Taxing times for GP’s – and it could get a lot worse

Many still reeling from the Chancellor’s Autumn Budget were then faced with the Spring Statement on 26 March, which crept up with little notice.

The good news is Rachel Reeves announced nothing fundamental affecting taxes or costs, for now. But given the volatility in the markets and the slowing UK economy, further changes could still be introduced in the next Autumn Budget.

The bad news is that the Employer NI and NMW increases mentioned above remain and start affecting practices from April.

Key tax changes affecting the medical profession:

Debt collection

We’ve been promised substantial investment in tax office staff over the next five years to chase outstanding debts and a strengthening of partnerships with private debt collectors. So, if you have a debt with HMRC then it is important to be proactive and agree on a repayment plan before debt collectors are instructed.  – The late payment interest rate for income tax has increased to 8.5% (Bank of England base rate plus 4%) from 6 April 25.

Late payment penalties

On joining Making Tax Digital for income tax (MTD for IT), late payments of income tax will be subjected to penalties from April 2025 as follows:

• *3% of the tax outstanding which is due for more than 15 days
• *another 3% where it is due for more than 30 days, and
• *10% a year where it is due for more than 31 days.

Late payment penalties currently start at 5% of the January balancing payment outstanding for more than 30 days.

Making Tax Digital (MTD)

Digital reporting to HMRC on a quarterly basis will be rolled out to the self-employed and landlords.

This is a key issue for locum GPs, or partner GPs who have other self-employed or property income, and they will each need to consider how to report to HMRC.

Specialist medical accountants will be crucial in supporting locums to report correctly and efficiently to HMRC. There is no set date for the introduction of MTD to partnerships. That may be a relief to many practices and their partners.

Practices should move towards real-time reporting to improve their own financial systems and ensure they are well-positioned for the eventual implementation.

MTD rollout

*April 2026: Self-employed or property income of more than £50,000

*April 2027: Self-employed or property income of more than £30,000

*April 2028: Self-employed or property income of more than £20,000.

High Income Child Benefit Charges

From summer 2025, a new service to report any High-Income Child Benefit Charges will be launched, meaning this can be paid through PAYE which avoids the need to submit a tax return.

This should help many employed medical professionals. In addition, anyone whose sole income stream is taxed through PAYE will not be required to submit a tax return from the 24/25 tax year onwards, regardless of the level of income. This will also take many out of self-assessment.

Changes to the benefits system

There were several changes to the benefits system to reduce the amounts paid overall and create cost savings for the government. This may not affect GPs or other medical professionals directly but, it is important they consider the impact on their patients who may require further support from social prescribers or other similar roles.

Reminder of changes from 6 April 25:

Employer National Insurance Contributions (NIC) - rate increased from 13.8% to 15%; threshold where this becomes payable in respect of each employee is reduced from £9,100 to £5,000.

National Minimum Wage (NWM) - over 21yrs of age: £12.21 per hour, up from £11.44; 18 to 20 yrs of age: £10 per hour, up from £8.60.

Capital Gains Tax (CGT) – the personal tax rate on the disposal of business assets/property for disposals meeting the conditions for business asset disposal relief increased to 14%, up from 10%. A further increase applies from April 2026 to 18%.

And do not forget that from 6 April 2027 - Inheritance Tax (IHT) changes. It is proposed that unused pension funds and their death benefits will be included in an individual’s estate. This will be a significant change and could bring many within the scope of IHT for the first time, and some thought will need to be given to future estate and succession planning. 

As ever, it is important to use a specialist medical accountant to understand the impact of these changes on you and your practice. The need to budget, look ahead and forecast earnings is more important than ever. GP finances continue to be increasingly complex, and support is needed to navigate these effectively and efficiently.

Get in touch with our medical accounting specialists

If you would like to speak with one of our specialists about how we can support you or your practice, please do not hesitate to get in touch.

Get in touch 

* This article first appeared in the Spring 2025 issue of AISMA Doctor Newsline