Two GPs can work side by side under very different legal arrangements, and the labels matter for tax. In an expense-sharing arrangement each GP is effectively a separate practitioner who shares premises and staff costs but keeps their own income. In a full partnership the GPs carry on a business in common and pool and share the profit. This guide explains the difference clearly, why it turns on whether there is a business carried on in common with a view to profit (the legal test for a partnership), and the practical tax, accounting and liability consequences of each, so you can tell which one you are actually in.

This page is about whether you are in a partnership at all, or merely sharing costs. If you are leaving a partnership, see retiring or leaving a GP partnership; if two partnerships are combining, see GP practice mergers. For the contrast with being a salaried (employed) GP, which is a different axis entirely, see GP partner versus salaried GP.

The core distinction in one paragraph

Here it is plainly. In a full partnership the GPs carry on one business together and share the profit of that single business. In an expense-sharing arrangement each GP runs their own practice and they share only the costs of premises and staff, while keeping their own income separately. Status and structure follow the substance of the arrangement, not the label on the door, and the legal dividing line is whether there is a business carried on in common with a view of profit. Everything else in this guide flows from that one distinction.

What an expense-sharing arrangement is

Each GP is effectively a separate practitioner

In an expense-sharing arrangement each doctor holds their own income, whether that is their own NHS contract position or their own share of receipts, and is, in substance, a separate sole practitioner. The GPs come together only to share the running costs, such as premises, reception and nursing staff, equipment and utilities, under an agreed cost-sharing formula. There is no pooling of profit. Each GP is self-employed and is taxed on their own income less their own share of the shared costs, on their own self-employment return.

How the costs are shared

The arrangement sets out how the shared overheads are split, whether equally, by sessions, by list size, or by another agreed measure, and each GP claims their own share of those costs as a deduction against their own income. There can still be a services company or a property arrangement holding the premises and employing the staff, but that does not, by itself, make the doctors profit-sharing partners. The cost-sharing formula and any service entity are agreed between the parties, so there is no standard split to assume.

The cost-sharing formula is where a lot of the practical detail lives. The parties have to decide which costs are genuinely shared (the building, reception, nursing, utilities, shared equipment) and which stay personal to each GP (their own indemnity, their own GMC and Royal College fees, their own car, their own continuing professional development). They then have to agree how the shared pot is divided and how it is settled in cash, often monthly, so that no GP is funding another's costs. None of this pooling of costs makes them partners, provided their incomes stay separate and there is no business carried on in common with a view of profit. The arrangement is, in effect, a cost-sharing contract sitting between otherwise separate practitioners.

When it is used

GPs commonly use expense sharing where they want to keep their income and clinical autonomy separate while still sharing the cost of a building and a team, as a transitional arrangement, or where the parties do not want the mutual financial exposure of a full partnership. Those are common reasons rather than a recommendation; whether expense sharing suits a particular group depends on their aims and on what they are prepared to sign up to.

What a full GP partnership is

A business carried on in common, with profit pooled and shared

In a full partnership the GPs carry on a single practice together and share its profit under the partnership deed. The partner is self-employed; the partnership files an SA800; each partner's share flows to the partnership pages (SA104) of their personal return; and partners are taxed on their profit share, not on their drawings. Contrast that directly with expense sharing: here income is pooled and shared, not just costs, so there is one divisible profit rather than separate incomes.

The pooling of income is the defining feature, and it has consequences that run through everything else. Because there is a single divisible profit, the partners need a profit-sharing agreement to decide who gets what, capital and current accounts to track each partner's stake, and a mechanism for partners joining and leaving. None of that apparatus is needed where each GP simply keeps their own income. So the presence of a profit-sharing agreement, partnership accounts and a buy-in or buy-out mechanism is not just paperwork; it is the structural signature of a business carried on in common, which is exactly what the legal test is looking for.

This is the technical core of the page. A partnership in England and Wales is defined by the Partnership Act 1890 section 1(1) as "the relation which subsists between persons carrying on a business in common with a view of profit". Whether an arrangement is a partnership is judged on the substance. HMRC's view in the Partnership Manual at PM133000 is that the receipt of a share of net profits is prima facie but not conclusive evidence of a partnership, that an obligation to share net losses is an even stronger indicator, that no single factor is conclusive, and that the parties' stated intention is relevant but not decisive on its own. You form an overall view on all the facts.

