Practice Finances
How the money actually flows through a practice — and the partnership economics nobody explains
General information, not financial advice
This guide explains how practice finances work in general terms, using 2026/27 national rates and illustrative round numbers. It is not financial, tax, or accounting advice, and your practice's position will differ. Speak to your specialist medical accountant before acting on anything here.
How the Money Flows in 2026/27
In one sentence: a GP practice is a small business with half a dozen income lines, most of which follow patients rather than effort — and understanding which is which is the foundation of every financial decision a partnership makes.
Our GP Contract guide covers the contract mechanics — Carr-Hill weighting, access requirements, what the SFE says. This guide is about the other half: what lands in the bank, what it costs to earn, and what it means for the people whose names are on the contract. Here's the typical income mix for a GMS practice — click any segment:
| Stream | What drives it | What that means for partners |
|---|---|---|
| Global Sum | Weighted list size — £130.07 per weighted patient | Follows patients, not sessions. Stable monthly cash; your rota decisions don't change it. |
| QOF | Points achieved × £227.95, adjusted for prevalence and list | Earned by the whole team across the year. Lumpy cash — aspiration advances plus a year-end settlement that can go either way. |
| Enhanced services | Items and services actually delivered and claimed | Effort-sensitive income. Under-claiming is a silent leak; reconcile monthly. |
| PCN / ARRS | PCN DES participation; ARRS reimburses staff costs | Mostly pass-through reimbursement, not profit. Don't let it flatter the top line. |
| Premises | Notional or actual rent, rates, clinical waste | Pass-through unless partners own the building — then it's a property return, held in ownership shares. |
| Dispensing (where eligible) | Dispensing volumes, fees, and purchasing margin | A genuine margin business for rural dispensing practices; irrelevant for everyone else. |
Dispensing practices — a different animal
If your practice dispenses, you run a genuine margin business alongside general practice: drug purchases on the expense side, dispensing fees and purchase discounts on the income side. The totals can look dramatic in the accounts while the margin is modest — always ask your accountant for the dispensing profit, not the dispensing turnover.
The one fact to hold onto
Most practice income follows patients, not sessions. The Global Sum — roughly 60% of income — is paid per weighted patient whether you offer eight sessions or six. That single fact drives the partnership economics in the second half of this guide: why cutting sessions costs less than you'd think, why cover costs are the real lever, and why a shrinking partnership carries the same overheads with fewer shoulders.
What Changed This Year
The 2026/27 contract was imposed — GPs rejected it by 98.9% in the BMA referendum (16,764 votes, 55.1% turnout) and collective action has escalated since. Whatever you think of the politics, these are the numbers now flowing through your accounts:
£485m
Contract uplift
3.6% cash for 2026/27
1.4%
Real-terms growth
After the GDP deflator
£130.07
Global Sum
Per weighted patient (was £123.34)
£227.95
QOF point
Per point (was £225.49)
£292m
GP Reimbursement Scheme
Repurposed from PCN CAP
~£440m
NI + NLW squeeze
Extra staff costs across practices
The uplift, honestly
£485 million sounds substantial. It's a 3.6% cash uplift, which becomes 1.4% in real terms after the GDP deflator. The headline rates moved with it: the Global Sum from £123.34 to £130.07 per weighted patient, and the QOF point from £225.49 to £227.95.
Set against that: the employer National Insurance and National Living Wage increases are estimated to cost practices around £440 million — meaning most of the uplift is spoken for by your staff bill before it gets anywhere near partner drawings. Specialist commentators have warned many partners face a real-terms pay cut this year.
The GP Reimbursement Scheme — new, practice-level
The structural change that matters most for your finances: £292 million has been repurposed from the PCN-level Capacity and Access Payment into a new practice-level scheme reimbursing GP employment — recruiting additional GPs or adding sessions.
- It's repurposed, not new money — if your PCN passed CAP funding through to practices, your net gain may be small
- It changes the cover maths — a salaried GP you thought unaffordable may not be once reimbursement is included
- It's practice-level — you apply directly, not through your PCN. The application mechanics are in our GP Contract guide
What to actually do
- Re-budget staff costs first — model your real NI and NLW impact rather than assuming the uplift covers it
- Don't set drawings off last year's profit — this is a year when costs are rising faster than income for many practices
- Check the GP Reimbursement Scheme before buying locum sessions — the cheapest cover option may have changed
Partnership Economics — the Part Nobody Explains
Medical school didn't cover this, and most induction packs don't either. Four pieces of maths every partner should understand: why profit isn't a salary, why most of your costs are fixed, what really happens when someone reduces sessions, and what cover actually costs.
