A 2025 financial checklist for GPs

The start of a new year is always a time for reflection and planning. And your finances should always be a key part of any goal setting.

In this article, Greg Hendricks, Specialist Financial Adviser at Wesleyan Financial Services, explores key factors that should be on GPs’ 2025 financial planning checklist.

Keep on top of your retirement plan

Your retirement plan should always be something you’re reviewing and updating, even if stepping back is still a distant prospect.

While this might seem daunting, it needn’t be a time-consuming exercise. It can be as simple as checking that your goals – whether that’s when you want to retire or what you want to do with your time when you step back from practice – still align with your lifestyle and ambitions, and that you understand what you might need to save this year to keep on track with your plan.

And, with the McCloud remediation underway – which my colleague Madeleine Dowling has recently written about here – there has never been a more important time to ensure your pension information is accurate, and that you have the information you need to make informed decisions about your retirement.

If you don’t have a plan yet, now is the time to start. It’s never too early to start retirement planning, and the earlier you do, the more comfortable a retirement you’re likely to enjoy.

Some important things to think about will include:

• How much you’re likely to need in retirement

The Retirement Living Standards suggest that couples need a retirement income of £59,000 per year to be ‘comfortable’ (for individuals it’s £43,100) – but naturally, it depends on your own unique circumstances, and the expenses you’ll incur in later life.

• When you’re able to retire

Depending on which part of the NHS Pension Scheme you’re in, you’ll be working towards a normal pension age of either 60, 65 or the state pension age – but you’ll have the option to sacrifice some of your benefits and retire early (from 55), or to continue building your benefits and retire late (up to 75).

You also have the opportunity to take a ‘partial’ retirement, stepping back into a role with less responsibility or less working hours, while still drawing your pension. This can deliver real flexibility, but can also come with its own challenges. Speaking to a financial adviser who understands the rules around partial retirement and the potential implications can be valuable in helping you shape your plan.

• Tax implications

Historically, those at the higher end of the pay scale would have been impacted by the Lifetime Allowance – the total amount you can build up in all your pension plans over your lifetime without incurring an extra tax charge.

This limit (£1,073,100 for the 2023/24 tax year) is applied to the value of all pensions you belong to, including the NHS pension (but excluding the state pension).

The good news is that in April 2024, the Lifetime Allowance was abolished. However, some medics will still need to keep the Annual Allowance – the amount that can be saved into a pension each year, without being taxed, in mind. For most people, this is currently up to £60,000, but for the highest earners can be much less.

If you’re concerned about your tax exposure or would value help understanding how your earnings might affect your pension tax position, a financial adviser will be able to help.

Tax treatment depends on your individual circumstances and may be subject to change in future.

Planning a portfolio career? Think of the financial implications.

It’s becoming increasingly common for GPs to consider ‘portfolio careers’ – holding more than one medical role at once. This might be splitting their time between clinical work, teaching and research.

Doctors report that this can have significant benefits, from supporting career development, to job satisfaction, personal fulfilment and better mental health.

However, it can also come with financial implications. Many doctors we speak to with portfolio careers are worried about simply losing track of their affairs given very busy schedules and multiple different income streams, which can lead to issues with things like tax.

It’s imperative to keep financial considerations in mind if you’re thinking about starting, or continuing, ‘portfolio’ work this year, and seek help as required.

Anticipate any practice cost increases

Upcoming changes to National Insurance (NI) in April 2025, unveiled at last year’s Budget, have understandably prompted significant concern from GP practices.

For nearly every practice, this will drive a spike in staff costs at a time when they are already under significant pressure to meet rising workloads, with limited budgets.

If you’re worried about the impact, the first step should be to calculate exactly how much NI increases are likely to cost your practice – and do this for as far in advance as possible.

This will give you a clearer picture of how much you may then need to alter any plans you had for this year – such as new investments in your building, business or team – and how this could affect the take home pay of you and any fellow partners.

If you’re likely to be earning less because of the tax rises, it could be worth seeking advice to review how this will affect your broader financial plans, such as how much you put aside for retirement.

Build strong financial foundations

Finally, make sure you have good ‘financial fundamentals’ in place. This should include:

• Making sure your non-pension savings and investments are tax efficient

You can currently save or invest up to £20,000 every tax year, tax-free, in an ISA. These are products that bring significant advantages because there's no tax to pay on any investment growth or income you earn – something that might be particularly valuable as taxes in other areas rise.

Remember – ISA allowances are on a ‘use them or lose them’ basis. If you don’t use your £20,000 before the end of the tax year (5th April 2025), you can’t roll it over into the next. This makes it all the more important to act now if you think it’s for you.

Keep in mind that the value of your investments can go down as well as up, and you may get back less than you put in.

• Protecting your income

As a busy GP, it’s essential to have the right level of protection in place. Check that you have this, and that any protection you do have is still at the appropriate level for your needs.

It’s not just buildings and contents insurance for practices that you should think about. There’s income protection insurance to cover your mortgage and other expenses if you fall sick; key person insurance, which provides a financial bridge between the loss and replacement of key employees; and partnership protection insurance, which pays out a lump-sum to enable you to buy your partners’ share of the business if they’re no longer around.

A practice risk assessment can help identify any vulnerabilities and make sure you have a safety net should the worst happen.

• Stay abreast of mortgage rate changes

The decision to hold interest rates at 4.75% was expected after inflation rose in November.

In this environment, good mortgage deals don’t tend to last long, so if you’re thinking about getting a mortgage, or remortgaging, it’s important to keep a close eye on the market and be prepared to move quickly.

Also bear in mind that, as a GP, your professional status could be a great help when applying for a mortgage, as you may be able to benefit from low-deposit mortgages and more generous offers. A mortgage specialist that understands the GP market, may be able to help access these.

Your mortgage is secured on your home. Your home may be repossessed if you do not keep up repayments.

At Wesleyan Financial Services, we provide specialist financial advice and products to GPs. To see how we could help you with your financial plans, get in touch with your Specialist Financial Adviser from Wesleyan Financial Services. Charges may apply. We will not charge you until you have agreed the services you require and the associated costs.