Expert FAQ: How GP partners can tackle national insurance cost hikes

Greg Hendricks of Wesleyan Financial Services breaks down what the changes in National Insurance will mean for GP practices

Changes to National Insurance (NI) unveiled at last month’s Budget have caused significant concern from GP practices.

And for good reason. For nearly every practice, 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. 

Since 30 October, many partners have approached us with questions about what the NI developments could mean for them.

Here, we share our answers to some of the most common queries.

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 four 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, as Pulse’s own analysis noted, 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 partners have already had to pay a mandatory five per cent increase to all staff with no increase in their global sum to cover this, and when they’re also facing significant cost increases in nearly every aspect of their premises.

It also comes at a time when practices are straining to manage workloads, and when the Government plans to ask general practice to deliver 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 thing they’re trying to protect against occurs.

And, 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 – something one in six practices polled recently by Berkshire, Buckinghamshire and Oxfordshire LMCs said they were thinking of doing.

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 a financial adviser to consider how this affects your broader financial goals, such as how much you put aside for your retirement.

And if you’re re-considering a partnership position, an 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.

Greg Hendricks is a specialist financial adviser at Wesleyan Financial Services, the specialist financial mutual for GPs