autumn Budget 2024 | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | 181,414 | 191,955 |
| Other in-year transfers to or from wider DHSC group budgets[footnote 3] [footnote 4] | Not applicable | Not applicable | Not applicable | Not applicable | 2,740 | 5,423 | 3,638 |
| Total NHS RDEL as per financial directions | 121,334 | 147,132 | 147,973 | 155,228 | 171,036 | 186,838 | 195,593 |
Table 7B: time series for funding growth comparisons
| Time series (£ million) | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 |
|---|---|---|---|---|---|---|---|
| Funding totals as per published financial directions | 121,334 | 147,132 | 147,973 | 155,288 | 171,036 | 186,838 | 195,593 |
| Minus HEE (only added to NHS budget from 2023 to 2024)[footnote 5] | Not applicable | Not applicable | Not applicable | Not applicable | −5,110 | −5,303 | -5,518 |
| Minus additional pensions (only added to NHS from 2024 to 2025) | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | −1,965 | −1,965 |
| Adjusted RDEL time series | 121,334 | 147,132 | 147,973 | 155,228 | 165,926 | 179,570 | 188,110 |
| Annual growth | Not applicable | 25,798 | 841 | 7,255 | 10,698 | 13,644 | 8,540 |
The NHS Funding Act 2020 set out the baseline revenue funding up to and including 2023 to 2026, representing the lower limit that NHS England is guaranteed to receive. 2025 to 2025 maintains 2023 to 2024’s baseline funding in real terms. The application of the IFRS 16 Leases accounting standard has subsequently revised this baseline revenue funding.
As Table 7A refers to the revenue resource use of NHS England Group and NHS providers, excluding depreciation and impairments, funding totals exclude £4,375 billion for expenditure incurred by ICBs that funds provider depreciation (in NHS trusts and foundation trusts), which is included in line 1.2 in Table 1.
Following the 2016 valuation of the NHS Pension Scheme, the employer contribution rate rose by 6.3% from April 2019. Alongside the long-term funding settlement for the NHS announced in 2018, the government committed to provide £2,851 billion additional recurrent funding for this annually. This has since been increased by £1,965 billion from 2024 to 2025, to reflect a further 3.1% rise from 1 April 2024, following the 2020 valuation of the scheme.
NHS Improvement, NHS Digital and HEE’s revenue and capital resource limits have been added to the funding totals going forward as the organisations have become part of NHS England. NHS Improvement’s 2022 to 2023 figures do not represent the full-year budget as the functions transferred to NHS England on 1 July 2022.
The HEE adjustment represents funding as part of the government’s continuing commitments around workforce supply and reform to meet the priorities of the NHS Long Term Workforce Plan.
In finalising NHS England’s opening and closing positions for each financial year, an adjustment to the figures is made to accurately reflect the closing position. These occur in the form of transfers in and out of NHS England. The ‘Other transfers of funding to or from DHSC group’ rows in the table above reflect the net sum of the transfers made that year, prior to and following Autumn Budget 2024.
Other transfers for NHS England’s 2025 to 2026 budget relate to VPAG, vaccines deployment, primary care and other smaller transfers.
Administration
The table below outlines the relevant administration limits for NHS England Group for years up to 2025 to 2026 in line with the outcome of phase one of the Spending Review 2025. Administration budgets also undertake transfers throughout the year. Adjustments have also been made to reflect the transfer of functions of NHS Improvement, NHS Digital and HEE into NHS England.
Table 8: relevant administration limits (excluding depreciation and impairments), included in revenue resource use limits
| Relevant administration limits (£ million) | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 |
|---|---|---|---|---|---|---|---|
| Total | 1,753 | 1,644 | 1,664 | 1,895 | 1,945 | 1,979 | 1,842 |
| NHS England only | 500 | 475 | 506 | 657 | 736 | 757 | 760 |
Capital
The table below outlines the relevant capital resource limits for NHS England Group for years up to 2025 to 2026 in line with the outcome of phase one of the Spending Review 2025.
Capital budgets also undertake transfers throughout the year, which mainly relate to individual trusts and providers, and some funding for NHS Technology and Digital Programme that is initially within DHSC’s budget.
Adjustments have also been made for the impacts of the application of the IFRS 16 Leases accounting standard.
Table 9: relevant capital resource use limits
| Relevant capital resource use limits (£ million) | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 |
|---|---|---|---|---|---|---|---|
| Capital departmental expenditure limit | 260 | 365 | 337 | 330 | 439 | 626 | 394 |
| NHS provider system capital that is allocated through ICBs (this is part of overall NHS provider operational capital) | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | 4,631 | 4,450 |
-
Numbers in this line may not sum due to rounding. ↩
-
This includes funding agreed in the NHS Long Term Plan funding settlement 2018, plus classification adjustments relating to change in treatment of deprecation spending in providers. ↩
-
This includes transfers from budgets held in the wider DHSC group including COVID-19 vaccines, primary care recovery, income from the voluntary scheme for branded medicines pricing, access and growth (VPAG), and support for NHS pay pressures. ↩
-
Numbers in this line may not sum due to rounding. ↩
-
HEE budget baselined in NHS RDEL from 2025 to 2026, therefore 2025 to 2026 adjustment assumes growth equal to total funding growth. ↩