GP Partnership Accounts: What Every GP Partner Needs to Know

GP partnership accounts are financial statements prepared for the practice as a whole. They include all income received by the practice (General Medical Services contract income, enhanced services income, dispensing income if applicable, private clinical income, and any rental income from property), all expenditure (staff costs, premises, drugs, equipment, locum costs), and the resulting profit available for distribution among the partners.

Partnership accounts for NHS GP practices must also deal with specific items that do not appear in most business accounts:

NHS superannuation: NHS employer and employee pension contributions, which must be correctly deducted from the practice's reimbursable income before the net profit is calculated.

Notional rent: where the practice occupies premises it owns, NHSE pays notional rent reimbursement. This is income for the partnership but does not constitute trading income in the same way as GMS income.

Drug dispensing income and reconciliation: for dispensing practices, the reimbursement system involves complex reconciliations between drug costs and payments received.

GP partnerships typically allocate profit according to a partnership agreement, which may specify equal shares, differential shares based on sessions worked, or a formula that includes a guaranteed minimum plus a variable element based on performance.

Profit allocation becomes complex when:

Partners join or leave during the year, requiring apportionment of the annual profit to each partner's period of membership.

Some partners reduce their sessions (e.g., parental leave or clinical commitments outside the practice) and the partnership agreement has provisions for adjusted shares.

The practice earns income from enhanced services or clinical work that is attributable to specific partners rather than shared equally.

We prepare individual partner profit share schedules as part of the annual accounts, which feed directly into each partner's self-assessment return.

From 2023/24 onwards, all self-employed individuals (including GP partners) are taxed on the profits arising in the tax year (6 April to 5 April), regardless of their accounting year-end. This change eliminated the old 'current year basis' and associated overlap profits.

For GP practices with an accounting year-end other than 31 March or 5 April, the transition year (2023/24) required apportionment of profits from two sets of accounts to create a tax-year basis figure. There was also a transitional relief that spread any additional taxable profits from the transition over five years.

Going forward, practices with a non-tax-year-end will need to apportion profits each year, which adds complexity to the accounts preparation process. We handle this apportionment and coordinate it with each partner's self-assessment filing.

GP partners pay NHS pension contributions at tiered rates on their NHS pensionable earnings. The pensionable earnings for GP partners are calculated from the practice's NHS income (net of practice expenses as defined by NHS England) rather than from the partner's profit share directly.

Each year, GP partners must complete a pensionable pay certificate to submit to the NHSBSA. This is based on the practice accounts figures, adjusted for NHS superannuation purposes. Errors in the pensionable pay certificate can result in incorrect pension input amounts, which then affect the annual allowance calculation.

We prepare the pensionable pay certificates as part of our annual accounts service for GP partnerships.

When a new GP partner joins the practice, several things need to happen from an accounting and tax perspective:

The partnership agreement is updated to reflect the new partner's share and join date.

The practice accounts are prepared showing the profit allocation for the period before and after the new partner's entry, so each partner is taxed only on their proportionate share.

The new partner begins paying NHS superannuation on their pensionable earnings from the date of entry.

The new partner must register for self-assessment (if not already registered) and file their first partnership return.

We coordinate the admission paperwork, accounts preparation, and individual return filing to ensure the transition is handled without gaps or errors.