Running payroll for a GP practice is not the same as running payroll for a typical small business. You are juggling PAYE and Real Time Information for practice staff, the NHS Pension Scheme alongside separate workplace pension auto-enrolment, employer National Insurance, and a workforce that mixes employees, self-employed partners and locums who each sit in a different tax box. This guide sets out what GP practice payroll actually involves in 2026/27 and where the common mistakes are.

If you want the wider picture of practice finances rather than payroll specifically, start with our GP accounting guide, then come back here for the payroll detail.

Who is on the payroll and who is not

The single biggest thing to get right in a GP practice is who actually belongs on PAYE. Tax status follows the substance of each working arrangement, not the job title.

  • Salaried GPs and practice staff (nurses, healthcare assistants, reception, practice managers) are employees. They go through PAYE with Class 1 NIC deducted at source and are active NHS Pension members.
  • GP partners are self-employed. They are taxed on their share of partnership profit, not on their drawings, so they never go through payroll. The partnership files an SA800 and each partner's share flows to the partnership pages of their personal Self Assessment return, with Class 4 NIC. For the detail, see our GP partnership tax guide and the partner versus salaried GP comparison.
  • Locum GPs are usually sole traders paid gross (not on payroll), or work through a limited company within the off-payroll (IR35) rules. A small number are genuinely salaried and do go through PAYE. See the locum section below.

Putting a partner through payroll, or treating a genuine employee as self-employed, creates real tax risk. The first thing a specialist payroll review checks is that each person is in the right box.

PAYE and Real Time Information for practice staff

For every employee, the practice operates PAYE: income tax and employee Class 1 NIC deducted each pay run, plus employer NIC on top (see below). Each time you pay staff you must send HMRC a Full Payment Submission (FPS) on or before payday under Real Time Information, with an Employer Payment Summary where needed (for example to reclaim statutory pay or report a nil payment).

Payroll for a practice also has to cope with the usual NHS-employer complications: Agenda for Change style pay scales and increment dates, enhanced or out-of-hours payments, statutory sick pay, statutory maternity, paternity and shared parental pay, part-time and term-time hours, and accurate holiday pay for staff with irregular hours.

RTI deadlines and penalties

Late FPS filings attract HMRC penalties charged per month, scaled by the size of the PAYE scheme: £100 for 1 to 9 employees, £200 for 10 to 49, £300 for 50 to 249 and £400 for 250 or more. One late filing per tax year is allowed without penalty. Most GP practices sit in the £100 to £300 bands rather than the £400 top band that applies to very large employers. Late-paid PAYE and NIC can also attract interest and additional charges, so the practical priority is to file on or before payday every run.

Employer National Insurance on practice staff

On top of what employees pay, the practice pays employer (secondary Class 1) NIC at 15% on earnings above the £5,000 secondary threshold for 2026/27. For a practice with several salaried staff this is a significant standing cost and should be budgeted into the partnership's staffing plan.

The Employment Allowance is £10,500, which most GP partnerships can claim against their employer NIC bill because they employ multiple people. The allowance is not available where a company's only employee is a single director, but that restriction rarely bites on a GP practice, which by its nature employs a team. A specialist payroll provider will make sure the allowance is claimed correctly and not missed.

NHS Pension Scheme through payroll

Salaried GPs and eligible employed staff are members of the NHS Pension Scheme, a defined-benefit scheme. Since 1 April 2022 all active members accrue in the 2015 (CARE) section, building up 1/54th of each year's pensionable earnings, revalued at CPI plus 1.5% while active. The historic 1995 and 2008 sections survive only as legacy service with a final-salary link. (The move that took members from the legacy sections into the 2015 scheme, and the related McCloud remedy covering 1 April 2015 to 31 March 2022, sits behind the modern position.)

For payroll, the mechanics are:

  • Employee contributions are tiered by pensionable pay and deducted through payroll.
  • Employer contributions are set centrally for the scheme and paid over by the practice.
  • Contributions and membership data are reported to PCSE (Primary Care Support England), and salaried GP pensionable pay is reconciled through the Type 2 self-assessment form a year in arrears. Partners pension their NHS profit through the Type 1 Annual Certificate of Pensionable Profits, which is an accounting exercise rather than a payroll one.

