How to Read GP Partnership Accounts: Current Accounts, Capital Accounts and Drawings

Once a year, your practice accountant hands every partner a bound set of GP partnership accounts to read and sign. Many partners glance at the net profit figure, check their own line, and sign, without ever really understanding what the rest of the document is telling them. This is a plain-English reading guide to that document. It explains what the profit and loss account shows, what the balance sheet shows, and the distinction that confuses partners most: the difference between your capital account (your long-term stake in the practice's net assets) and your current account (the running tally of profit allocated to you, less what you have drawn).

The aim here is comprehension of the accounts themselves, so you can open the file and know what you are looking at. It is not a tax tutorial. For how partnership profit is actually taxed (the SA800 to SA104 mechanics, Class 4 National Insurance and the NHS goodwill rules), see the GP partnership tax complete guide. For how the profit is divided between partners in the first place, see GP partnership profit sharing and tax planning. And if you are still weighing up whether to join, the financial implications of becoming a GP partner page covers the buy-in. This page takes all of that as given and shows you how to read the accounts of a practice you are already in.

What a Set of GP Partnership Accounts Actually Is

A set of GP partnership accounts is a single document prepared by the practice accountant for the partnership as a whole. It normally comprises a profit and loss account (the year's income and expenditure), a balance sheet (what the practice owns and owes at the year end), a set of partners' capital and current accounts, and a set of notes explaining the accounting policies and the profit allocation.

The reason the document is structured this way is that a partnership is transparent for tax. The partnership itself pays no tax. It files one partnership return (the SA800), and each partner's allocated share then flows to the partnership pages (the SA104) of their own self assessment return, where it is taxed as self-employed trading income with Class 4 National Insurance on top. The accounts are the source document that sits behind all of that, but they are not the tax computation. The profit shown in the accounts is adjusted (for example, depreciation is added back and capital allowances are claimed instead) to arrive at the taxable profit. The complete guide covers those adjustments and the tax flow.

One more practical point before we open the document: most GP partnership accounts are unaudited accounts. They are prepared to an agreed accounting date, signed by the partners, and carry an accountant's report rather than an audit opinion. That report usually confirms the accounts were compiled from the records and information the partners supplied, which is a useful and normal level of assurance, but a different one from a statutory audit.

It is also worth knowing the order in which the pages usually appear, so you can navigate the file quickly. At the front sits the accountant's report and a short page of partnership information (the partners' names, the accounting date and the basis of preparation). Then comes the profit and loss account, followed by the balance sheet, then the partners' capital and current accounts (often on a single facing page so you can compare partners), and finally the notes. Some accountants add a detailed trading and profit and loss schedule at the back that breaks the headline income and expenditure into many more lines than the main statement shows. If you ever feel a figure on the main page is too summarised to understand, that detailed schedule is usually where the underlying lines live.

The Profit and Loss Account: How the Practice Did This Year

The profit and loss account (you may also see it called the income and expenditure account) is the part most partners feel they understand, and it is the right place to start. It runs income at the top, expenditure in the middle, and net profit at the bottom.

Income Lines

The income section maps to how a GP practice is funded. You will typically see core NHS funding (the Global Sum and other GMS or PMS contract income), QOF income, enhanced services, Primary Care Network and Network Contract DES funding, premises reimbursement (notional or cost rent), dispensing income where the practice dispenses, and any private or non-NHS income. The exact labels vary between accountants, but every income line is money the practice received or is owed for the year. There is no single national per-patient value to check these against; the funding is weighted and uplifted annually, so treat the income section as a record of what came in rather than something to benchmark line by line.

Expenditure Lines

Below income sits expenditure. In most practices staff costs are the single biggest line, followed by premises costs, locum and agency cover, drugs and clinical supplies, IT and equipment, professional fees (accountancy, legal, payroll) and finance costs on any borrowing. You will also see depreciation, which is the accounting charge for wearing out equipment over time. Depreciation reduces the accounts profit, but it is added back for tax and replaced by capital allowances, so it is one of the differences between the accounts profit and the taxable profit. The complete guide explains that adjustment.

Net Profit

Income less expenditure equals net profit: the profit available to share between the partners. This is the figure the deed then allocates. The point to fix firmly in your mind is that this allocated profit, not your drawings, is what you are taxed on. We return to this repeatedly below, because it is the idea that connects the profit and loss account to your own current account and to your tax bill.

