GP partnership tax works very differently from a salary. As a partner you are self-employed for tax, and you are taxed on your share of the practice's taxable profit, not on your drawings. This GP partnership tax complete guide for 2026/27 explains how partnership profits flow through to tax, the returns involved (SA800 and SA104), the National Insurance position, allowable expenses, capital accounts and how it all interacts with the NHS pension.

If you are weighing up whether to join a partnership in the first place, read our guide to the financial implications of becoming a GP partner. If you want to understand how partners agree who gets what, see GP partnership profit sharing and tax planning. This guide focuses on the tax mechanics that apply once you are a partner.

How GP Partnership Profits Are Taxed

A GP partnership is transparent (look-through) for tax. The partnership itself pays no corporation tax. Instead, each partner pays income tax and Class 4 National Insurance on their allocated share of profit.

The mechanics run through two returns:

  • The partnership return (SA800), filed by the practice, reports the total taxable profit and shows how it is split between partners under the profit sharing agreement.
  • Each partner's allocated share is then entered on the partnership pages (SA104) of their own self assessment return, where it is taxed as self-employed trading income.

Your taxable profit share includes your portion of GMS or PMS contract income, any private work, property income and other practice income, reduced by your share of allowable practice expenses and capital allowances.

The key point that catches new partners out is that tax follows your profit share, not your cash drawings. If your partnership's taxable profit for the year is high but you drew less in cash (or some profit was retained to fund working capital), you are still taxed on your full allocated share. Drawings are taken on account of profit during the year and trued up at the year end.

How GP Practice Income Arises

Core NHS practice funding comes from the Global Sum, a per-patient payment weighted by the Carr-Hill formula (which adjusts the registered list for age, sex, morbidity, list turnover and geography), plus the Quality and Outcomes Framework (QOF), enhanced services and Primary Care Network (Network Contract DES) funding including the Additional Roles Reimbursement Scheme. Dispensing practices also earn dispensing income. There is no single national per-patient value: the Global Sum and QOF point value are weighted and uplifted each year, so confirm the current figures in the Statement of Financial Entitlements.

GP income is therefore built from Global Sum, Carr-Hill weighting, QOF, enhanced services and PCN funding. It does not use UDAs or NHS treatment bands (those are dental concepts). All of this income feeds into the partnership's taxable profit, which is then allocated to partners.

Understanding Partnership Profit Sharing

Most GP partnerships set out each partner's percentage entitlement in a profit sharing agreement. Common approaches include:

  • Equal shares once partners reach full parity
  • Session-weighted shares reflecting different time commitments
  • Prior shares or fixed shares paid before the balance is split (for example a property or seniority element)
  • A graded route to parity for an incoming partner over a fixed period

Your agreed share drives your tax liability for the year regardless of monthly drawings. For a fuller treatment of how shares are structured and the tax planning around them, see GP partnership profit sharing and tax planning.

National Insurance for GP Partners in 2026/27

As self-employed individuals, GP partners pay Class 4 National Insurance on their profit share. For 2026/27 the rates are:

  • 6% on profits between £12,570 and £50,270 (the main rate was cut from 9% to 6% on 6 April 2024)
  • 2% on profits above £50,270

Class 2 National Insurance is no longer a required payment from 6 April 2024. Self-employed partners with profits at or above the Small Profits Threshold are treated as having paid Class 2, so they keep their state pension entitlement without a separate weekly charge. There is no longer a flat weekly Class 2 amount for partners to budget for (those with profits below the threshold can still pay voluntary Class 2 to protect their record).

Basis Period Reform: Taxed on the Tax Year

Following basis period reform, all partnerships are now taxed on the actual tax year basis (6 April to 5 April) rather than on the accounting year ending in the tax year. The transitional year was 2024/25, when some practices whose accounting date did not align with the tax year faced an additional charge on overlapping profits, with spreading relief available over five years.

From 2025/26 onwards the rules are bedded in: your taxable profit for the year is the profit arising in that tax year, apportioning across accounting periods where the practice's year end is not 31 March or 5 April. Aligning the practice accounting date with the tax year removes the need to apportion.

