How much is NHS-funded nursing care?
NHS-funded nursing care (FNC) is a flat weekly NHS payment made directly to nursing homes for the nursing element of a resident's care. From 1 April 2026, the standard rate is £267.68 per week and the higher rate is £368.24 per week. The NHS pays these amounts to the home regardless of the home's own fee level or the resident's financial means. FNC replaced the previous standard rate of £254.06 from the same date.
FNC applies only where a resident in a nursing home has been assessed as needing nursing care but does not qualify for full NHS continuing healthcare. It is not means-tested and is not a contribution from the resident or the local authority.
| Rate | Weekly amount (from 1 April 2026) | Prior rate |
|---|---|---|
| Standard FNC rate | £267.68 | £254.06 |
| Higher FNC rate | £368.24 | n/a (pre-2026 higher-band figure not applicable here) |
FNC rates are reviewed annually; the figure above applies from 1 April 2026. FNC rates change every April, so confirm the current figure before you lock a fee model for the year.
FNC is not CHC: why the difference changes everything
FNC is a nursing top-up. NHS continuing healthcare (CHC) funds the whole care package. Conflating the two is one of the most costly accounting and VAT errors a nursing home can make.
Under FNC: the resident's primary funding arrangement stays in place (personal funds, local authority, or a combination). The NHS adds the FNC payment on top. The nursing home has multiple customers: the LA (or resident), plus the NHS for the FNC element. The home's own fee structure and VAT analysis apply to the non-FNC portion in the normal way.
Under CHC: the NHS funds the full package of care, both nursing and personal care elements, directly. The provider's supply is to the NHS, not to the individual resident. This changes the fee negotiation framework (you are effectively contracting with the NHS), the income recognition treatment, and the VAT analysis. CHC placements warrant a separate income line in your accounts and a separate contractual arrangement with the relevant NHS body.
In practice, a nursing home may hold FNC placements, CHC placements, LA-funded placements and self-funders simultaneously. Each stream has a different payer, a different fee basis and different accounting treatment. They must never be blended.
Accounting for a mixed income base: FNC, LA, self-funder and CHC
A nursing home with a typical mixed income base must recognise each stream separately in its management accounts and statutory accounts. Blending streams into a single "fee income" line destroys the information you need to manage occupancy, margin and fee negotiations.
| Payer | Who pays | What it covers | How it is recognised |
|---|---|---|---|
| FNC (standard or higher) | NHS, direct to the home | Nursing care element only | Separate income line; weekly accrual per FNC-assessed resident |
| Local authority placement | LA, direct to the home | Personal and social care; may or may not include the nursing element | Separate income line at the LA-contracted weekly rate; FNC added on top if the resident also receives FNC |
| Self-funder | The resident (or family) | The home's full weekly fee | Separate income line at the home's private rate; any FNC element credited back or netted per your contractual terms |
| CHC placement | NHS (via ICB), direct to the home | Full care package, nursing and personal care | Separate income line; supply is to the NHS; contractual framework differs from LA placements |
For FNC specifically: the £267.68 (or £368.24 higher rate) is income of the nursing home, recognised in the period it relates to, and shown separately from LA and self-funder fee income. It does not reduce the LA-contracted rate; it sits alongside it.
A management accounts format that works for a mixed-income nursing home typically carries five revenue lines: FNC income, LA placement income, self-funder income, CHC placement income, and any other income (for example day-care fees or sundry charges). Occupancy percentages and bed-week rates are then calculated per stream, which is the only way to see the true margin contribution of each payer type.
Use our funded nursing care fee-mix calculator to model your own rate and occupancy mix, and care staffing cost and margin calculator to stress-test the per-stream margins against your actual cost base.
What each payer actually pays and the cross-subsidy problem
In most nursing homes with significant LA-funded occupancy, the LA weekly rate sits below the actual cost of delivering a bed-week of care. The self-funder rate is set higher to compensate. This cross-subsidy is not a business secret; it is widely documented in the sector's own cost-of-care data and has been a recurring subject of parliamentary scrutiny.
The per-bed-week economics typically look like this in broad terms:
- The home calculates a fully loaded cost per bed-week: direct staffing, indirect staffing, food and consumables, laundry, maintenance, utilities, insurance, property costs and an allowance for voids and management overhead.
- The LA-contracted rate, in many cases, does not cover this fully loaded cost.