A useful habit when reading the profit and loss account is to look at the year-on-year movement rather than the absolute numbers in isolation. Most accounts present the prior year alongside the current year, so you can see at a glance whether income rose or fell, which expenditure lines moved, and whether net profit went up or down. A sharp change in one line (a jump in locum costs, a fall in enhanced-services income, a spike in premises costs) is usually the story of the year, and it is far more informative than the headline profit on its own. If a movement surprises you, that is exactly the kind of thing to raise with your accountant when the accounts are presented, rather than after you have signed.

The Balance Sheet: What the Practice Owns and Owes

The balance sheet is a snapshot at the accounting date. The top half lists what the practice owns and owes; the bottom half shows how the resulting net assets are financed.

On the asset side you will see fixtures, fittings and equipment (at cost less depreciation), any owned premises, debtors (money owed to the practice, including amounts due from the commissioner), and cash at bank. On the liability side you will see creditors (amounts the practice owes), any loans, and accruals (costs incurred but not yet invoiced). Assets less liabilities gives net assets, which is what the partners collectively own through the partnership.

How the Net Assets Are Financed

This is the line that connects the balance sheet to you personally. The bottom half of the balance sheet shows that the net assets are represented by the partners' capital and current accounts. In other words, everything the practice owns net of what it owes belongs to the partners, and it is split between their long-term capital accounts and their year-to-year current accounts. Understanding those two accounts is the heart of reading the document, so we take them in turn.

The Capital Account: Your Long-Term Stake in the Practice

Your capital account is your share of the fixed, long-term capital of the partnership: your slice of its net assets, including equipment, fixtures, working capital and any share of owned premises. When you joined, your buy-in paid into your capital account; when you leave, a buy-out returns it. The becoming a GP partner page covers the buy-in mechanics.

There is a GP-specific point to state clearly here. Your capital account reflects tangible assets and premises, never NHS goodwill, because NHS GP goodwill cannot be sold (the sale has been prohibited since 1 April 2004). So unlike some other businesses, there is no goodwill figure built into your stake. The only goodwill a GP can sell is genuinely private, non-NHS goodwill. The complete guide sets out the goodwill rules in full; the point for reading the accounts is simply that you will not find an NHS goodwill line in your capital account.

Capital accounts are often shown as relatively fixed amounts that are revalued only on events: a property revaluation, a partner joining or leaving, or a formal change to the capital structure. That stability is the key contrast with the current account, which moves every single year.

The Current Account: Profit In, Drawings Out

Your current account is the running, year-to-year account. Profit allocated to you for the year is credited to it; your drawings and any partner-specific costs are debited from it. The balance carried forward is what the partnership owes you (a credit balance) or what you owe the partnership (a debit, or overdrawn, balance).

An Illustrative Walk-Through

The following figures are illustrative only and bear no relation to any real practice; your own figures will look quite different. Suppose a partner opens the year with a credit current account balance of £20,000. During the year they are allocated a profit share of £120,000 and take drawings of £105,000. Their accountant also charges £3,000 of personal costs through the practice on their behalf. The closing current account is then £20,000 plus £120,000, less £105,000, less £3,000, which leaves a credit balance of £32,000 carried forward. That £32,000 is undrawn profit: money allocated to the partner and owed to them, but left in the practice.

A Credit Balance Versus an Overdrawn Balance

A healthy credit current account, as in the illustration above, means the partner has left profit in the practice. Collectively, partners' undrawn profit often funds the practice's working capital, which is a normal and usually deliberate position. An overdrawn (debit) current account is the opposite: the partner has drawn more cash than their share of profit supports, so on paper they owe the difference back. An overdrawn balance is a prompt to review the drawings level, and most deeds expect it to be corrected. The discipline behind keeping the current account healthy, and reserving for the tax on the profit it represents, is the subject of the dedicated drawings versus profit and tax reserving page.

Capital Account Versus Current Account: The Distinction That Confuses Partners

If you take one thing from this page, take this side-by-side. Your capital account is your long-term stake in the practice's net assets. It changes on buy-ins, buy-outs and revaluations, and otherwise sits fairly still. Your current account is your annual profit-and-drawings tally. It changes every year as profit is credited and drawings are debited.