1. Profit is not a salary
You don't get paid by the practice — you own a share of what's left after the bills. Here's the journey from practice profit to your bank account:
The practice makes a profit
Income minus expenses, for the whole practice, calculated when the annual accounts are prepared. This is the number that matters — and you're taxed on your share of it whether or not you ever draw it out.
e.g. £1.5m income − £1.05m expenses = £450,000 profit
The deed sets your share
Profit is divided according to your partnership deed — pure sessional shares, equality after prior shares, or a points system. Property income and seniority may be carved out first as prior shares.
e.g. three equal partners at 8 sessions each → £150,000 per partner
Superannuation comes off
If you're in the NHS Pension Scheme, employee contributions are deducted through the practice against your pensionable profit. They're your money going into your pension — but they never reach your bank account.
Certified annually on your Type 1 certificate — check it matches the accounts
Tax is reserved — or should be
Nobody deducts tax at source for a partner. Either the practice retains a tax reserve on your behalf or you save it personally. Self-assessment payments on account fall due each 31 January and 31 July.
The classic new-partner trap: an 18-month wait, then two tax bills arriving close together
Drawings are what's left
Monthly drawings are an estimate of your share after superannuation and tax reserves — an advance against profit, not a salary. When the accounts are finalised, the difference is settled through your current account.
If drawings ran ahead of actual profit, you owe the practice the difference at year-end
The drawings illusion
Steady monthly drawings feellike a salary, which is exactly why they're dangerous. If profit falls — a locum-heavy year, a QOF clawback, the NI rise — and drawings don't, the gap quietly accumulates in your current account until the accountant delivers the bad news with interest. Review drawings whenever the practice's circumstances change, not once a year.
2. Most of your costs are fixed
Walk down the expense side of your accounts and mark each line: does this cost change if a partner works fewer sessions? For most lines, the honest answer is no.
| Cost line | Fixed or variable? | Notes for partners |
|---|---|---|
| Staff salaries and on-costs | Fixed (short term) | The largest single cost. The 2026/27 employer NI and National Living Wage rises land here. |
| Premises — rent, rates, utilities | Fixed | Partly offset by premises reimbursement; the rest doesn't care how many sessions you work. |
| IT, CQC fees, indemnity, subscriptions | Fixed | Contractual and regulatory — these fall for nobody. |
| Locum and cover costs | Variable | The main lever partners actually control. See the cover maths below. |
| Clinical consumables | Variable (small) | Moves with activity, but rarely moves the dial. |
| Dispensing drug purchases | Variable | Matched by dispensing income — watch the margin, not the totals. |
This is why practice finances behave so differently from a consulting-room intuition of “work more, earn more”. Income follows patients; costs are mostly fixed; so the profit effect of any staffing decision comes down to the marginal cost of clinical cover — which brings us to the worked example.
3. Fixed-cost dilution — what dropping sessions really costs
The scenario every tired partner has run in their head: “If I drop from eight sessions to six, I lose a quarter of my income.” Round numbers, one practice, and the actual maths:
The naive sum
Three partners, eight sessions each, sharing £450,000 of profit — £150,000 per partner, or £18,750 per weekly session on the averages. Partner A wants to drop to six sessions and assumes: a quarter fewer sessions, a quarter less income.
Expected new income: £150,000 × 6/8 = £112,500 — a £37,500 pay cut
Practice income barely moves
The Global Sum is paid per weighted patient, not per partner session. QOF, enhanced services, and premises income don't change either. When Partner A drops two sessions, the practice loses clinical capacity — not income.
Practice income: £1.5m before, £1.5m after
Costs rise only by the cover
The practice replaces the two sessions with salaried GP time — illustratively £12,500 per weekly session per year including on-costs, so £25,000. Every other cost line is fixed and doesn't move.
New profit: £450,000 − £25,000 = £425,000
Re-share the profit
£425,000 is now shared across 22 sessional shares instead of 24 — about £19,318 per session. Partner A takes 6 × £19,318 ≈ £115,900: a gross fall of around £34,100, not £37,500. The remaining partners each take 8 × £19,318 ≈ £154,500 — slightly up, because the cover costs less per session than the profit each session was generating.
