How does the single activity fee work?

What is the single activity fee?

The single activity fee (SAF) is the flat fee an English pharmacy contractor earns for each prescription item it dispenses. It is set out in Part IIIA of the Drug Tariff, the monthly publication NHS Prescription Services produces for the Department of Health and Social Care (DHSC). The current wording is blunt: all prescriptions dispensed by English pharmacy contractors attract a single activity fee. Its value is 152p.

The fee arrived on 1 December 2016 as part of the funding cuts imposed that year. Before then, dispensing income came through several channels. Community Pharmacy England (CPE), then PSNC, records that the SAF "incorporated and replaced the Professional Fee, Practice Payments, Repeat Dispensing Fee and EPS Monthly Allowances". The repeat dispensing payment had been worth £1,500 a year and the EPS allowance £200 a month. Both vanished into the per-item fee.

That design has two consequences worth understanding. First, the fee is automatic. NHSBSA pays it on every eligible item with no endorsement, so there is nothing to claim. Second, almost all of your dispensing remuneration now rides on one number. When DHSC and CPE change the SAF, they change the income of every pharmacy in England on the same day.

How much is it, and how did it get here?

The fee is £1.52 per item from May 2026. The 2026/27 contract, agreed by DHSC, NHS England and CPE on 29 May 2026, raised it from £1.46 and backdated the rise to May. Every other fee stayed at its 2025/26 level, so the SAF carried the whole fee uplift. For the rest of that settlement, see what the 2026/27 pharmacy contract actually pays.

The longer history shows how little the fee moved for eight years and how sharply it has moved since. The table draws on CPE's funding records, DHSC settlement documents and NHSBSA notices.

Two things stand out. The fee sat between £1.13 and £1.29 from its introduction until March 2025, including the whole of the five-year deal that ran to March 2024. And the 25p added since April 2025 is worth more than every earlier change combined. That is why the fee suddenly matters to owners who had stopped looking at it.

Is it paid on every item?

Nearly every item earns one fee, and some earn more than one. CPE's June 2026 factsheet lists the cases where a single prescription line attracts multiple fees. They include combination packs, different strengths of the same drug on one form, and different formulations of the same drug. Powder and solvent treatment packs, assorted flavours, several pieces of elastic hosiery and different appliance types or sizes also count separately. Optional extras on lymphoedema base garments attract no additional fee.

The SAF is not the only line in Part IIIA. A handful of additional fees sit beside it for specific work. The table shows the values in the current Drug Tariff. Most have not changed for years, because the two recent settlements put all new fee money into the SAF.

The practical point is endorsement. The SAF itself needs none, but the multi-fee cases and the additional fees depend on the prescription being dispensed and endorsed correctly. A combination pack recorded as one item earns one fee. That is a small leak per script and a steady one across a year.

How is the fee set and adjusted?

DHSC sets the fee to deliver an agreed amount of money, not to reflect the cost of dispensing an item. The CPE factsheet puts it plainly. The SAF "is reviewed and adjusted based on forecasts of total dispensed item volumes to ensure that fee delivery remains within the agreed funding envelope each year". A PSNC briefing from 2018 said the same thing in different words. DHSC considers prescription volume trends and adjusts the fee to try to deliver the total agreed funding.

In other words, the fee is a dial. Each settlement fixes a global sum. Part of that sum is delivered as retained margin, the rest as fees. If item volumes run ahead of forecast, fees over-deliver and the dial turns down. If volumes fall short, it turns up. The history table shows the dial moving in both directions: up 4p in November 2017, down 3p in November 2018, up 2p for the back half of 2021/22, then back down.

The scale of the dial has grown with the envelope. In 2018/19 the contract sum was £2.592bn, split between £1.792bn of fees and £800m of margin. For 2026/27 the envelope is £3.636bn, with allowed margin at £1.1bn. DHSC reported around one billion items dispensed by community pharmacies between April 2025 and January 2026, so roughly 1.2bn a year. At £1.52 an item, that is about £1.8bn through the SAF alone. That estimate is ours, not DHSC's, but it shows why the fee is the main lever. NHSBSA's own count of 1.30bn items dispensed in the community in England in 2025/26 includes dispensing doctors and appliance contractors, who are paid differently.

