GP Tax Planning 2025: What You Might Be Missing

With big changes to NHS contracts this year, many GPs risk paying more tax than necessary. Here’s how to stay ahead.

As healthcare professionals focus on delivering quality care, it’s easy to overlook the financial fine print—especially when it comes to tax. But with the 2025–26 NHS GP contract bringing in significant updates around funding, pensions, and expense claims, understanding your tax position is more important than ever.

At Nichols Medical Accountants, GP tax planning is their speciality—and they’ve identified several areas where GPs could be losing money unnecessarily.

What’s New in 2025—and Why It Matters

This year’s contract updates include:

• Funding reallocation – £889 million is being redirected into the Global Sum, with a strong focus on CVD prevention and routine vaccinations.
• New enhanced services – £80 million has been allocated to advice & guidance initiatives, aiming to reduce secondary care referrals.
• ARRS updates – Maximum GP reimbursement under ARRS has increased from £73,113 to £82,418.

These changes affect everything from practice profitability to pension contributions—and without tailored tax planning, GPs could face higher bills, lower take-home pay, and compliance issues.

Smart Steps to Safeguard Your Finances
To make the most of the changes, here’s what every GP should consider:

1. Review how you extract income
Salary, dividends, or retained profits? Choosing the right mix can help reduce your tax exposure.

2. Track pension contributions
Exceeding the £60,000 Annual Allowance could trigger unexpected charges—especially with growing pension pots.

3. Optimise your practice expenses
Are you fully claiming for IT systems, booking software, professional fees and training costs?

4. Understand the impact of QOF changes
Reallocated indicators may reduce historic income streams, affecting both practice profits and tax planning.

Pension Planning: Still a Minefield?

Although the Lifetime Allowance charge has been abolished, pension tax remains a headache for many GPs. Nichols Medical Accountants advise GPs to:
• Check whether they’re on course to exceed the Annual Allowance.
• Monitor pension growth before year-end to avoid breaching thresholds.
• Ensure locum or salaried GP pension deductions are being calculated correctly—mistakes can lead to underpayments or missed relief.

These small checks can prevent large penalties.

Common Mistakes That Could Be Costing You

Nichols Medical regularly identifies these avoidable issues:
• Under-claiming expenses – from clinical software to subscriptions, unclaimed costs add up fast.
• Inefficient profit extraction – many GPs default to salary, when dividends or a hybrid approach could save thousands.
• Self-assessment blind spots – late or incomplete tax returns can lead to HMRC scrutiny and interest charges.
• Lack of forward planning – with the shift in QOF indicators and changes to contract funding, cash flow forecasting is more important than ever.

How Nichols Medical Accountants Can Help

Nichols Medical Accountants are specialists in tax planning for healthcare professionals. Their team works closely with GPs across the UK to:
• Build tax-efficient income structures
• Monitor pension contributions and allowances
• Ensure compliance with the latest NHS contract requirements
• Offer forward-looking financial planning tailored to your practice

👉 Explore how Nichols Medical can support you

Thinking Ahead: Why 2025 Is the Year to Act

With the NHS contract landscape evolving and more scrutiny than ever on how practices manage finances, it’s crucial to act early. Nichols Medical can help you reduce risk, increase tax efficiency, and keep more of what you earn.

Visit nicholsmedical.co.uk/thedoctorsclub to book your tax review and access exclusive content tailored for GPs.