Discretionary Payments in the NHS Dental Contract: What They Are and How to Account for Them from September 2026

NHS dental discretionary payments 2026 change from September by broadening the NHS dental service that can count towards the two-year qualifying period for maternity, paternity, adoption and long-term sickness support.

The updated NHS dental quality and payment reforms contractual guidance also introduces a related funded annual appraisal contribution worth £213 for each eligible dentist, dental therapist or dental hygienist. However, the two arrangements are covered under separate sections of the guidance and should not be treated as the same payment.

Section 9 covers funded annual appraisals. Section 10 covers discretionary support payments and the change to the two-year qualifying service requirement from September 2026. Both have financial management implications, but they operate differently and require separate accounting and administrative controls.

The funded annual appraisal contribution is converted into Units of Dental Activity at the practice’s Monetary Value of a UDA and credited against the contract delivery position. It forms part of the existing NHS dental contract value and should not automatically be recorded as additional income above the annual contract value.

The discretionary support payment reform is different. It changes which NHS dental service can be counted when a dentist applies for qualifying maternity, paternity, adoption or long-term sickness support.

This guide explains what the two reforms are, how the funded annual appraisal contribution works, how the discretionary payment eligibility changes affect dental practices and associates, how each element should be accounted for and what practices should do before September 2026.

Kudos Accounting provides specialist accounting support for dentists and NHS dental practices, including NHSBSA reconciliation, associate payment reviews, bookkeeping, management accounts and NHS pension reporting.

What Discretionary Payments Actually Are

The term discretionary payments has a specific meaning in Section 10 of the NHS England contractual guidance.

It refers to support payments made under the relevant Statement of Financial Entitlements in connection with:

Maternity leave
Paternity leave
Adoption leave
Long-term sickness leave

One existing qualifying condition is that a dentist must have completed at least two years of relevant service.

Before September 2026, the qualifying calculation was based principally on time on the Dental Performers List, which meant that only primary NHS dental care service normally counted.

From September 2026, the requirement is broadened so that qualifying NHS dental service in both primary and secondary care can count towards the two-year period. Dentists must provide documented NHS employment history and references, which the dental contractor must verify before forwarding the evidence to NHSBSA.

This may benefit dentists who have worked across:

NHS general dental practice
Hospital dental services
Community dental services
Other qualifying secondary NHS dental care settings

The reform should not be described as including every form of NHS employment. The official guidance refers specifically to NHS dental service in primary and secondary care.

The funded annual appraisal contribution is a separate reform covered in Section 9. It is discussed in the same guide because it also affects workforce support, contract delivery and practice accounting, but it is not itself a Section 10 discretionary support payment.

The funded annual appraisal contribution

Eligible dentists, dental therapists and dental hygienists, including eligible dental contractors and locums, can claim a fixed contribution worth £213 after completing a qualifying annual appraisal.

The contribution:

Forms part of the existing contract value
Is converted into UDAs
Uses the practice’s Monetary Value of a UDA
Is reported through the Contract Management and Payment System
Counts towards contract delivery
Is included in mid-year and year-end reconciliation

The policy objective is to encourage structured appraisal, professional development and workforce support within NHS dental teams.

The discretionary support payment eligibility reform

The second arrangement changes how the existing two-year qualifying period is calculated for welfare-related discretionary payments.

This is primarily an eligibility reform rather than a new routine income stream for every practice.

The practice’s financial responsibilities include:

Checking whether the dentist may qualify
Verifying NHS dental employment history
Retaining supporting references
Forwarding verified evidence to NHSBSA
Recording any approved payment separately
Reconciling the payment to the relevant absence period
Reviewing any related associate or payroll records

For larger practices and dental groups, the change may increase the number of dentists who qualify for NHS support during periods of eligible leave or long-term sickness.

The Funded Annual Appraisal Payment: The Detail

The funded annual appraisal contribution is the part of the 2026 reforms that most directly affects the contract delivery records of a typical NHS dental practice.

Who qualifies for the £213 contribution?

Funded appraisal time is available to eligible:

Dentists
Dental therapists
Dental hygienists
Dental contractors providing direct NHS dental care
Locums satisfying the eligibility conditions

The individual must provide direct NHS dental care and meet the working-time and continuous-engagement requirements in the NHS England guidance.

The eligibility conditions include spending the equivalent of at least two whole working days per month, or 12 days across a continuous six-month period, providing direct NHS dental care during the relevant financial year.

The individual must also have been in continuous employment or engagement requiring the provision of NHS dental services within the relevant 26-week period.