Gross cost of dropping 2 of 8 sessions: ~23%, not 25%
Tax softens the fall
The income given up is the top slice — taxed at the highest marginal rates. Between £100,000 and £125,140 the personal-allowance taper pushes the effective income-tax rate to 60% before National Insurance. In this illustration the net cost is roughly half the gross — around £16,000–£17,000 a year.
Roughly £1,400 a month, after tax, for two sessions a week of your life back
Every deed is different — model yours
This example uses a pure sessional profit share, salaried-rate cover, and round illustrative numbers. Your deed may split profit differently (equality, points, prior shares for property or seniority); your cover may be locum-priced; your tax position is your own; and pension effects are deliberately left out. The principle — marginal cover cost, not average profit per session, is what a session change really costs — survives all of that. The exact numbers don't. Ask your accountant to run your version before you decide anything.
4. What cover actually costs
The worked example hinged on one number: the cost of replacing a clinical session. The only figure that matters is the full cost per session delivered — including on-costs, agency fees, and the sessions that never get filled:
| Cover option | Cost shape | What else to weigh |
|---|---|---|
| Salaried GP | Salary plus employer NI and pension on-costs. Usually the cheapest steady cover per session — if you can recruit. | Continuity for patients; employment rights, sick pay, and leave costs stay with the practice. Check the GP Reimbursement Scheme before assuming you can't afford one. |
| Regular locum | Sessional invoice rates, typically well above the equivalent salaried cost per session. | No employer on-costs, but no continuity guarantee, pension admin via locum forms, and availability risk every time your rota changes. |
| Ad-hoc / agency locum | The most expensive option, with agency fees on top of the sessional rate. | Fine as a safety valve. If it becomes structural, it will quietly eat the partnership's profit — a locum-heavy year shows up hard in the accounts. |
| Partners absorb it internally | No cash cost — a real workload cost. | The hidden expense surfaces later as burnout, sickness, and eventually a partner resignation that costs far more than cover ever would. |
The workforce paradox
Here's the bitter irony of 2026/27: for the first time in years, GPs are available — trade press has documented qualified GPs struggling to find work — while practices that desperately need them can't afford to employ themfrom core funding. Salaried GPs overtook partners in headcount in December 2024, yet the funding per patient doesn't stretch to another salary in many practices. The GP Reimbursement Scheme is the contract's partial answer — £292m specifically for employing GPs — which is why checking it belongs in every cover decision this year.
Last partner standing
One honest paragraph, because it belongs in a finances guide: if partners leave and aren't replaced, the survivor holds the NHS contract, the lease, the staff contracts, and unlimited personal liability — alone. The average practice now has 2.9 partners (it was 3.2 in 2015), partner numbers in England are down to 17,846 and falling, and an RCGP survey of 2,317 GPs found only 32% would even consider partnership — citing personal liability, budgets, and buildings. None of this is a reason to panic; it is a reason to treat succession as a standing finance item, keep the practice attractive to join, and know exactly what your deed says about exits beforeyou're the one reading it at midnight. Our Partner Exits and Partnership Agreements guides cover the mechanics.
Estimate Your Core Income
A back-of-envelope check on the two biggest streams — Global Sum and QOF — using the 2026/27 national rates. Useful for sanity-checking your accounts, budgeting, or seeing what a list-size change would mean:
Estimate Your Core Income
A rough guide to Global Sum + QOF only. It excludes enhanced services, PCN income, premises reimbursement, and dispensing — typically a third or more of total practice income. Everything runs in your browser; nothing you type is stored or sent anywhere.
Your weighted list is your raw list adjusted by the Carr-Hill formula. If you don't know your factor, your practice's payment statements show both raw and weighted list sizes — divide one by the other.
Weighted patients
10,000
Global Sum
£1,300,700
QOF income
£119,674
Estimated core income
£1,420,374
Based on £130.07 per weighted patient and £227.95 per QOF point (525 points counted, capped at 582). Roughly £142.04 per registered patient. An approximation only — it excludes enhanced services, PCN flows, premises reimbursement, dispensing, MPIG, and the out-of-hours deduction. For illustrative purposes only, not financial advice.
What this deliberately leaves out
Enhanced services, PCN flows, premises reimbursement, dispensing, MPIG, and the out-of-hours deduction — typically a third or more of total income, and the streams that vary most between practices. The estimator gives you the right order of magnitude for the core, nothing more. Your accounts, not a web page, are the source of truth — and everything you type here stays in your browser.