- Self-funder rates are set to cover both the actual cost and the margin sacrificed on LA placements.
- FNC income (£267.68 per week standard) partially offsets the nursing cost for qualifying residents, but the LA placement rate itself is set independently of FNC.
The risk is greatest for homes where LA placements represent more than 50% of occupied beds. A fall in self-funder occupancy, or a significant void period, can expose the cross-subsidy structure and turn a nominally profitable bed mix into a loss-making one. Making this visible in monthly management accounts, rather than discovering it at year-end, is the starting point for addressing it.
The local authority fee-negotiation lever: fair cost of care
Care Act 2014 statutory guidance and the market sustainability regime give providers a formal framework for challenging below-cost LA rates. Local authorities have a statutory duty to pay fees that reflect the actual and reasonable cost of care. This is not a voluntary principle; it is embedded in the statutory guidance that LAs must follow.
The market sustainability regime requires LAs to carry out and publish cost-of-care assessments. These assessments are the provider's primary external reference point in a fee negotiation: they contain the LA's own view of what a bed-week of care costs in its area, broken down by care type and setting. If the LA's published cost-of-care data shows a cost that exceeds what it is currently paying you, that gap is your opening position.
The practical negotiation steps are:
- Obtain the LA's published cost-of-care assessment for your care type and local area.
- Compare the LA's assessed cost per bed-week against your own loaded cost per bed-week.
- Prepare your own cost-of-care evidence pack (see the next section).
- Submit a formal rate review request, referencing the Care Act statutory guidance and the market sustainability assessment, with your pack attached.
- Where the LA declines or offers an insufficient increase, escalate through its formal complaints and review process, citing the statutory duty.
This is not a quick process. Providers who approach it with documented cost data and a clear statutory reference are better positioned than those who make an informal request for a higher rate without evidence.
Building the cost-of-care evidence pack
An effective cost-of-care evidence pack translates your own operational data into the format an LA finance team expects to see. The components are:
| Evidence element | What to include |
|---|---|
| Loaded staffing cost per bed-week | Direct care staff hours and cost at NLW (£12.71/hr from April 2026), employer NIC at 15% above the £96/week secondary threshold, Employment Allowance offset if applicable, holiday pay accrual (12.07% of hours), and agency top-up costs at your actual rate |
| Non-pay costs per bed-week | Food and consumables, laundry, utilities, maintenance, insurance, property costs (rent or mortgage/depreciation), management and administration, professional fees |
| Occupancy and void allowance | Actual occupancy over the past 12 months; a reasonable void allowance (the LA should not assume 100% occupancy in its cost model) |
| FNC income offset | Show FNC income separately; do not use it to inflate the apparent LA rate; it offsets nursing cost, not the entire placement cost |
| Target margin | A reasonable sustainable margin that allows for reinvestment and compliance cost; the LA's own cost-of-care guidance should reference a margin allowance |
| Comparison to LA's published data | A side-by-side of your cost per bed-week against the LA's assessed cost; any gap is the shortfall your submission is addressing |
Use our true cost of care calculator to build the staffing component of this pack, and the staffing cost and margin calculator for the margin modelling. The care provider business index gives you quarterly formation and dissolution counts for the sector, which are useful evidence of market pressure but are not fee benchmarks.
Scotland, Wales and Northern Ireland: different regimes
The FNC rates, CHC framework and Care Act statutory guidance described in this post apply in England only. Scotland, Wales and Northern Ireland operate separate funding and regulatory regimes for nursing care contributions and continuing healthcare. The nursing-payment mechanics, rates and the frameworks governing local authority fee-setting all differ. If your home operates in Scotland, Wales or Northern Ireland, the England figures in this post do not apply, and you should seek advice specific to the relevant devolved regime.
Getting your fee-mix model right
Accounting for a mixed FNC/CHC/LA/self-funder income base is not an administrative detail; it is the foundation of the financial information you need to run a viable nursing home. The margin picture looks very different depending on which stream fills a void bed, and that difference is invisible unless each stream is tracked separately.
If your current accounts or management information system blends fee income, correcting that is the first step. The second is making the per-stream margin visible each month. The third is using the cost-of-care evidence framework to challenge any LA rate that sits below your loaded cost.
For operators wanting to model these numbers in detail, start with the funded nursing care fee-mix calculator. For a broader review of fee strategy, staffing cost and the accounting structure that supports it, see our services for care home operators.