Dental nurses and other staff groups are not eligible for the £213 funded appraisal contribution under this scheme.

The guidance also excludes salaried dentists employed under NHS terms and conditions, including dental foundation trainees during their training period, dental therapy foundation trainees during their training period, other salaried staff and individuals working under contracts providing care in secure and detained estates.

How the contribution is claimed

Eligible clinicians must have a personal identification number and must be attached to the relevant contract in the Contract Management and Payment System, which is currently Compass.

Where an eligible dental therapist or dental hygienist does not already have a PIN, the dental contractor must create the DCP record and the commissioner must authorise it.

The eligible clinician then self-declares through the funded appraisal eForm in Compass after the appraisal has taken place.

The claim must normally be submitted:

By the eligible clinician
Through the funded appraisal eForm
Promptly after the appraisal
No later than two months after the appraisal date
Only once in the financial year

Once a claim has been submitted, it cannot be amended and duplicate submissions are not accepted.

Where a clinician works across several NHS dental contracts, NHS England recommends submitting the claim under the contract through which the individual provides the greatest amount of NHS activity during the year.

The UDA conversion mechanism

Each accepted annual appraisal declaration receives a fixed value of £213.

The £213 is converted into UDAs using the practice’s Monetary Value of a UDA. The resulting amount is rounded up to the nearest two decimal places and credited against contract delivery.

At a Monetary Value of £35 per UDA:

£213 ÷ £35 = 6.09 UDAs

For four eligible clinicians:

Four clinicians × £213 = £852

The corresponding UDA credit is approximately:

Four clinicians × 6.09 UDAs = 24.36 UDAs

The value remains £213 for each eligible clinician regardless of the practice’s Monetary Value of a UDA.

A practice with a higher UDA value receives fewer UDA credits because each UDA is worth more. A higher UDA value does not increase the fixed appraisal contribution above £213.

When the funded appraisal scheme applies

The funded appraisal scheme applies during the 2026/27 financial year.

It should not be described as starting only in September 2026. The September date specifically relates to the Section 10 discretionary payment eligibility change.

An eligible clinician should submit the funded appraisal declaration within two months after completing the appraisal. The practice should therefore verify current operational instructions in Compass rather than waiting until September automatically.

The Appraisal Process: What the Practice Actually Has to Do

The £213 contribution is conditional on an eligible annual appraisal taking place.

It is not a payment simply for having a clinician attached to the NHS contract.

NHS England defines:

The Appraisee as the eligible dental professional who has completed the annual appraisal
The Appraiser as the person conducting the appraisal

The appraisal must focus on the NHS aspects of the appraisee’s role.

The process should provide a formal and structured opportunity to discuss:

Performance
Achievements
Challenges
Professional development
Training needs
Clinical quality
Practice objectives
Support requirements
Wellbeing
Continuing professional development
Personal development planning
Resources required to carry out the role effectively

The discussion must be conducted confidentially between the appraiser and appraisee. Key points, agreed objectives and development actions must be documented.

For many dental practices, the appraiser may be the principal dentist, dental contractor, clinical lead or another suitably appropriate person.

Larger dental groups may use a dental director or designated clinical lead to conduct appraisals across several sites.

The appraiser should understand the clinician’s NHS role and be able to conduct a meaningful and properly documented discussion. A self-assessment completed without an appraisal discussion should not be treated as satisfying the process.

Appraisal documentation

NHS England provides an example appraisal template in its contractual guidance.

A practice may continue using its own appraisal documentation provided that it covers the required NHS-focused content.

The full appraisal record does not normally have to be uploaded with every Compass claim. However, the appraiser and appraisee must retain an accurate record because the commissioner may request evidence through post-payment verification.

The claim itself is submitted electronically through the funded appraisal eForm in Compass. This means the earlier statement that no centralised electronic submission form exists is no longer correct.

Practices should retain:

Appraisal invitation
Preparation documents
Appraisal date
Appraiser and appraisee details
Meeting notes
Agreed objectives
Personal development plan
Training actions
Compass submission confirmation
Eligibility evidence
Details of any amount passed to the clinician

The Associate Agreement Interaction: How the Appraisal Payment Flows

The £213 contribution is converted into UDAs and credited against the practice’s contract delivery position.

The amount passed to the associate, therapist, hygienist or locum depends on the contract of engagement.

NHS England anticipates that, as a minimum, the dental contractor will pass on to an eligible dental care professional the proportion of the UDA credit equivalent to the percentage or arrangement contained in their contract of engagement.

