A financial viability statement (FVS) is a document new care providers must submit as part of their CQC registration application. It is prepared on CQC's own template and is normally prepared or signed by an accountant. Its purpose is to demonstrate that the proposed service has sufficient financial resources to operate safely and sustainably from day one, before a single resident or client is taken on.
What the FVS is and why CQC asks for it
The short answer: CQC cannot permit a provider to begin operating without confidence the business will not collapse financially within months of opening. The FVS is the mechanism through which an independent professional attests that the numbers stack up. It sits inside the broader registration application and is the financial leg that no registration can bypass.
CQC registration is mandatory before providing any regulated activity, including personal care, accommodation for persons requiring nursing or personal care, and nursing care. The application has several legs; the financial leg culminates in the FVS. Unlike the narrative parts of a registration application, the FVS works from a structured template CQC publishes and expects to see completed in full.
The underlying regulatory logic is straightforward. CQC monitors the financial health of large providers under its market oversight regime precisely because provider collapse disrupts care for many people simultaneously. For new providers at the start-up stage, the FVS is the earliest point at which this risk can be assessed. A credible FVS is therefore not a box-ticking exercise; it is evidence that the business has been planned with sufficient rigour to survive the period between registration and sustainable trading.
Who must submit one and when
The short answer: Every new provider proposing to carry on a regulated activity in England must submit a financial viability statement as part of the registration application, before trading begins. There are no size exemptions.
The Health and Social Care Act 2008 makes trading before registration a criminal offence. This is not a civil penalty or a fine after the fact; it is a criminal liability that can attach to the provider and, in some circumstances, to individual directors or managers. The consequence is that the FVS must be produced and submitted as part of the registration pack, not drafted retrospectively once the service is running.
New providers sometimes treat the FVS as something to tidy up after they have secured premises, recruited staff and begun negotiations with commissioners. This is the wrong order of operations. Registration, and with it the FVS, must come first. In practice, this means the financial model that underpins the FVS needs to be completed at a point when many of the start-up's key variables (fee rates, occupancy ramp-up, opening capital) are still being finalised, which is one of the reasons professional input is almost always required.
What CQC's template actually contains
The short answer: CQC publishes a specific financial viability template that sets out the structure it expects. The sections are defined by CQC; providers complete the template, they do not design it.
In substance, the template asks the applicant to evidence three things: where the money to launch the service is coming from, what it will cost to run the service until it reaches sustainable trading, and that the person signing off on those numbers is professionally competent to do so. That means opening capital and confirmed funding, a costed operating model built on lawful wage rates, and projections that show the service surviving its occupancy or referral ramp-up period.
CQC revises the form from time to time, so always download the current version from the link above and complete that document rather than a copy saved from an earlier application. The sections are CQC's to define; the financial evidence that fills them is covered in detail below.
The numbers a viable statement has to stand up
The short answer: The FVS must demonstrate opening capital, a credible cash-flow runway through to break-even occupancy or hours, and a cost base modelled on current statutory rates. A statement built on out-of-date wage or NIC figures will fail at the first professional review.
Whatever the template's specific fields, the financial substance of a viable care start-up comes down to three areas.
Opening capital and funding sources
The FVS must evidence where the money to launch and sustain the business is coming from. This means showing available cash, confirmed loan facilities, investor commitments or equity contributions at the date of registration. Unconfirmed or conditional funding (a loan "in principle" that has not been formally offered, or equity contributions dependent on future events) does not demonstrate financial viability. CQC needs to see money that is actually there.
Cash-flow runway to break-even
A care home or domiciliary agency rarely breaks even on the day it opens. A care home fills beds over weeks and months; a domiciliary agency builds its call roster from a standing start. The FVS must show that the opening capital is sufficient to fund operating losses during this ramp-up period and carry the business through to the point at which fee income covers costs.
For a care home, break-even is typically expressed as a minimum occupancy rate: the percentage of beds that must be filled before the home generates enough income to cover its fixed cost base. For a domiciliary agency, it is expressed as a minimum weekly call volume or total care hours. Both figures depend on the fee rate, the cost base and the pace of admission or client acquisition. All three must be stated and defended.
The cash-flow model that supports these figures should run month by month from opening through to the break-even point and ideally beyond, showing the cumulative cash position at each month end. A statement that shows only the steady-state position once the service is full is not a cash-flow runway; it is a profit and loss forecast for a hypothetical future, and it does not answer the question CQC is actually asking.
A cost base modelled on current statutory rates
The biggest single source of FVS failure is a cost base built on wrong wage and employment cost figures. For a care provider, staff costs typically represent 60 to 70 percent of total expenditure. Getting these wrong by even a small margin per hour compounds across hundreds of thousands of hours per year.
The cost base must reflect:
- National Living Wage of £12.71 per hour for workers aged 21 and over from 1 April 2026. This is the legal floor. Any care worker on the NLW who is paid less exposes the provider to an NMW enforcement action; any financial model that uses a lower figure is simply wrong.
- Employer NIC at 15% on earnings above £5,000 per year (£96 per week, £417 per month). For a care provider with a large part-time workforce, employer NIC is a significant cost. The secondary threshold of £5,000 means that even lower-paid workers who exceed the weekly threshold of £96 generate employer NIC at 15% on each pound above that level. Modelling this per-head rather than as a flat percentage of payroll produces a more accurate number.
- Employment Allowance of up to £10,500 per tax year offsetting employer NIC for eligible businesses. For a small domiciliary agency or single-home operator whose total employer NIC liability is below £10,500, the allowance eliminates the bill entirely in the early period. This is a material relief that should be correctly reflected in the cash-flow model.