Allowable Partnership Expenses

The partnership deducts its business expenses before profit is allocated, reducing every partner's taxable share. Common allowable practice expenses include:

  • Staff salaries, employer pension contributions and training
  • Premises costs: rent or notional rent, business rates, utilities and maintenance
  • Locum and agency cover
  • Medical equipment, IT and clinical systems
  • Clinical supplies and, for dispensing practices, drug purchases
  • Accountancy, legal and professional fees

Capital allowances apply to equipment. The Annual Investment Allowance gives 100% relief on qualifying plant and machinery up to £1,000,000 a year (cars excluded), which covers most clinical and IT equipment. Spend above that, or on integral features such as heating and electrical systems, goes into the writing-down allowance pools. Note that the main-rate writing-down allowance falls from 18% to 14% from 6 April 2026 for income tax (the special rate pool stays at 6%), and a new 40% first-year allowance is available on new, unused main-rate plant from 1 January 2026.

Individual Partner Expenses

As well as your share of partnership expenses, you can claim your own business expenses on your SA104, provided they are incurred wholly and exclusively for the profession. These commonly include:

  • GMC annual retention fee, and Royal College or specialty membership fees on HMRC's approved list
  • Medical indemnity (MDU, MPS or MDDUS) for private and non-clinical or regulatory matters. NHS GP clinical negligence in England is covered by the state-funded Clinical Negligence Scheme for General Practice (CNSGP) at no subscription, so your own indemnity is mainly for non-NHS work
  • BMA subscription where on the approved list, and relevant CPD
  • Business mileage between practice sites
  • A reasonable apportionment of home-office, phone and internet costs

For mileage, you can use HMRC's approved rates: 55p per mile for the first 10,000 business miles and 25p per mile thereafter for 2026/27 (the first-10,000-miles rate rose from 45p to 55p on 6 April 2026). Travel from home to your first practice site is ordinary commuting and is not deductible. For a fuller checklist, see the complete list of GP tax deductions.

Capital Accounts: Joining and Leaving a Partnership

Each partner has a capital account recording their share of the partnership's net assets (tangible assets, working capital and any owned premises). This is central to how money changes hands when a partner joins or leaves, and it is often confused with goodwill.

A buy-in by an incoming partner pays for their share of the practice's net assets, and a buy-out returns an outgoing partner's capital. Crucially for GPs, NHS goodwill is not part of this, because it cannot be bought or sold (covered below). The numbers are driven by the value of tangible assets, premises shares and working capital, not goodwill. If you are joining a partnership, our guide to the financial implications of becoming a GP partner goes into the buy-in mechanics in detail.

NHS Goodwill Cannot Be Sold

This is the single biggest way GP partnership transactions differ from, say, a dental practice. The sale of NHS GP goodwill has been prohibited since 1 April 2004, currently under The Primary Medical Services (Prohibition on the Sale of Goodwill) Regulations 2019 (SI 2019/251). A GP, or anyone acting on their behalf, cannot sell the goodwill of an NHS medical practice, and cannot sell company shares whose value includes that goodwill.

The practical consequences are:

  • A retiring partner cannot extract value by selling NHS goodwill, and cannot claim Business Asset Disposal Relief on it. What they receive is their capital account and share of tangibles and premises.
  • Only genuinely private (non-NHS) goodwill can be sold. Business Asset Disposal Relief (taxed at 18% for qualifying disposals on or after 6 April 2026, up from 14% in 2025/26 and 10% before April 2025) applies only to a private practice disposal, never to NHS goodwill.

For the full position on what can and cannot change hands, see whether GP practice goodwill can be sold under the NHS rules.

Premises and the "Last Man Standing" Risk

Premises are a bigger feature for GPs than for many professions. Surgery premises are often held in a separate property partnership or LLP, with income support via notional rent (for owner-occupiers, assessed on a current-market-rent basis by the District Valuer) or the legacy cost rent scheme. Notional rent amounts are property-specific, so there is no standard figure.