For example, an associate agreement may calculate remuneration by reference to:

UDAs personally delivered
A fixed associate UDA rate
A percentage of NHS contract income
Total contract credits
Specific NHS incentive payments
Pensionable NHS earnings
Non-clinical NHS payments

An agreement that refers only to UDAs generated through completed courses of treatment may not clearly explain how a funded appraisal credit should be handled.

Practices and associates should therefore review the existing agreement before distributing the first appraisal credit.

The review should establish:

Whether the credit forms part of associate remuneration
What proportion is payable
Whether the payment is pensionable
How it appears on the associate statement
Whether any deduction is made for practice costs
How locums working across several contracts are treated
How duplicate claims will be prevented

Where an agreement is ambiguous, the financial and legal treatment should be clarified before the credit is distributed rather than after a disagreement arises.

Our specialist dental practice team can review the financial calculation and associate payment schedule. Any amendment to the legal terms of an associate agreement should also be reviewed by an appropriately qualified dental solicitor.

Specialist Dental Practice Accountants

Need help setting up your discretionary payment accounting?

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How to Account for Discretionary Payments Correctly

Getting the accounting treatment right requires separating the funded appraisal contribution from the Section 10 discretionary support payments.

The funded appraisal contribution is a contract-delivery credit within the existing annual NHS contract value.

A maternity, paternity, adoption or sickness support payment is a separate payment made under the relevant Statement of Financial Entitlements when the dentist qualifies.

They should not be combined into one accounting code.

Income recognition: when is the appraisal credit earned?

The appraisal credit should not automatically be treated as £213 of new revenue in addition to the annual NHS contract value.

NHS England states that all credits described in the contractual guidance form part of the dental contractor’s contract value. The appraisal credit therefore supports contract delivery rather than increasing the total contract entitlement.

The appropriate accounting treatment depends on how the practice already records NHS income.

Where the full NHS contract value is recognised

Some practices record monthly NHS contract receipts as income and then adjust for expected underperformance, clawback or reconciliation.

Under this method:

The annual contract value limits total NHS contract income
The appraisal credit improves the contract delivery position
The £213 should not be added as separate revenue above the contract value
The credit should be tracked through a memorandum or management account code
Any year-end adjustment should reflect the total contract and clawback position

A suitable tracking code may be:

NHS Funded Appraisal UDA Credits

This provides visibility without automatically creating duplicate statutory income.

Where NHS income is recognised through activity-based accruals

Some dental practices prepare detailed management accounts based on activity and credits earned.

Under this method, the appraisal credit may be included in the earned contract calculation once:

The appraisal has taken place
The clinician meets the eligibility conditions
The declaration has been submitted
The claim can be measured reliably
The value has not already been recognised
Total recognised income remains within the contract entitlement

The precise recognition date may depend on the practice’s accounting policy and the certainty of the claim.

It is therefore too absolute to state that every appraisal must be recognised immediately on the date of completion.

Separate nominal codes: why they matter

Practices should separately track:

Core NHS contract receipts
Funded appraisal UDA credits
Complex Care Pathway credits
Quality Improvement credits
Unscheduled-care credits
NHS patient charges
Contract reconciliation adjustments
Expected clawback
Maternity support payments
Paternity support payments
Adoption support payments
Long-term sickness support payments

Separate reporting allows the practice to understand how contract delivery was achieved and whether the expected credits have appeared correctly.

For guidance on other non-standard contract credits, read our NHS dental complex care pathways accounting 2026 guide.

NHSBSA reconciliation for appraisal credits

The appraisal credit contributes to the overall UDA delivery position.

The practice should maintain an appraisal control schedule recording:

Clinician name
PIN
Contract number
Appraisal date
Appraiser
Claim submission date
Two-month deadline
Fixed value of £213
Monetary Value of a UDA
Expected UDA credit
Actual UDA credit
Difference
Associate share
Superannuation treatment
Reconciliation status

The schedule should be compared with Compass and the practice’s normal NHS contract reconciliation records.

Any discrepancy should be investigated promptly.

Potential issues include:

Clinician not attached to the correct contract
Incorrect PIN
Claim submitted after the deadline
Duplicate claim
Wrong Monetary Value of a UDA
Credit allocated to another contract
Claim not submitted fully
Claim left in entered rather than completed status
Credit subsequently reversed

The aggregate contract-delivery value across a year

For a practice with five eligible clinicians:

Five × £213 = £1,065

At £35 per UDA:

£213 ÷ £35 = 6.09 UDAs per clinician

The total contract-delivery credit is:

Five × 6.09 UDAs = 30.45 UDAs

For a dental group with 20 eligible clinicians:

20 × £213 = £4,260

The value can become material at group level, particularly when it affects the expected year-end delivery percentage.

