Pharmacy First launched in January 2024 as one of the most significant expansions of community pharmacy services in NHS history. Two years on, it is no longer a new scheme finding its feet — it is a core part of how community pharmacies deliver NHS care, and in 2026/27 it is expanding further. NHS England’s Medium Term Planning Framework published in April 2026 explicitly lists maximising Pharmacy First and rolling out new clinical pathways — including emergency contraceptives and HPV vaccination — as a priority target for the period to 2028/29. The Community Pharmacy Technician Apprenticeship Programme opened for applications on 27 April 2026, signalling a sustained investment in pharmacy workforce capacity to deliver these expanded services.
For community pharmacy owners across England, Pharmacy First now represents a meaningful and growing income stream — one that sits alongside NHS dispensing income, the Pharmacy Quality Scheme, and other enhanced services but has its own distinct payment structure, income recognition challenges, and VAT implications. Getting the accounting right for Pharmacy First in 2026/27 is not optional — it is a compliance requirement and, for practices on MTD for Income Tax, part of the digital record-keeping obligation that applies from April 2026.
This guide explains exactly how Pharmacy First payments work, how income should be recognised and recorded, how the VAT treatment applies, what the MTD implications are, and how to set up your accounts correctly to capture every pound of Pharmacy First income your pharmacy earns and is entitled to claim.
What Is Pharmacy First and What Has Expanded in 2026/27
Pharmacy First is an NHS enhanced service that enables community pharmacists to assess and treat patients with certain common conditions without them needing to see a GP. The service launched in January 2024 with seven clinical pathways covering sinusitis, sore throat, earache, infected insect bites, impetigo, shingles, and uncomplicated urinary tract infections in women. These seven pathways remain the core of the service in 2026/27.
The expansion confirmed for 2026/27 adds two significant new elements to the Pharmacy First framework that have direct income implications for community pharmacies.
Emergency Contraception via Pharmacy First
From 2026/27, community pharmacies commissioned under Pharmacy First can provide emergency contraception as part of the scheme — bringing a service that has historically been delivered as a locally commissioned enhanced service or a private paid service into the national Pharmacy First framework. This significantly expands the potential patient volume and the income opportunity, particularly for pharmacies in areas where local commissioning of emergency contraception has historically been inconsistent or absent.
HPV Vaccination via Pharmacy First
The rollout of HPV vaccination through community pharmacy as part of the Pharmacy First expansion is one of the most clinically significant developments in the scheme’s history. NHS England’s Medium Term Planning Framework for 2026/27 to 2028/29 specifically identifies rolling out new services including emergency contraceptives and HPV vaccination through community pharmacy as a priority target. WIS Accountancy For pharmacies with the clinical capacity and infrastructure to deliver vaccinations, this represents a substantial new income stream that needs to be accounted for correctly from the outset.
Why the expansion matters for accounting:
Each new clinical pathway added to Pharmacy First creates a new income stream with its own payment rate, its own claim submission process, and its own income recognition timing. Lumping all Pharmacy First income into a single nominal account — or worse, combining it with NHS dispensing income — makes it impossible to monitor scheme performance, identify missed claims, or present an accurate picture of the pharmacy’s income mix to HMRC or to a prospective lender or buyer.
How Pharmacy First Payments Work: The Payment Structure
Before accounting for Pharmacy First income correctly, pharmacy owners need to understand how the payment structure works. The scheme has three distinct payment components, each of which requires separate treatment in the accounts.
1. Monthly Activity Payment (Consultation Fee)
For each completed Pharmacy First consultation — where a pharmacist assesses a patient and either treats them under the pathway or refers them onwards — the pharmacy receives a consultation fee. The current rate is £15 per completed consultation regardless of which of the seven core pathways is used or whether a medicine is supplied as part of the treatment.
The consultation fee is the primary income driver for most pharmacies delivering Pharmacy First. A pharmacy completing 40 consultations per month earns £600 per month in consultation fees — £7,200 per year — from this single component alone.
2. Medicine Supply Payment
Where the pharmacist supplies a medicine as part of a Pharmacy First consultation, the pharmacy is reimbursed for the cost of the medicine at Drug Tariff price. This is separate from the consultation fee and is processed through the standard NHSBSA dispensing payment mechanism — appearing on the monthly payment schedule alongside regular dispensing income.
3. Fixed Monthly Fee (Establishment Payment)
Pharmacies registered and active on the Pharmacy First service receive a fixed monthly establishment payment — currently £1,000 per month — to contribute to the fixed costs of maintaining Pharmacy First capacity. This is paid regardless of the volume of consultations delivered in the month, provided the pharmacy remains active and compliant with the service specification.
