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Savings in employer’s national insurance by changing the status of your salaried GP

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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 specific matters.

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.

September 2005