The practical consequence cuts both ways. An arrangement labelled "expense sharing" that in substance pools and shares profit, or shares losses, may actually be a partnership, with all the partnership tax consequences that follow. And an arrangement loosely described as a partnership may, on the facts, be something else. So the label is a starting point, not the answer; check the actual money flows against the section 1(1) test.

The losses point is worth dwelling on, because it is often the clearest signal. PM133000 treats an obligation to make good net losses as an even stronger indicator of a partnership than a share of profit. The reasoning is intuitive: people who have genuinely agreed to carry on a business in common stand to lose together as well as gain together, whereas separate practitioners who merely share costs do not underwrite each other's clinical income. So if your arrangement says that, in a bad year, the GPs top up a shared shortfall out of their own pockets in agreed proportions, that points firmly towards a partnership, whatever the heading on the document says. Conversely, if each GP simply bears their own bad year and the others are unaffected, that points away from a partnership.

An illustration of substance over label

Consider two illustrative arrangements that wear the same name. In the first, two GPs call themselves an expense-sharing practice. Each keeps their own list income, each files their own return, and they split the rent, the receptionist's salary and the utilities equally; if one has a quiet quarter, the other is unaffected. On the substance, that is expense sharing: there is no business in common with a view of profit. In the second, two GPs also call it expense sharing, but in fact all the practice income goes into one pot, the running costs come out of it, and they split what is left in agreed shares, topping up any shortfall between them. Despite the label, that second arrangement pools and shares profit (and losses), and on the section 1(1) test it can be a partnership in law. The names are identical; the substance, and therefore the tax treatment, is not. This is illustrative reasoning, not a ruling on any particular arrangement, but it shows why the label cannot be relied on.

The tax differences

How income is returned

In expense sharing, each GP files their own self-employment return, reporting their own income and their own share of the shared costs; there is no partnership return. In a full partnership, the partnership files an SA800 and each partner's share flows to the partnership pages (SA104) of their personal return. The presence or absence of a partnership return is one of the clearest practical signals of which structure is actually being operated.

What you are taxed on

Both routes are self-employed, so both involve Class 4 National Insurance, payments on account, and Making Tax Digital for Income Tax where qualifying income crosses the threshold. The difference is the unit being measured: in expense sharing it is your own income, while in a partnership it is your allocated share of the partnership profit (taxed on profit share, not drawings). The NIC, payments-on-account and MTD detail is covered in the complete GP partnership tax guide rather than re-taught here.

One practical wrinkle worth flagging is Making Tax Digital, because the two structures sit differently. A general partnership is currently deferred from Making Tax Digital for Income Tax, with no confirmed start date, so a full GP partnership is not mandated at partnership level yet. An expense-sharing GP, by contrast, is a sole trader for their own income, so they are tested as an individual: where their own qualifying income crosses the threshold, they come into MTD on the usual timetable. That can mean an expense-sharing GP is brought into quarterly digital reporting on their own income before a partnership of similar GPs is, simply because of how the rules apply to each structure. It is a detail to check rather than a reason to choose one structure over the other.

Expenses

In both cases costs must be incurred wholly and exclusively for the business to be deductible. In expense sharing, each GP deducts their own share of the shared costs against their own income. In a partnership, the shared costs are partnership expenses deducted before the profit is split between partners. For what is deductible in either structure, see our complete list of GP tax deductions.

The accounting differences

A full partnership prepares one set of partnership accounts, with a capital account and a current account for each partner and a single divisible profit. An expense-sharing arrangement does not have pooled partnership accounts at all: each GP keeps their own accounts, and there is usually a separate record or simple set of accounts for the shared-cost pool (and for any services company or property entity holding the building and staff). If you want to see what a single set of partnership accounts looks like, by contrast, see reading GP partnership accounts.

This difference matters more than it first appears, because the partnership accounts do a job that has no equivalent in expense sharing. In a partnership, the capital and current accounts track each partner's long-term stake and their short-term position, which is what gets returned, or paid in, when a partner joins or leaves. There is no such account in a genuine expense-sharing arrangement, because there is no shared net asset base to account for: each GP owns their own income and their own assets, and the only shared records relate to the cost pool. So if you find yourself with capital accounts, a single divisible profit and a buy-in or buy-out mechanism, that is the apparatus of a partnership, not of cost sharing, and it is another signal of which structure you are really operating.