For a pharmacy delivering Pharmacy First, the total monthly income is therefore the sum of the establishment payment plus consultation fees plus any medicine supply reimbursements. These three components have different accounting treatments and should never be combined into a single income line.
Key Point: The £1,000 monthly establishment payment is paid regardless of consultation volume — it is earned by being registered and maintaining readiness to deliver the service, not by completing consultations. This means it should be recognised as income each month it is received, irrespective of actual consultation activity. The consultation fee income, by contrast, is earned on a per-consultation basis and should be accrued as consultations are completed and claimed, not simply when cash is received.
Income Recognition: Getting the Timing Right
One of the most common accounting errors in Pharmacy First is treating all income as earned when the NHSBSA payment arrives in the bank. The accruals principle — income is recognised when it is earned, not when cash is received — applies to Pharmacy First income exactly as it does to NHS dispensing income, QOF payments, and other enhanced service income.
Establishment payment recognition:
The £1,000 monthly establishment payment should be accrued as income in the month to which it relates, not when the bank transfer arrives. NHSBSA typically pays establishment payments with a short lag — if the payment for April arrives in late April or early May, it still relates to April and should appear as April income in your management accounts. This is straightforward but requires your bookkeeping system to post accruals rather than simply recording bank receipts.
Consultation fee recognition:
Consultation fees are earned when the consultation is completed and the claim is submitted through the Pharmacy First IT system — not when the payment arrives. In practice, there is typically a one-to-four-week lag between claim submission and payment receipt. This means that at the end of any given month, a pharmacy will have completed and submitted consultations for which payment has not yet arrived. These represent earned income that should be accrued.
Practical approach to consultation fee accrual:
Your Pharmacy First IT system — PharmOutcomes or the NHS system used in your area — maintains a record of all completed consultations and submitted claims. At the end of each month, run a report showing consultations completed and claimed but not yet paid. Multiply the number of outstanding claims by £15 to calculate the accrual. Post this as accrued income in your accounts and reverse it in the following month when the payment is received. This ensures your management accounts correctly reflect income earned in the period rather than income received.
Medicine supply recognition:
Medicine supply reimbursements flow through NHSBSA’s dispensing payment system and should be recognised using the same accrual methodology as standard NHS dispensing income. They appear on your NHSBSA monthly payment schedule and should be reconciled against submitted claims in the same way as Category M drug cost reimbursements. If you have not yet set up a reconciliation process for your NHSBSA schedule, our guide on pharmacy NHS dispensing income, clawbacks, and reconciliations covers the full methodology.
Year-end accruals:
At your financial year-end, the accrued income position should include all Pharmacy First consultations completed and claimed before the year-end date but not yet paid, plus the establishment payment for the final month of the year if not yet received. The medicine supply reimbursement should be accrued as part of the standard dispensing income year-end accrual process. Failing to accrue these items understates income and overstates the pharmacy’s true financial position at year-end.
Setting Up Your Nominal Ledger for Pharmacy First
The single most important practical step for getting Pharmacy First accounting right is setting up distinct nominal ledger codes for each income component from the outset — or updating your existing chart of accounts if you are already delivering the service without proper income separation.
Recommended nominal ledger structure for Pharmacy First:
Your chart of accounts should include the following Pharmacy First-specific income codes, separate from all other NHS income:
- Pharmacy First — Establishment Payment (£1,000 per month fixed)
- Pharmacy First — Consultation Fees (£15 per completed consultation)
- Pharmacy First — Medicine Supply Reimbursement (variable, per Drug Tariff)
- Pharmacy First — Emergency Contraception (new 2026/27 pathway — separate code from the date of commissioning)
- Pharmacy First — HPV Vaccination (new 2026/27 pathway — separate code when live in your area)
These codes should sit within a broader income category structure that keeps Pharmacy First income clearly separated from NHS dispensing income, the Pharmacy Quality Scheme, other enhanced services, and private income. The separation is essential not just for management accounting purposes but for your VAT partial exemption calculation — the VAT treatment of Pharmacy First income requires careful classification, covered in detail below.
Our pharmacy accounting team sets up this nominal structure for all pharmacy clients from the point they join the Pharmacy First service. If you are already delivering Pharmacy First and have been posting income to a single NHS income nominal code, now is the time to reclassify — ideally at the start of your new accounting period.
VAT Treatment of Pharmacy First Income: What You Need to Know
The VAT position of Pharmacy First income is more nuanced than it might first appear, and getting it wrong has direct consequences for how much input VAT your pharmacy can recover.
