Expert FAQ: How GP partners can tackle National Insurance cost hikes

As changes to National Insurance (NI) were announced as part of the 2024 Autumn Budget, it's understandable for GP practices to be concerned.

For many practices, this will mean a spike in staff costs at a time when they are already under significant pressure to do more with limited budgets to meet the ever-mounting demands of frontline service.

In this article, Greg Hendricks, Specialist Financial Adviser from Wesleyan Financial Services, answers common queries about what NI developments could mean for GP practices.

What’s happened?

National Insurance has been changed in two ways.

Firstly, the headline rate of employer NI will increase by 1.2 percentage points to 15%, from 6 April 2025. Secondly, the level at which employers start paying NI on salaries has been reduced from £9,100 p/a to £5,000, meaning a greater proportion of employees’ salaries will be taxable.

How much will practices need to pay, and what support is on offer?

There won’t be a single salaried role in a practice that won’t be affected by these changes.

While the actual costs will vary from practice to practice, we calculate that a typical one – employing two salaried GPs on £80,000 p/a, a practice manager on £60,000 p/a and five practice nurses on £50,000 p/a, along with a receptionist (£25,000 p/a), two team members for administrative support (each £25,000) and a cleaner (£15,000 p/a) – could see its NI bill alone rise by £12,778 next year. And that’s not taking into account the increase to the National Living Wage (NLW) also taking effect from April next year.

While practices may have been hoping for some support to help manage this, nothing has been announced yet. It hasn’t been said whether the global sum will be increased to help offset this cost rise, and GP practices aren’t eligible to claim for the employment allowance because they’re considered to be public bodies. This would otherwise have provided some relief by enabling them to claim back a proportion of their NI contributions.

How will this impact practices?

It’s important to view these Budget changes in the wider context of cost and workload pressures facing general practice.

These NI changes follow a year where the government accepted the recommendations of the Review Body on Doctors' and Dentists' Remuneration (DDRB) to increase the salary scales and pay ranges of contracts for GP partners, salaried GPs and practice staff.

As part of these recommendations, Additional Roles Reimbursement Scheme (ARRS) staff (those who are not doctors) were supposed to receive a 5.5% pay increase to match the Agenda for Change pay scales.

However, the General Practitioners Committee England (GPCE) confirmed this pay wouldn't be funded separately. Instead, Primary Care Networks (PCNs) will need to find this money from within their existing budgets, resulting in additional financial pressure.

It also comes at a time when practices are straining to manage workloads, and when the Government plans to ask the NHS to deliver more than 40,000 more appointments a week. It’s understandable why, for many partners, the picture just doesn’t stack up. General practice cannot do more, with less.

As it stands, it is GP partners that will have to shoulder the NI cost increases – along with everything else. And they’ll now be facing some difficult operational decisions.

While some may try to absorb the costs as much as they can, others will have no option but to make cuts elsewhere. This could mean hiring fewer staff, reducing non-mandated services, or cutting appointment numbers.

Others might try and dilute insurance cover to save money - a strategy that could actually end up costing them more in the long-term if the circumstance they’re trying to protect themselves against occurs.

In extreme cases, some doctors might look at the numbers and decide that partnership just doesn’t work for them any more, given the cost and the responsibility, prompting them to hand back their contracts.

Alongside this, there’s a real risk that this puts even more doctors off even considering partnership as an option - something that would continue to undermine the very basis of the general practice model.

What should partners be doing now?

If you’re worried about how this will impact your practice, the first thing to do is to quantify exactly how much the NI increases are likely to cost for the coming years, looking as far in advance as possible.

You will then have a clearer idea of how much you may need to alter any existing plans to invest in your practice, and what the overall impact might be to each partner’s take-home pay.

If you’re now earning less, then it could be worth speaking to your Specialist Financial Adviser from Wesleyan Financial Services to consider how this affects your broader financial goals, such as how much you put aside for your retirement. Please note advice charges may apply.

If you’re re-considering a partnership position, your adviser can also help you understand the implications of working in a salaried or locum role, or even taking on a ‘portfolio career’ – working more than one role at once.

All of these paths can have their own tax and pension implications that need to be thought through, and it can make a difficult situation worse if you take action without first considering the full implications of any changes.

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