The position you are actually in
You take the clinical risk, carry the staff, fund the stock and absorb the difference when reimbursement does not match what you paid. Meanwhile the sector's funding is negotiated nationally and its reimbursement prices are set to deliver a margin across the whole sector rather than in your business.
That is not a reason to be gloomy about it. It is a reason to be precise, because in a business where the price is set for you, the only things left to manage are volume, cost, timing and accuracy — and accuracy is the one almost nobody works on.
What we do for a single branch
- NHS income reconciled month by month against what NHSBSA actually paid
- The deduction scale quantified against your real buying terms
- Accounts and tax with income split by stream rather than merged into turnover
- VAT handled on the correct basis — dispensing is zero-rated, not exempt
- Payroll, including the locum status question before it becomes an enquiry
Common questions
What does an independent actually lose to the deduction scale?
More than a multiple does, and that is the point of it. The scale reduces reimbursement on the assumption that you buy below Drug Tariff price. A large group with real purchasing power may beat that assumption; an independent frequently cannot, and absorbs the difference without anything in the accounts naming it. The deduction is applied before the money reaches you, so there is no line anywhere in your records showing what it cost — it has to be reconstructed, which is exactly what we do in a review.
Is the 2026/27 settlement good news for a single branch?
It is a real increase and it is agreed — £3.636 billion, up £340 million on £3.296 billion. Whether it is good news for you depends on arithmetic nobody does for you. The sector figure includes the Pharmacy First budget for the first time, so the like-for-like rise is smaller than 10.3% looks. Against that, run your own numbers: the Single Activity Fee at £1.52 against your item count, and your own wage, National Insurance and energy increases. The answer is specific to your branch.
Should I incorporate?
Sometimes, and it is a modelling question rather than a rule. Corporation tax is 19% on profits to £50,000 and 25% from £250,000, with marginal relief of 3/200ths between them — an effective marginal rate of 26.5% on that band. Against that sit dividend rates, the administrative cost, and what incorporation does to any future sale. If you already own another company the limits are divided, which changes the answer again. We model it rather than assert it, and sometimes the answer is to stay as you are — incorporating a business you intend to sell within a few years can cost more in tax on the way out than it saves on the way through.
What is the single most useful thing to fix first?
The split of NHS income in your records. Until dispensing reimbursement, the Single Activity Fee, advanced services, the Pharmacy Quality Scheme and retail are separated, nothing else can be managed — because those five move for entirely different reasons and a single turnover line hides all of it. It is unglamorous, it takes one conversation to set up, and it is the thing every other improvement depends on. Once it is in place you can see whether a bad month was volume, pricing or services, which is the difference between a problem you can act on and a feeling that things are getting harder.