However, the total remains part of the existing NHS contract value and should not be added again as income if that contract value has already been recognised.

NHS Superannuation and the Funded Appraisal Contribution

NHS England states that earnings related to funded appraisals are subject to superannuation contributions for individuals participating in the NHS Pension Scheme.

The practice should review:

Whether the clinician is an active NHS Pension Scheme member
The amount passed to the clinician
Whether the amount is pensionable under the relevant rules
How the amount appears on the associate payment statement
Whether pension contributions have been calculated
Whether the amount is reflected in pension records
Whether the Net Pensionable Earnings declaration is affected

The entire £213 should not automatically be treated as pensionable earnings of the clinician if only part of the credit is passed on under the associate agreement.

For further guidance, read the NHS superannuation guide for dental associates.

The Discretionary Support Payment Eligibility Reform: What Changed

The second reform changes how the existing two-year service requirement is calculated for maternity, paternity, adoption and long-term sickness support payments.

The pre-reform position

Before September 2026, one of the eligibility conditions was that the dentist must have been on the Dental Performers List for at least two years.

This generally limited the qualifying calculation to time spent working in primary NHS dental care.

What the reform changes

From September 2026, all qualifying NHS dental service in primary and secondary care can count towards the two-year requirement.

This can include qualifying service in:

NHS general dental practice
Hospital dental services
Community dental services
Other primary or secondary NHS dental care roles

It should not automatically be interpreted as including unrelated NHS employment outside dental services.

The dentist must provide documented NHS employment history and references.

The dental contractor must verify that evidence and forward it to NHSBSA, which will process the relevant claim.

What this means for dental practices financially

More dentists may satisfy the two-year qualifying condition after September 2026.

This may affect:

Workforce planning
Long-term absence planning
Maternity and parental leave arrangements
Locum-cover planning
Associate communications
Practice cash-flow forecasts
NHSBSA claim administration

An associate whose Performers List service is under two years may still satisfy the requirement if qualifying primary and secondary NHS dental service brings the total to at least two years.

The practice should not confirm entitlement until the evidence has been gathered and assessed against the current requirements.

Accounting for an approved support payment

A Section 10 discretionary support payment should have its own nominal account.

Suggested codes include:

NHS discretionary maternity support
NHS discretionary paternity support
NHS discretionary adoption support
NHS discretionary long-term sickness support

The payment should be reconciled to:

NHSBSA documentation
The approved claim
The qualifying absence period
Amounts passed to the dentist
Locum or cover costs
Associate payment records
Payroll records where relevant
Pension treatment where relevant

An application that has not yet been approved should not automatically be treated as guaranteed income.

Setting Up Before September 2026: The Action List

The Section 10 eligibility change applies from September 2026.

The funded appraisal arrangements should also be set up correctly during the 2026/27 financial year.

Verify your clinician list in Compass

Every eligible clinician must have the correct PIN and contract association.

Check:

Dentists
Dental therapists
Dental hygienists
Eligible locums
Contract start dates
Contract end dates
Commissioner authorisation
NHS activity records

A clinician who is not correctly attached to the contract may be unable to submit a funded appraisal declaration.

Plan and schedule eligible appraisals

Identify:

Eligible clinicians
Appraiser
Appraisal date
Preparation date
Required documents
Submission deadline
Contract through which the claim will be made

Do not assume every clinician automatically qualifies.

Check the minimum NHS direct-care and continuous-engagement requirements first.

Set up the management tracking codes

Configure separate codes for:

Funded appraisal UDA credits
Discretionary maternity support
Discretionary paternity support
Discretionary adoption support
Discretionary long-term sickness support

The funded appraisal credit may be a memorandum or contract-delivery code rather than additional statutory income, depending on how the full NHS contract value is recorded.

Review associate agreements

Clarify:

Whether the appraisal credit is shared
The percentage or UDA rate applied
The payment date
Pension treatment
Treatment of locums
Treatment where a clinician works across several contracts
Evidence required before payment

Prepare a discretionary support eligibility audit

For each potentially affected dentist, obtain:

Performers List dates
Primary NHS dental service history
Secondary NHS dental service history
Employer references
Contract or engagement dates
Evidence of breaks in service
Date on which the two-year requirement is met

Reconcile the NHS records monthly

Review:

Claims submitted
Claim status
Credits expected
Credits received
Contract-delivery percentage
Amounts passed to clinicians
Pension deductions
Outstanding queries

Our bookkeeping for healthcare team can help configure the nominal-code structure and NHSBSA reconciliation framework for NHS dental contract credits.