Can You Afford to Hire?
Staffing is the biggest line in the practice budget, and a hire costs meaningfully more than the advertised salary once employer National Insurance and pension are added. This calculator shows the true annual cost of a role at 2026/27 rates — and, with your practice figures, what it does to your staff cost ratio:
Cost a New Hire
Pick a role or type a salary, and see the true annual cost once employer National Insurance and pension are added — at 2026/27 rates. Add your practice figures (optional) to see what the hire does to your staff cost ratio.
BMA recommended range for England 2026/27: £78,699–£118,759. A soft benchmark, not a pay scale.
1.0 is full-time; 0.5 is half-time. The salary and the National Insurance threshold interaction are handled automatically.
Optional — your practice context
Add both figures to see the staff cost ratio before and after the hire. Leave blank to skip.
Pro-rated salary
£78,699
Employer NI
£11,055
Employer pension
£11,317
Total annual cost
£101,071
On-costs as % of salary
28.4%
Everything runs in your browser — nothing you type is stored or sent anywhere. The total excludes recruitment, training, cover for sickness and maternity, and pay drift. The NHS Pension figure is the practice-paid rate; most of the headline 23.78% employer rate is funded centrally by NHS England. Rates apply to 2026/27 only. GP practices whose work is wholly or mainly NHS-funded generally cannot claim the Employment Allowance, so nothing has been deducted for it. Illustrative only, not financial advice — speak to your specialist medical accountant.
Check the reimbursement routes before you fund it alone
If the role is employed through your PCN under the Additional Roles Reimbursement Scheme, reimbursement runs up to a per-WTE maximum that includes employer on-costs — for GPs, £152,900 outside London in 2026/27, of which £118,759 is the salary element. The money flows to the PCN, not the practice, so what reaches you depends on how your network organises it.
New for 2026/27, the GP Employment Reimbursement Schemefunds salaried GP employment at practice level — £292m repurposed from the Capacity and Access Payment, now recurrent in the core contract. If you're costing a salaried GP, run the numbers with the scheme included before concluding you can't afford one.
Reading Your Accounts
Practice accounts arrive once a year, often months after year-end, and in many practices they're filed rather than read. That's a wasted asset: the annual accounts meeting is the one time a specialist sits across the table with benchmark data on hundreds of practices like yours.
Use a specialist medical accountant — the AISMA network is the usual marker — and take these seven questions to the meeting. Click each one for what it tells you:
Benchmarks beat instincts
Every one of these questions gets sharper with comparison data — income per weighted patient against benchmark, staff cost ratio against trend, drawings against profit. Specialist accountants hold pooled data across their GP clients; a generalist accountant, however good, is benchmarking you against nothing. If your accountant can't answer “compared to what?”, that itself is an answer.
What's Coming — All Unsettled
The contract landscape has moved three times this year already, and the bigger moves are still ahead. Everything below the “now” line is unsettled — announced intentions, not agreed facts:
April 2026
The imposed 2026/27 contract took effect — £485m uplift, Global Sum £130.07, QOF point £227.95, £292m moved from PCN CAP to the practice-level GP Reimbursement Scheme. GPs had rejected it by 98.9% in the BMA referendum (16,764 votes, 55.1% turnout).
Summer 2026
Collective action escalating month by month. Practices absorbing the employer NI and National Living Wage rises (~£440m across England) while the GP Reimbursement Scheme rolls out.
Autumn 2026
Wholesale contract negotiations expected to open. Scope, timetable, and outcome are all unsettled — treat anything you read about the future contract as provisional.
2027
A profession-wide vote on any renegotiated contract is anticipated. Unsettled — the result could reshape practice funding, or entrench the current model.
Date not set
A review of the Carr-Hill formula remains pending. If it happens, it would redistribute the Global Sum between practices — some gain, some lose. Unsettled.
How to plan against uncertainty
Don't make irreversible financial commitments — property purchases, long leases, partnership restructures — on assumptions about what wholesale negotiations or a Carr-Hill review will deliver. Budget on the 2026/27 rates you actually have, keep a sensible reserve, and revisit when something is signed rather than briefed. We'll update this guide as each of these settles.