- For domiciliary services: travel-time NMW and sleep-in NMW. Travel time between care calls is working time for NMW purposes and must be paid at or above the applicable rate. A cost model built on face-to-face contact hours only understates the true staff cost. For sleep-in shifts, only time the worker is actually awake for the purposes of working counts for NMW (Mencap v Tomlinson-Blake [2021] UKSC 8); sleeping time with sleeping facilities provided is excluded. Both positions need to be correctly reflected in the cost model.
Our true cost of a care hour calculator and care staffing cost and margin calculator are built on the current statutory rates above and can produce the input figures the FVS cost model needs.
Worked example: a domiciliary start-up FVS skeleton
The following illustrates the structure of a cash-flow runway section for a small domiciliary agency. All rates are the statutory 2026-27 figures cited above; adapt the volumes and fee rates to your own business case.
| Item | Assumption / rate | Source |
|---|---|---|
| Care worker wage floor | £12.71/hr (NLW, aged 21+) | gov.uk NMW rates |
| Travel time between calls | Paid at NLW (counted as working time) | gov.uk NMW guidance |
| Employer NIC rate | 15% above £5,000/yr secondary threshold | gov.uk employer thresholds |
| Employment Allowance | Up to £10,500 per tax year | gov.uk Employment Allowance |
| Holiday accrual (irregular hours) | 12.07% of hours worked per pay period | gov.uk holiday entitlement |
| Break-even hours (illustrative) | Minimum weekly call hours at which fee income covers full cost base | Your fee rate and cost model |
| Runway to break-even | Month-by-month cash position from opening to break-even | Your opening capital vs. cumulative deficit |
A credible runway model would show something like: opening capital of £X covers a projected cumulative operating deficit of £Y over the first N months, with break-even hours of Z achieved by month M. Each number flows from the rates in the table above; each rate is cited. This is what "prepared by an accountant" looks like in practice.
Why it is normally accountant-prepared, and what a weak FVS looks like
The short answer: A weak FVS typically fails on one of three problems: unfunded runway, wage and NIC costs modelled below the legal floor, or a break-even projection that does not hold up under scrutiny. An accountant's role is to make sure none of these appear in the submitted document.
The most common failure modes in FVS submissions are:
- Unfunded runway. The cash-flow model shows a cumulative deficit in months 2 to 6 that exceeds the confirmed opening capital. The business would run out of money before reaching break-even. CQC cannot approve this as financially viable.
- Wage costs below the legal floor. Staff costs modelled at a wage rate below the current NLW, or without travel time for domiciliary workers, produce a cost base that is unlawful to operate at. The statement shows a business that looks viable on paper only because it assumes it will underpay its staff. This is not a modelling shortcut; it is a fundamental error.
- No break-even analysis. A statement that shows strong steady-state profitability once fully operational but does not address the ramp-up period does not answer the financial viability question. The question is whether the business survives to reach that point.
- Funding sources that are not confirmed. A letter of intent from a potential investor, or a bank's indicative terms rather than a formal offer, is not confirmed funding. The FVS must be built on money that exists, not money that might arrive.
An accountant preparing the FVS will identify all four of these issues before submission and either resolve them in the model or advise the client that the business case needs strengthening before registration is realistic.
FVS versus the wider registration pack
The FVS is the financial document within a larger registration submission. It is distinct from, and does not replace, the business plan and other evidence CQC requires. A business plan covers the proposed service's strategic rationale, target market, staffing model, quality framework and operational approach alongside a summary of the financial position. The FVS focuses specifically on the financial leg: capital, cash flow, cost base and break-even.
Both documents cover some overlapping ground (the business plan will include financial projections; the FVS will reference the service's intended client base to justify its volume assumptions), but they serve different purposes. Submitting a business plan without a separate FVS, or assuming the FVS section of the business plan is sufficient, is a common administrative error in new-provider applications.
Neighbouring registration requirements (statement of purpose, fit and proper person checks, policies and procedures) are outside the scope of this post. The focus here is the financial document.
FVS readiness checklist
| Readiness item | Status | Rate / source |
|---|---|---|
| Opening capital confirmed (cash or committed facility) | ☐ Done / ☐ Outstanding | Bank statements or formal loan offer |
| Month-by-month cash runway modelled to break-even | ☐ Done / ☐ Outstanding | Your cash-flow model |
| Break-even occupancy (care home) or hours (domiciliary) calculated | ☐ Done / ☐ Outstanding | Staffing cost and margin calculator |
| Staff wage floor at £12.71/hr (NLW, 21+) from 1 April 2026 | ☐ Done / ☐ Outstanding | gov.uk NMW rates |
| Travel time between calls included in domiciliary cost base | ☐ Done / ☐ Outstanding | gov.uk NMW working time |
| Employer NIC modelled at 15% above £5,000/yr secondary threshold | ☐ Done / ☐ Outstanding | gov.uk employer thresholds |
| Employment Allowance (up to £10,500) applied where eligible | ☐ Done / ☐ Outstanding | gov.uk Employment Allowance |
| Funding sources evidenced (not indicative or conditional) | ☐ Done / ☐ Outstanding | Formal offers, statements, investor commitments |
| CQC template downloaded and completed in full | ☐ Done / ☐ Outstanding | CQC FVS template |
| Accountant has prepared or reviewed and signed the statement | ☐ Done / ☐ Outstanding | Professional sign-off |
What we do and how to take the next step
Our CQC financial viability statement service is a fixed-fee accountant-prepared engagement covering the full FVS: cost base build on current statutory rates, month-by-month cash-flow runway model, break-even analysis, and completion of the CQC template. The output is a submission-ready document, prepared by an accountant and reviewed against the current template before it leaves our hands.
If you are at an earlier stage, evaluating whether your business case is viable before committing to premises or staff, our care start-ups hub covers the full pre-registration financial checklist, including the FVS, the cost modelling tools and the other financial steps that precede a CQC application.