The liability and risk differences

In a full (general) partnership the partners share the profits and also the liabilities and the mutual exposure of the business, including the standing premises liability and the last man standing risk where premises are owned. In an expense-sharing arrangement each GP carries their own income and, broadly, their own liabilities, with shared exposure usually limited to the shared-cost commitments, such as the lease and the staff contracts they have jointly signed up to.

The important caveat is that the actual exposure depends on what each party has signed, not on the label. A jointly guaranteed lease creates shared exposure even in an expense-sharing arrangement, and a GP can be left carrying more of it if others leave. So the documents matter more than the name. For the premises-liability detail, see the last man standing premises risk.

This is the point where the structure and the documents can pull in different directions, and it catches people out. A GP may believe that because the arrangement is called expense sharing, their exposure is limited to their own affairs, while the lease they have signed jointly and severally tells a different story. Joint and several liability on a lease means each signatory can, in principle, be pursued for the whole of the rent if the others cannot pay, regardless of how the cost-sharing formula divides it internally between them. The same can be true of staff contracts and equipment finance that have been entered into jointly. So the practical advice is to read the lease, the employment contracts and any guarantees as carefully as the cost-sharing agreement itself, because they, not the label, determine who is on the hook if things go wrong.

The flip side is that, where the documents are clean, expense sharing genuinely does keep more of the risk personal. A GP whose income is their own and who has not guaranteed the others' obligations is not exposed to a colleague's clinical or financial difficulties in the way a partner is. That separation of risk, as much as the separation of income, is often the reason GPs choose expense sharing in the first place. As ever, though, it is the substance of what has been signed that delivers the separation, not the name on the front of the agreement.

NHS contract and pension consequences

The NHS contract and pension position can differ between the two structures. In a full partnership the partners are typically Type 1 medical practitioners pensioning the profit share through the Annual Certificate of Pensionable Profits. An expense-sharing GP pensions their own income on the basis that fits their own contract and role. The right NHS contract and pension treatment depends on the actual arrangement and should be confirmed; for the pension detail, see GP pension contributions and tax relief rather than the certification machinery here.

The contract position underneath the pension treatment is the thing to get right first, because the pension follows from it. Who actually holds the NHS contract, and how each GP's NHS-derived income is recognised, shapes which certification route applies and how the pensionable earnings are worked out. Two GPs sharing a building can have quite different NHS contract arrangements, and the pension certification has to reflect what is genuinely the case rather than the convenient label. Getting this wrong does not just create a tax or accounting problem; it can mean pensionable earnings are recorded incorrectly, which is awkward to unwind later. So the sensible order is to confirm the NHS contract reality, settle whether the arrangement is in substance a partnership or expense sharing, and then make sure the pension certification matches, taking specific advice on the certification machinery rather than assuming it from the structure's name.

Which one are you actually in? A short test

A focused checklist you can apply, drawn from the Partnership Act test and the PM133000 indicators:

  • Do you pool and share profit, or only share costs?
  • Is there a single divisible profit, or does each of you keep your own income?
  • Is there a partnership deed and a partnership return (SA800), or separate returns and a cost-sharing agreement?
  • Do you share losses?
  • What do the documents (deed, lease, contract) actually say?

The headline is the one we keep coming back to: the label does not decide it, the substance does, and an arrangement can be a partnership in law even if it is not called one. If the answers point both ways, take advice rather than assume. For the full-partnership side, see the complete GP partnership tax guide and GP partnership profit sharing and tax planning; for the broad implications of being a partner, see becoming a GP partner.

How we help GPs choose and run the right structure

We help GPs work out which arrangement they are actually in, and which one suits them going forward. In practice that means checking the real money flows and the documents against the Partnership Act test, so an arrangement called expense sharing is not quietly operating as a partnership (or the reverse), setting up the right returns for the structure (separate self-employment returns for expense sharing, or an SA800 with SA104 shares for a partnership), and making sure the NHS contract and pension treatment fits the arrangement. Neither structure is universally better; the right one depends on the parties' aims and on what they have signed, so we work it through on your facts. You can read more on our page for GPs, browse related guides in the GP tax and accounts category, or get in touch to talk it through.