Glossary
Practice-finance jargon decoded — the terms you'll meet in your accounts, your deed, and your accountant's letters:
Drawings
The monthly amounts partners take from the practice — an advance against expected profit, not a salary. Set prudently, reviewed against the finalised accounts, and trued up through current accounts.
Profit share
Your slice of the practice's profit, as defined by the partnership deed — sessional shares, equality after prior shares, or a points system. This is what you're taxed on, whether or not you draw it.
Current account
The running balance between your profit share and what you've actually drawn (plus tax and superannuation paid on your behalf). Should be reviewed annually and kept broadly in parity between partners.
Capital account
Your long-term stake in the practice — property, equipment, and working capital you've contributed. Paid out (per the deed) when you leave; one reason partner exits need financial planning.
Tax reserve
Money set aside — by the practice or personally — against your self-assessment liability. Partners have no employer deducting tax at source; the reserve is what stands between you and an unfunded January bill.
Payments on account
The two advance payments (31 January and 31 July) HMRC requires against the current tax year, each half of last year's bill. Rising profits mean they lag reality, with a catch-up balancing payment.
Superannuation
NHS Pension Scheme contributions, deducted through the practice against your pensionable profit and certified annually. Check the certificate matches the accounts — errors compound quietly.
Fixed-cost dilution
The effect of most practice costs being fixed: changes in partner sessions move profit far less than pro-rata, because income follows patients and only the marginal cover cost changes. Works for you when reducing sessions; works against a shrinking partnership carrying the same overheads.
Sessional share
A profit-sharing unit based on weekly sessions worked. A partner on 6 of a practice's 22 total sessions takes 6/22 of the shareable profit. Common, simple, and the model used in this guide's worked example.
Prior shares
Also: prior charges
Amounts allocated to specific partners before the main profit split — typically property income for building owners, or seniority. Check your deed: they change who really earns what.
On-costs
The employer's costs on top of gross salary — employer National Insurance and employer pension contributions. For practice staff in 2026/27, typically around 15–20% of salary depending on pay level and pension arrangement. The reason a hire always costs more than the advertised figure.
Staff cost ratio
Staff costs as a percentage of practice income. The headline expense benchmark — ask for the three-year trend, especially with the 2026/27 NI and National Living Wage rises.
AISMA
Association of Independent Specialist Medical Accountants
The network of accountancy firms specialising in GP practices, with pooled benchmarking data. If your accountant doesn't specialise in medical practices, you're paying for generic advice in a very non-generic business.
Notional rent
The premises reimbursement paid to practices whose partners own the building, based on assessed rental value. The property-owning partners' return on the building — separate from clinical profit.
Weighted patient
Your registered list adjusted by the Carr-Hill formula for age, deprivation, and other workload factors. The Global Sum (£130.07 in 2026/27) is paid per weighted patient, not per raw patient. See the GP Contract guide for the formula.
GP Employment Reimbursement Scheme
Also: GP Reimbursement Scheme
The new practice-level scheme for 2026/27 — £292m repurposed from the PCN Capacity and Access Payment, recurrent in the core contract — funding practices to employ salaried GPs or add sessions. Distinct from the PCN-level ARRS: this money reaches the practice directly. Changes the salaried-vs-locum cover maths; check it before buying locum sessions.
Practice Finances Checklist
Things to review with your partners, your practice manager, and your accountant. None of it is urgent until the day it suddenly is:
Where to start
- This month: re-budget staff costs for the NI and NLW rises, and check the GP Reimbursement Scheme against your cover spend
- Before the next accounts meeting: take the seven questions from this guide, with partners present
- This year:run the fixed-cost dilution model for your own practice — sessions, cover, and exits — while it's hypothetical
A reminder before you act on any of this
Everything above is general information based on national 2026/27 rates and illustrative examples — it is not financial, tax, or accounting advice, and it can't see your deed, your list, or your tax position. Speak to your specialist medical accountant before making decisions about sessions, drawings, cover, or partnership changes.
Sources and further reading
- Changes to the GP contract in 2026/27 (NHS England, March 2026)
- BMA referendum result (April 2026)
- NHS England GP Workforce statistics (31 May 2026)
- GP partners face pay cut warning (GPonline)
- The GP recruitment paradox (Pulse, 2025 review)
- Statement of Financial Entitlements (SFE) 2026/27
Last reviewed: 9 July 2026. All links checked at that date.
Built by an NHS GP partner. Illustrative figures are marked as such.