in employer’s national insurance by changing the status
of your salaried GP
We are looking to employ a salaried GP to
replace our senior partner who has just retired. We have
heard that there are significant savings to be made in National
insurance if we alter their status to being a “fixed
profit share partner”. We would like to know what
the implications are for both the practice and the salaried
GP if we decide to do this?
If you employ a salaried GP, they will be
included on the payroll and taxed at source just like any
other member of staff. As their employer, you will pay employer’s
national insurance, which is currently 12.8%.
If you employ a salaried GP on a gross salary
of £65,000 this would cost you £7,693 in employer’s
national insurance contributions. This could be saved if
the GP became a fixed profit sharing partner, as they would
no longer be an employee, but self-employed. The savings
in national insurance makes this an attractive option, but
there are many other factors to consider.
To be treated as a self employed partner they
would need to have the same risks and rewards as the other
partners. Their profit share should be the higher of their
fixed share or a percentage of the profits, with the aim
of the fixed share being the higher amount.
Implications for the practice
If the salaried GP became a “fixed profit
sharing partner”, they would essentially be a partner
in the practice. This would mean would have the same rights
and responsibilities as the other partners in the practice.
One main disadvantage is that they would be
able to have sight of your practice accounts, which may
cause some difficulties for high earning practices.
If the GP is taking on the same workload and
responsibilities similar to the other partners, but is earning
a lot less this could cause problems within the partnership.
The GP may want to try and agree a higher fixed share once
they have seen how much the other partners are earning.
Making the GP a fixed profit sharing partner could be an
opportunity to reward them for their work by agreeing a
fixed share plus a small share of the profits. For example,
your could agree that they would receive a percentage share
of the quality and outcomes framework if the practice achieved
a certain number of points.
The GP would have the same rights as any partner,
which would mean they could have access to the accounting
books and records, however they would not need to be a signatory
for the bank, i.e. signing cheques. As a partner they would
be able to sign contracts on behalf of the partnership which
again may lead to problems if not been discussed with other
partners. If the practice did not want the GP to be able
to have these responsibilities then this would need to be
clearly stated in the partnership agreement.
The partnership agreement would need to be
updated for the new partner, which would include details
of their responsibilities, fixed profit share and other
The PCT would need to be informed that the
practice have taken on a partner. As a partner the GP would
be entitled to seniority income, which they would not receive
as an employed GP. This would mean that their profit share
would be their fixed share plus their seniority.
Implications for the salaried GP
As a fixed profit sharing partner, they would
have the status of being a partner as opposed to just a
member of staff, but would also have joint and several liability
like any other partner. They would also become responsible
for their tax affairs whereas being a salaried GP this is
dealt with by the practice through PAYE. This means they
need to register as self employed, complete a tax return
and pay their tax liabilities by the relevant deadlines.
If they use an accountant to deal with there tax affairs,
they will have the cost of the accountant’s fees.
However, an advantage of being self-employed
is that they would be able to claim a lot more expenses
for tax relief compared to an employed GP.
Under the new contract, partners are required
to complete a certificate of their NHS pensionable profits,
and although they would be a fixed profit share partner,
a certificate would still need to be completed and submitted
to the PCT.