For wider reform planning, read our NHS dental contract reform April 2026 guide.

Common Mistakes to Avoid

Treating funded appraisals as Section 10 discretionary payments

Funded appraisals are covered under Section 9. Discretionary support payments are covered under Section 10.

Describing the £213 as new money above the contract value

The contribution forms part of the existing contract value.

Recording £213 as extra revenue twice

If the full contract value is already recorded, adding another £213 can duplicate NHS income.

Assuming a higher UDA value means a larger contribution

The fixed value remains £213. A higher Monetary Value of a UDA produces fewer UDA credits.

Allowing the practice to submit every declaration

The eligible individual self-declares through the Compass eForm.

Missing the claim deadline

A claim should normally be submitted within two months after the appraisal date.

Claiming through several contracts

Only one claim is permitted for each eligible individual during the financial year.

Assuming any locum automatically qualifies

A locum must satisfy the direct NHS care, minimum time and continuous-engagement requirements.

Applying the new service rule to unrelated NHS employment

The September reform refers to qualifying NHS dental service in primary and secondary care.

Combining support payments and appraisal credits

The arrangements serve different purposes and require separate reconciliation.

Ignoring associate agreement and pension treatment

The practice must determine how much is passed to the clinician and how any pensionable earnings are recorded.

Frequently Asked Questions

Answers to common questions about NHS dental discretionary payments, funded appraisals, UDA credits, Compass claims and accounting treatment.

We have five associates and two dental therapists. What is the total funded appraisal value?

If all seven clinicians meet the eligibility conditions, complete a qualifying appraisal and submit an accepted claim, the fixed value is seven multiplied by £213, giving a total of £1,491.

At a Monetary Value of £35 per UDA, each accepted claim converts to approximately 6.09 UDAs. The total contract-delivery credit would therefore be approximately 42.63 UDAs.

The £1,491 forms part of the existing contract value. It should not be added again as separate income where the complete contract value has already been recognised.

Do locum dentists count as eligible for the funded appraisal contribution?

A locum can qualify, but eligibility is not automatic. The locum must provide direct NHS dental care and satisfy the minimum working-time and continuous-engagement conditions in the NHS England guidance.

Only one funded appraisal claim can be made for the clinician in each financial year. Where a locum works across several contracts, the claim should normally be submitted under the contract through which they provide the greatest amount of NHS activity.

Can previous hospital or community dental service count towards the two-year discretionary payment requirement?

Potentially. From September 2026, qualifying NHS dental service in both primary and secondary care can count towards the two-year requirement.

The dentist must provide documented NHS dental employment history and references. The dental contractor must verify the evidence before forwarding it to NHSBSA.

Contact the Kudos Accounting team if help is needed reconciling the financial and practice records supporting an application.

Should the £213 appraisal contribution appear separately in an MTD quarterly update?

Not automatically. The contribution forms part of the existing NHS contract value and may not generate a separate bank receipt.

A cash-basis practice should record the actual NHS receipts received and should not create a separate cash transaction for a UDA credit that did not produce additional money in the bank.

A practice using traditional accounting should apply its normal NHS contract accrual and reconciliation policy without recognising the same value twice.

How does the funded appraisal contribution affect NHS superannuation?

NHS England states that earnings relating to funded appraisals are subject to superannuation contributions for individuals participating in the NHS Pension Scheme.

The exact pensionable amount depends on how much of the credit is passed to the clinician and how the contract of engagement treats the payment.

Read the NHS superannuation guide for dental associates for further information.

Final Summary

A new contract credit and an eligibility reform that both require active management

The funded annual appraisal contribution and September 2026 discretionary payment eligibility change are separate reforms. Practices need different eligibility, accounting and reconciliation processes for each one.

Keep Section 9 appraisal credits and Section 10 payments separate.
Verify clinician eligibility and Compass records.
Submit funded appraisal claims within two months.
Track £213 UDA credits without duplicating contract income.
Reconcile expected and actual credits each month.
Review associate income-sharing arrangements.
Confirm the NHS superannuation treatment.
Verify primary and secondary NHS dental service histories.
Retain appraisal, employment and claim evidence.