Higher-earning members need to watch the pension annual allowance of £60,000 (2025/26), which tapers where threshold income exceeds £200,000 and adjusted income exceeds £260,000, down to a floor of £10,000. For defined-benefit schemes the test is the growth in the pension (the pension input amount), not the contributions paid. This is a personal tax issue rather than a payroll one, but it is closely linked, so we cover it fully in our NHS pension annual allowance guide and our GP pension contributions and tax relief guide.

Workplace pension auto-enrolment alongside the NHS scheme

Auto-enrolment and the NHS pension are two separate duties, and a GP practice has to manage both. The NHS Pension Scheme is a qualifying scheme, so staff who are active NHS members already satisfy the employer's auto-enrolment duty. The catch is everyone else.

Staff who are not eligible for the NHS scheme, or who have opted out of it, must be assessed for separate workplace pension auto-enrolment into a qualifying scheme. The duties run on each pay run and include:

  • assessing each worker's eligibility by age and earnings;
  • automatically enrolling eligible jobholders and applying the minimum contributions;
  • processing opt-ins, opt-outs and refunds within the deadlines;
  • re-enrolling eligible staff who previously opted out roughly every three years;
  • keeping records and completing the declaration of compliance with The Pensions Regulator.

The statutory minimum is 8% of qualifying earnings in total, of which at least 3% must come from the employer, with the balance from the employee. Qualifying earnings for 2026/27 are the band between £6,240 and £50,270 a year. The risk to manage is staff being double-enrolled (in both the NHS scheme and a workplace scheme) or, worse, missed entirely. Good payroll keeps the two streams cleanly separated.

Locum GPs and temporary staff

Locum cover is where practices most often get payroll status wrong. There are three common patterns:

  • Self-employed locum (sole trader): paid gross, not on the payroll. The practice should keep evidence of genuine self-employment and ensure the locum handles their own tax and, where relevant, their own NHS pension via Locum forms A and B.
  • Locum through a limited company: within the off-payroll (IR35) framework. Because a GP partnership is usually a small employer (within the Companies Act small-company thresholds), the old rule applies and the locum's own company decides its IR35 status, rather than the practice issuing a status determination. The practice pays the company's invoice gross.
  • Genuinely salaried locum: on a contract of employment and run through PAYE like any other employee.

IR35 has not been abolished and the off-payroll rules have not been repealed, so do not assume a company-based locum is automatically outside scope. For the detail on who decides status and what it means, see our locum doctor IR35 guide and, where a practice is weighing up a company arrangement, the locum limited company pros and cons.

Year-end and benefits reporting

Practice payroll runs to an annual cycle as well as a monthly one:

  • P60s for every employee in post at 5 April, and P45s for leavers.
  • P11D reporting for any taxable benefits in kind, for example private medical insurance, certain professional subscriptions paid by the practice or a company-provided vehicle, with the associated Class 1A employer NIC.
  • Final FPS or EPS for the tax year and reconciliation of the practice's PAYE account.

Year-end payroll output also feeds the partnership accounts and each partner's tax position, so it should be coordinated with the practice's accountant rather than handled in isolation.

Software, RTI and self-service

Modern practice payroll runs on cloud-based, RTI-compliant software that submits FPS and EPS directly to HMRC, calculates statutory payments and pension contributions automatically, and gives staff self-service access to payslips and P60s. Integration with the practice's accounting records means employment costs flow straight into the partnership's management information, which helps partners budget for staffing, the 15% employer NIC and pension costs.

Why GP practice payroll is a specialist job

Generic payroll providers can run a standard PAYE scheme, but they routinely struggle with the medical-specific layers: NHS pension tiering and PCSE reporting, the partner-versus-employee distinction, locum status and IR35, and the interaction between the NHS scheme and auto-enrolment. Getting any of these wrong creates either compliance penalties or unexpected tax charges for individuals.

For practice-wide financial systems that sit around payroll, our GP bookkeeping guide and GP accounting software guide are useful companions.

How we can help

We act for GP practices, partnerships and individual doctors and understand the payroll mechanics that generic providers miss: PAYE and RTI for a mixed clinical and administrative team, NHS pension reporting through PCSE, auto-enrolment for non-NHS-scheme staff, employer NIC and the Employment Allowance, and locum status. If you want practice payroll handled by people who know the NHS pension and GMS contract environment, our specialist medical accountancy services include payroll for practices, and you can get in touch to discuss what your practice needs.

This article is general information for UK GP practices and doctors, not personal advice. Payroll, pension and IR35 treatment depends on your practice's specific facts, so take advice before acting.