Becoming a partner in a GP practice: The benefits, risks and financial implications

Are you considering becoming a partner in a GP Practice?

Becoming a GP partner involves much more than a change in title. As well as continuing to provide clinical care, you’ll become involved in running the practice as a business. You may take responsibility for its people, finances, services and long-term direction.

Partnership can offer greater influence and the potential for higher earnings. However, it also brings additional responsibilities and financial risks. Before making the move, it’s important to understand what the role involves and whether it’s right for you.

How will your role change?

As a salaried GP, your main responsibilities are usually clinical. As a partner, you’ll combine patient care with management, leadership and business responsibilities.

You’ll have a say in how the practice operates. This could include decisions about:

• the services the practice provides
• recruitment and people management
• budgets and financial planning
• premises and equipment
• regulatory and contractual requirements
• the practice’s future strategy.

A GP practice may hold an NHS contract through an individual GP or a partnership. As a partner, you’ll share responsibility for meeting the practice’s contractual obligations and maintaining high standards of patient care.

Having greater control can be rewarding, but it also means taking responsibility for difficult decisions and the financial health of the practice.

What are the financial implications?

One of the biggest changes is how you’ll receive your income.

As a salaried GP, you receive an agreed salary and tax / NI is deducted at source throughout the year. As a partner, you’ll receive monthly drawings on account of your expected share of the practice’s profits.  There may then be a final payout once the partnership accounts have been signed off.

Your final taxable income will depend on the profit allocated to you under the partnership agreement.

Your income may fluctuate

Your income will depend on the practice’s financial performance and your agreed profit share. It may vary from one year to the next, so you’ll need to be comfortable with a less predictable income.

It’s important to understand the difference between drawings and profit. Drawings are payments taken from the partnership during the year. They aren’t necessarily the same as your final share of the profit.

You are taxed on profits not drawings, so you need to ensure that drawings are of a reasonable level for you to be able to save for your tax as well as day to day living.

You’ll be responsible for your tax

Partners are generally responsible for paying tax on their own share of the partnership’s profits through Self-Assessment. Depending on your circumstances, this may include payments on account towards the following year’s bill.

Setting money aside regularly can help you prepare for your tax payments and avoid unexpected pressure on your personal finances.

You may need to invest capital

You may be asked to contribute capital when joining the partnership. This could help fund working capital, equipment or an interest in the practice premises.

You should establish:

• how much capital you’ll need to contribute
• when you’ll need to pay it
• whether borrowing will be required
• how and when the capital will be repaid if you leave.

You should also understand whether you’ll acquire an interest in the practice property or take on any responsibility for leases, loans or other liabilities.

What should you review before joining?

Before committing to the partnership, carry out careful financial and legal due diligence.

You should normally review at least three years of the practice’s accounts. This can help you understand:

• historic profitability and trends
• how profits are shared and likely drawings on account
• staffing and premises costs
• loans and other liabilities
• planned investment or significant future costs
• whether the practice relies heavily on income that may not continue.

You should also ask for a copy of the partnership agreement. This document should explain the partners’ responsibilities, restrictions and arrangements for joining or leaving the practice. The BMA describes it as one of the most important documents for an incoming partner to review.

Take independent legal and financial advice so you understand exactly what you’re agreeing to.

Questions to ask yourself

Before making your decision, consider the following questions;

1. Do you want greater influence?
   Think about how much involvement you want in the practice’s operations and future direction. Partnership may suit you if you want to shape services and play an active role in decision-making.
2. Are you comfortable with financial risk?
   The level of risk will depend on the practice’s legal structure and partnership agreement. Make sure you understand the liabilities you’ll take on and whether your personal assets could be exposed.
3. Can you manage the additional responsibilities?
   Partnership duties can require significant time and energy alongside your clinical work. Consider whether you’re comfortable dealing with finances, people management, contracts and operational challenges.
4. Do you trust the other partners?
   A successful partnership depends on open communication and a shared approach to decision-making. Spend time understanding the other partners’ priorities, working styles and plans for the practice.
5. Does partnership fit your life?
   Consider how the role will affect your working hours, financial plans, family commitments and long-term career goals.

Need help?

Becoming a GP partner can be a rewarding career move. It can give you greater influence over how the practice develops and may offer increased earning potential. However, it also brings business responsibilities, financial uncertainty and risk.

Careful due diligence can help you understand the opportunity, identify potential concerns and make a well-informed decision.

We recently recorded a podcast exploring these points in more detail. Listen here, find it and more at larking-gowen.co.uk/LGI or search Larking Gowen Insights on your preferred podcast platform.

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Louise Dean | Partner in our medical accounting team | Colchester, Essex