The core VAT position:
NHS Pharmacy First consultation fees and establishment payments are exempt from VAT under Group 7 of Schedule 9 to the Value Added Tax Act 1994 — the supply of healthcare services by registered health professionals. A pharmacist conducting a clinical assessment and providing treatment under Pharmacy First is making an exempt supply of healthcare services, not a taxable supply of goods.
This means Pharmacy First consultation fees and establishment payments join NHS dispensing income, Pharmacy Quality Scheme payments, and other NHS-commissioned clinical services in the exempt income column of your partial exemption calculation.
Medicine supply reimbursement — the nuance:
The medicine supply reimbursement is more complex. Where the supply of medicine is integral to and inseparable from the exempt healthcare consultation — which is the case for most Pharmacy First medicines supplied as part of a treatment pathway — the overall supply is exempt. However, where medicine is supplied separately from any clinical assessment, the standard dispensing rules apply. For Pharmacy First, the medicine is supplied as part of the clinical pathway and the reimbursement should generally be treated as part of the exempt income — consistent with how NHSBSA dispensing income is treated for other NHS-commissioned services.
HPV vaccination — the specific VAT position:
HPV vaccination income has a specific VAT treatment that requires attention when the service launches in your area. Vaccination services provided by pharmacies under NHS commission are exempt as healthcare services. However, if your pharmacy also provides private HPV vaccinations — charging patients directly — those private vaccination fees are standard-rated for VAT purposes. If you deliver both NHS-commissioned and private HPV vaccinations from the same premises, you must track the income streams separately and apply the correct VAT treatment to each. Combining them would distort both your partial exemption calculation and your VAT return.
The partial exemption impact:
As Pharmacy First income grows — through higher consultation volumes and new pathways — it increases the proportion of your total income that is exempt from VAT. If your private retail income (which is standard-rated) remains constant but your exempt Pharmacy First income increases, the recoverable proportion of your input VAT falls. This is not a cost unique to Pharmacy First — it is the same structural effect that any expansion of NHS exempt income produces in a mixed pharmacy business. But it needs to be monitored and updated in your partial exemption calculation each quarter.
Our VAT specialist team works with pharmacy clients to ensure the partial exemption calculation is updated whenever the income mix changes — including when new Pharmacy First pathways are commissioned. If your quarterly VAT returns have not been updated to reflect the introduction or expansion of Pharmacy First, this should be reviewed immediately.
Warning: A pharmacy that has been delivering Pharmacy First since January 2024 without updating its partial exemption methodology has been filing incorrect VAT returns for over two years. The cost of correcting this — including potential HMRC interest on under-declared output tax or over-claimed input tax — can significantly exceed the cost of getting specialist VAT advice at the outset. If you are in this position, contact our team for an urgent VAT review.
MTD for Income Tax and Pharmacy First: The Digital Record-Keeping Requirement
From 6 April 2026, sole trader and partnership pharmacies with gross income above £50,000 are required to maintain digital records and submit quarterly updates to HMRC under MTD for Income Tax. Pharmacy First income forms part of the qualifying income for MTD threshold purposes — it is self-employment income from the pharmacy business and must be recorded digitally and reported in quarterly submissions.
What digital records must capture for Pharmacy First:
Under MTD, your digital records must separately capture each category of income as it is earned — not simply record the bank transfer from NHSBSA. For Pharmacy First, this means your MTD-compatible software must record:
- The establishment payment as income in the month it relates to
- Consultation fee income by month, based on completed and claimed consultations
- Medicine supply reimbursements as part of the broader dispensing income reconciliation
- Any new pathway income (emergency contraception, HPV vaccination) from the date each pathway goes live in your area
A pharmacy that posts all NHSBSA receipts — dispensing income, Pharmacy First payments, PQS payments, and enhanced service fees — to a single bank receipt entry does not meet the MTD digital record-keeping requirements. Each income stream must be separately identifiable in the digital records.
The quarterly submission cycle:
Pharmacy First income earned in each quarter must be included in the corresponding quarterly MTD update submitted to HMRC. Given the accrual-based income recognition requirements described above, this means your MTD-compatible software needs to be set up to post accruals — not just bank transactions — in order to produce accurate quarterly figures. A pharmacy running purely on a cash basis (recording income when received) will produce incorrect quarterly MTD figures for Pharmacy First due to the timing lag between consultation completion and payment receipt.
Our guide on MTD for income tax for GP partners and locum doctors covers the broader MTD compliance framework. For pharmacies, the same principles apply — the right software, properly configured, is essential. Our pharmacy bookkeeping team can review your current setup and ensure it is MTD-compliant from April 2026.