The practical consequence is that money sitting in your current account is not the same as your capital stake. A partner can have a large credit current account (lots of undrawn profit) and a modest capital account, or vice versa. The two are presented separately precisely so that your long-term investment in the practice is not muddled with your short-term, in-and-out profit position. Some practices keep the two combined in a single column and some split them out across the page; either way the underlying ideas are the same, and a good set of accounts will let you read both figures off clearly.

Drawings, Reserves and Undrawn Profit in the Accounts

Now that the two accounts are clear, the moving parts fall into place. Drawings appear as a debit to your current account, reducing it each time you take cash. Undrawn profit (sometimes shown as a profit reserve) is profit allocated but not drawn, sitting as a credit current account balance or held in a reserve, and it commonly funds the practice's working capital so that the partnership is not reliant on borrowing to pay its bills between funding receipts.

This is where the tax point bites. Because you are taxed on allocated profit, not drawings, you can owe tax on profit that is still sitting in the practice as undrawn profit. The accounts will happily show you a healthy credit current account while a tax bill on that same profit is looming, and the two are not automatically reconciled for you. Reserving for that gap is exactly what the drawings versus profit page covers.

You may also see partner-specific items routed through the current account that have nothing to do with the practice's trading. Examples include personal tax paid on a partner's behalf, professional subscriptions settled centrally, motor or other costs charged through the practice, or interest credited on an undrawn balance where the deed provides for it. Each of these is simply a debit or credit on that partner's current account, and they are part of why two partners on identical profit shares can end the year with quite different current account balances. When you read your own current account, it is worth checking the make-up of the movements, not just the closing figure, so you understand why your balance is where it is.

The link back to the balance sheet is worth making explicit, because it is the moment the whole document clicks into place. The total of all partners' capital and current account balances equals the net assets figure on the balance sheet. Everything the practice owns, net of what it owes, is owed back to the partners, split between their long-term capital and their year-to-year current accounts. If you ever want to sanity-check that you have read the accounts correctly, adding the capital and current account columns and comparing the total to net assets is a quick way to confirm the document hangs together.

Notes, the Accountant's Report and the Accounting Date

The notes at the back of the accounts are easy to skip and worth reading. They set out the accounting policies (for example how fixed assets are depreciated), the basis on which the accounts were prepared, and the partners' profit shares for the year. If you ever want to check how your share was arrived at, the notes are where the allocation is documented.

The accountant's report on the front states the basis of the accountant's involvement. On unaudited accounts it confirms the accounts were prepared from the partners' records and explanations, rather than offering an audit opinion. That is the normal position for a GP practice and is nothing to be concerned about; it simply tells you what assurance the figures carry.

Finally, the accounting date (the date the accounts are drawn up to, such as 31 March or 30 June) frames the period the accounts cover. Since the move to the tax-year basis, the accounting date also affects how a practice's profit is matched to tax years. That is a tax question rather than an accounts-reading one, and it is covered in full in the basis period reform page rather than here.

How Reading Your Accounts Helps You (and What to Ask Your Accountant)

The point of being able to read your accounts is that you can answer a handful of questions about your own position before you sign. From your accounts you should be able to read off:

• What is my profit share for the year?
• What is my closing current account balance, and is it a credit or overdrawn?
• What is my capital account balance?
• How much undrawn profit have I left in the practice?
• Does my current account position suggest my drawings are set about right?

If you cannot answer those from the document, they make a good agenda for a conversation with your accountant. For the practice-side bookkeeping that feeds the accounts, see the GP accounting guide and the GP bookkeeping guide. For how your share then reaches your own return, see the GP tax return page. And the wider GP tax and accounts category collects the rest.

How We Help GP Partners

We work with GP partners and practices across the UK, and a recurring theme is partners who sign their accounts every year without ever feeling fully on top of what the numbers mean. We talk partners through their own capital and current accounts in plain language, prepare accounts that are easy to read, and flag the things worth acting on (an overdrawn current account, a drawings level that no longer fits the profit, or undrawn profit that needs a tax reserve behind it). The aim is that you understand your own position, not just that the accounts add up. You can read more about how we support GPs on the for GPs page, or get in touch if you would like to talk through your own accounts.

This guide is general information and not advice for your specific circumstances.