This matters for planning. A rise in the SAF is only as durable as the volume forecast behind it. If items grow faster than expected in 2026/27, the fee can be trimmed in-year without a new settlement, exactly as it was in April 2022. The reverse is also true. For how the envelope itself is negotiated, see whether the 10% funding uplift is enough.

How does it appear in your payments?

The fee appears on your monthly Schedule of Payments as the activity payment, under pharmacy fees. NHSBSA's worked example for a September 2025 schedule shows the line as "10775 @ 146 p", producing £15,731.50. That is the item count multiplied by the fee in force for that month. From the May 2026 schedule onwards the rate shown is 152p.

You are paid in two stages. If you submit your FP34C declaration through the Manage Your Service portal by the 5th of the month, you receive an advance payment four working days later. NHSBSA calculates it from the items you declared and your latest average item value, less the prescription charges you collected. The final reconciled payment arrives about two months after submission, and the advance is recovered on that schedule as "Recovery of early payment on account". In the same worked example, the payment on account for October covered 10,928 items less 377 charges and came to £101,285.78.

Because the advance uses the average item value, a fee change reaches you before the reconciled schedule does. That is what the 2026/27 settlement meant by "early advanced payments from June to swiftly benefit contractors". The higher rate fed into advance payments from June, and the reconciled schedules for May onwards carry the backdated rate. Your declared item count drives all of it, which is why the CPE factsheet stresses accurate declarations. Under-declare and your advance shrinks; the money still comes, but later.

How is the fee different from margin?

The fee is fixed per item and margin is not. The SAF pays £1.52 whether the item is a 28-pack of amlodipine or a specials order. Margin is the difference between the Drug Tariff reimbursement price, after the discount deduction, and what you paid. It rises and falls with the market, with your wholesaler terms and with what DHSC does to Category M prices.

Both are counted inside the envelope. DHSC allows the sector a target amount of margin each year, £1.1bn for 2026/27, up £200m on 2025/26. It measures what pharmacies actually earned through a margin survey and adjusts Category M prices each quarter to steer towards the target. When the sector over-delivers, DHSC recovers the excess later unless it agrees a write-off. The 2026/27 settlement wrote off up to £239m of past over-delivery net of fee under-delivery. The 2025/26 settlement had written off £193m.

The discount deduction is the piece most owners forget. Reimbursement prices are reduced before payment: 20% on generics, 5% on brands and 9.85% on appliances in NHSBSA's September 2025 example. Your margin is what remains after that deduction and after your purchase price. The SAF is untouched by any of it.

What happens on concession lines?

The fee does not change when a medicine is short. If you cannot buy a drug at or below the Drug Tariff price, CPE can ask DHSC for a price concession. If one is granted, every contractor is reimbursed at the concession price for that month. CPE's tracker showed 223 concessions granted for August 2026. The SAF stays at £1.52 on every one of them.

That is where the fee and the margin collide. Suppose you pay £3 more than the reimbursement price for one pack because a concession came late or came in low. That single item has cost you the equivalent of two SAFs. A pharmacy dispensing 8,000 items a month earns £12,160 in activity payments. It does not take many loss-making lines to eat into that. The 2026/27 settlement did not change the reimbursement rules; it handed dispensing at a loss to a joint reform programme instead. For the mechanics and the numbers, see how price concessions work and why pharmacies dispense at a loss. For the reform timetable, see what the community pharmacy reform programme will change.

Two habits limit the damage. Buy early in the month where you can, before concession prices are set, and check the concession list before you order a known problem line. Neither changes the fee. Both protect the margin that sits beside it.

What should you check each month?

Your item count is the number that drives both the advance payment and the activity payment, so check it first. The rest is a short routine.

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