Staffing Costs and the Pharmacy First Profitability Equation
Pharmacy First is not free to deliver. The consultation-based service requires pharmacist time — typically 15 to 20 minutes per consultation including assessment, treatment or referral, and IT system recording. Understanding the true profitability of Pharmacy First requires accounting for the staff cost of delivery, not simply the income received.
The staffing cost calculation:
A pharmacist earning £50,000 per year works approximately 1,820 hours per year. The hourly cost to the pharmacy — including employer NIC at the new 15% rate from April 2026, employer pension contributions, and employment on costs — is approximately £32–35 per hour. A 20-minute Pharmacy First consultation therefore costs the pharmacy approximately £11 in direct pharmacist time.
Against a consultation fee of £15, the direct gross margin per consultation is approximately £4 before any overhead allocation. This is a meaningful but slim margin — and it reinforces why the £1,000 monthly establishment payment is such an important component of the Pharmacy First income structure. Without the establishment payment, Pharmacy First would be financially marginal for many pharmacies. With it, the combined income per consultation — when the establishment payment is allocated across the expected monthly consultation volume — is significantly more attractive.
Employer NIC implications:
If your pharmacy has hired additional staff specifically to deliver Pharmacy First — a pharmacy technician to free up pharmacist time for consultations, for example — the salary and employer NIC cost of that staff member should be tracked as a direct cost of Pharmacy First delivery. The April 2026 employer NIC increase to 15% and the secondary threshold drop to £5,000 have increased the employment cost of all pharmacy staff, including those delivering Pharmacy First. Our payroll for healthcare team can help you model the net profitability of Pharmacy First delivery under the current employment cost structure.
Missed Claims: The Revenue Leakage Risk
One of the most significant financial risks in Pharmacy First — and one that is entirely within the pharmacy’s control — is missed or incomplete claims. A consultation that is completed but not correctly submitted through the Pharmacy First IT system generates no income. Given the £15 per consultation fee, 20 missed claims per month represents £300 of lost income — £3,600 per year — for what is typically an administrative failure rather than a clinical one.
Common causes of missed Pharmacy First claims:
Patient record not created correctly in PharmOutcomes or the local IT system before the consultation begins. Consultation completed but pathway outcome not correctly recorded — a referral that is not marked as complete in the system generates no fee. System downtime during the consultation resulting in incomplete records that are not retrospectively completed. Staff unfamiliar with the submission process making errors in recording the pathway used or the outcome.
How to monitor for missed claims:
Compare the number of Pharmacy First consultations recorded in your appointment or consultation log against the number of completed claims showing in your IT system each month. Any gap represents either a missed claim or a consultation in progress. Investigate gaps promptly — NHSBSA has time limits on retrospective claim submission, and a missed claim that is not identified within the submission window is permanently lost income.
Build a monthly Pharmacy First reconciliation into your bookkeeping process — comparing expected claim income against submitted claims and against NHSBSA payments received. This three-way reconciliation is the most effective tool for identifying and addressing revenue leakage before it accumulates into a material loss.
Management Accounts for Pharmacy First: What Good Looks Like
A pharmacy owner reviewing monthly management accounts should be able to see Pharmacy First performance clearly and separately from other income streams. Good management accounts for a pharmacy delivering Pharmacy First show the following for each month:
Income section:
- Pharmacy First establishment payment: £1,000
- Pharmacy First consultation fees: [number of consultations × £15]
- Pharmacy First medicine supply reimbursement: [as per NHSBSA schedule]
- Pharmacy First emergency contraception (if commissioned): [as applicable]
- Pharmacy First HPV vaccination (if commissioned): [as applicable]
- Total Pharmacy First income: [sum of above]
Cost section (if staff costs are tracked to Pharmacy First):
- Pharmacist time cost allocated to Pharmacy First consultations
- Any dedicated Pharmacy First support staff costs
Net Pharmacy First contribution: Total income minus allocated costs
This level of visibility enables the pharmacy owner to assess whether Pharmacy First is delivering a positive financial contribution, whether consultation volumes are growing or declining, and whether the staffing model is appropriately scaled for the income being generated. It also provides the data needed for any future decision about expanding into new Pharmacy First pathways — the HPV vaccination and emergency contraception additions — based on a clear financial model rather than assumption.
Our pharmacy accounting specialists produce this level of management account detail for pharmacy clients as a standard monthly deliverable. If your current accountant produces accounts that show a single “NHS income” line without this breakdown, you are flying blind on one of your fastest-growing income streams.
Frequently Asked Questions
Is Pharmacy First income included in the gross income threshold for MTD for Income Tax?