A real planning risk is the "last man standing" problem, where a single remaining partner can be left holding the whole premises liability and lease as colleagues retire. The own-versus-rent decision and the premises share valuation are specialist areas that need practice-specific advice. See our guides to notional rent versus cost rent and the last man standing premises risk.

How Partnership Profits Interact With the NHS Pension

As a Type 1 medical practitioner (a GP partner), your NHS pensionable earnings derive from your net NHS profit, and you complete the Annual Certificate of Pensionable Profits (Type 1) each year via PCSE. A rising profit share increases your pensionable pay and, with it, your pension growth, which is where the annual allowance comes in.

The standard pension annual allowance is £60,000 for 2026/27. For a defined-benefit scheme like the NHS scheme, what is measured is the growth in your pension (the pension input amount), not contributions paid. The allowance tapers where threshold income exceeds £200,000 and adjusted income exceeds £260,000, falling by £1 for every £2 of adjusted income above £260,000, down to a floor of £10,000. The lifetime allowance was abolished from 6 April 2024 and replaced by the Lump Sum Allowance (£268,275) and the Lump Sum and Death Benefit Allowance (£1,073,100).

The historical context is that the standard allowance rose from £40,000 to £60,000 in April 2023, easing (but not removing) the pressure on higher-earning partners. A partner whose profit share pushes them into the taper can still breach the allowance and face a charge at their marginal rate, which the NHS scheme can settle through Scheme Pays. For the detail, see the NHS pension annual allowance complete guide.

Should a GP Partnership Incorporate?

This question comes up often, and the answer for the NHS side is straightforward: a limited company cannot hold an NHS GMS or PMS contract, and income routed through a company is not NHS-pensionable. Incorporation is therefore a private-work decision only (for example private clinics, medico-legal or occupational health income), never a way to run the core NHS partnership.

Even for private work, the case is rarely a clear win at typical profit levels, and the 2026/27 dividend rate rise narrows it further: dividend tax is 10.75% (ordinary), 35.75% (upper) and 39.35% (additional) from 6 April 2026, with a £500 dividend allowance, up from 8.75% and 33.75% in 2025/26. Any tax comparison must be paired with the loss of NHS pension accrual on income taken as dividends. See our guides to incorporating private medical work step by step and the benefits and drawbacks of a GP limited company.

Self Assessment, Payments on Account and MTD

Your share of partnership profit is reported on the partnership pages (SA104) of your personal self assessment return. The return and the balancing payment are due by 31 January following the tax year, so 2026/27 profits are due by 31 January 2028. If your prior-year liability exceeded £1,000 (and less than 80% was collected at source), you also make two payments on account, each 50% of the prior year's liability, due 31 January and 31 July.

Because tax follows profit share rather than drawings, many partners hold back a sensible proportion of profit through the year so the January and July bills do not come as a shock. Your specialist medical accountant can model the right reserve from your projected share.

On Making Tax Digital for Income Tax, general partnerships are deferred with no confirmed start date, so a GP partnership is not yet mandated to keep digital records and file quarterly updates at partnership level. Your own position can still be in scope: separate sole-trader income (private or locum work) with qualifying income above £50,000 brings you into MTD from 6 April 2026, with the threshold falling to £30,000 from April 2027 and £20,000 from April 2028.

Record Keeping

Good records keep the partnership return accurate and protect each partner's expense claims. Practices should keep:

  • Partnership accounts showing the profit allocation between partners
  • Records of private and non-NHS income
  • Expense receipts and mileage logs
  • Business bank statements and asset registers for capital allowances
  • Capital account records for partner entries and exits

Getting Professional Help

GP partnership tax brings together profit sharing, capital accounts, the NHS goodwill rules, premises and the NHS pension, and the figures move from year to year. Working with a specialist medical accountant helps you understand your obligations, plan your tax reserve and avoid the common traps, particularly when partners are joining or leaving, when shares change, or when private work or incorporation is on the table.

This guide is general information and not advice for your specific circumstances. For tailored support, get in touch with our medical accounting team.