Yes. Pharmacy First income — including establishment payments, consultation fees, and medicine supply reimbursements — forms part of the pharmacy’s gross business income for MTD threshold purposes. For a sole trader or partnership pharmacy, if total gross income from all sources (dispensing, Pharmacy First, private sales, enhanced services) exceeds £50,000 in the 2024/25 tax year as reported on the Self Assessment return filed by 31 January 2026, the pharmacy is within the Phase 1 MTD mandate from 6 April 2026. If you are uncertain whether your pharmacy is in scope, our pharmacy accountants can confirm your position and set up the correct MTD-compliant software immediately.
We have been delivering Pharmacy First since launch in 2024 and have been posting everything to a single NHS income account. How do we fix this?
The first step is to reclassify historical Pharmacy First income into the correct nominal codes — establishment payments, consultation fees, and medicine supply reimbursements separately. This can typically be done using journal entries or reclassification postings in your accounting software rather than by re-entering all historical transactions individually. The second step is to review your VAT partial exemption calculations for the periods since January 2024 to assess whether Pharmacy First income was correctly included in the exempt income figure. If it was not, your partial exemption ratio may have been incorrect. Our VAT specialist team and pharmacy accounting team can manage this reclassification and VAT review process for you.Contact us to arrange a review.
How do we account for consultations where the patient does not complete treatment — for example, a referral to a GP?
A completed Pharmacy First consultation — including one that results in a referral rather than treatment — still generates the £15 consultation fee, provided the consultation is correctly completed and submitted through the IT system with the appropriate outcome recorded. A referral is a legitimate pathway outcome and the consultation fee is payable. Ensure your staff understand that recording a referral outcome correctly in the system is just as important as recording a treatment outcome — both generate income, and a referral that is not correctly recorded generates nothing. This is a training and process point as much as an accounting one.
Our pharmacy delivers Pharmacy First but we are also registered for VAT. Does the establishment payment attract VAT?
No. The Pharmacy First establishment payment is received as consideration for maintaining commissioned NHS healthcare service capacity. It is exempt from VAT under the healthcare exemption — consistent with the treatment of other NHS establishment and infrastructure payments to community pharmacies. You do not need to add VAT to your NHSBSA claims for the establishment payment, nor does the payment carry VAT when received. It forms part of your exempt income for partial exemption calculation purposes. If you have been treating the establishment payment as standard-rated income on your VAT returns, this is an error that needs to be corrected. Our VAT specialists can review your returns and advise on the correction process.
We are considering joining Pharmacy First for the first time in 2026/27. What accounts setup do we need before we start?
Before your first Pharmacy First consultation, ensure your accounting software has the correct nominal codes set up for each income component as described in this guide. Ensure your partial exemption methodology is documented and will be updated to include Pharmacy First exempt income from the date you start delivering the service. Confirm whether you are within the MTD mandate and if so ensure your software is MTD-compatible and configured to record Pharmacy First income accruals correctly. Register on the Pharmacy First IT system and ensure all staff involved in delivering consultations understand the claim submission process. Our pharmacy accounting team can set all of this up for you before your first consultation —contact us for a new service setup consultation.
Summary: Getting Pharmacy First Accounting Right in 2026/27
Pharmacy First is no longer a pilot or an optional add-on — it is a core NHS service that is expanding in 2026/27 with new clinical pathways and a growing patient volume. For community pharmacy owners, the income opportunity is real and growing. But so is the accounting complexity if it is not managed correctly from the outset.
The essentials to get right are clear. Separate your Pharmacy First income into distinct nominal codes — establishment payment, consultation fees, medicine supply, and new pathway income separately. Accrue consultation fee income when consultations are completed and claimed, not when cash arrives. Update your VAT partial exemption calculation to correctly include all Pharmacy First exempt income. Ensure your MTD digital records capture Pharmacy First income on an accruals basis from April 2026. Monitor for missed claims monthly using a three-way reconciliation of consultation records, submitted claims, and NHSBSA payments. And model the true profitability of Pharmacy First delivery by allocating the relevant staff costs against the income generated.
A specialist pharmacy accountant who understands the Pharmacy First payment structure — not just general bookkeeping — is the most effective way to ensure your accounts correctly capture this growing income stream. If your current accountant posts all NHS income to a single account, you are almost certainly missing the financial clarity you need to run and grow your Pharmacy First service profitably.If you are delivering Pharmacy First and have never had a specialist review of your accounting setup, or if you are planning to join the service in 2026/27 and want to start with the right structure, contact our team for an immediate consultation. You may also find these related guides useful:pharmacy NHS dispensing income — clawbacks and reconciliations,VAT partial exemption for healthcare businesses,MTD for income tax, andemployer NIC changes April 2026.