NHS Pension & Tax in 2025: What GPs Should Be Thinking About

As the NHS introduces pension and tax updates for 2025, many GPs could be at risk of avoidable tax charges, missed reliefs, or unexpected financial strain. Here’s what to review now.

The pension and tax landscape for GPs in 2025 is changing. While the Lifetime Allowance (LTA) has been abolished, Annual Allowance (AA) limits still apply, and a 6.7% pension increase has come into effect from April. Add in revised contribution bands and remedial statements tied to the McCloud remedy, and it’s clear that GPs need to take a closer look at their financial planning.

Nichols Medical Accountants, specialists in supporting NHS professionals, have outlined the most important updates—plus how to protect your income and retirement strategy.

NHS Pension Changes That GPs Need to Know

Here are the key changes now in effect or coming this year:

6.7% Pension Increase

From April 2025, NHS pension payments will rise by 6.7%, aligned with the Consumer Price Index. Retired members will see this reflected in April/May payments.

McCloud Remedy Growth Statements

Revised pension growth statements for 2015–2023 will be issued, which may affect your Annual Allowance and trigger Scheme Pays decisions. You could be eligible for refunds—or liable for new tax.

Flexible Retirement Rules

The NHS now allows members to partially retire and continue working, enabling more control over income and pension drawdown.

Employee Contribution Band Reforms

New bands aim to smooth transitions between contribution rates, preventing steep jumps as your income increases.

The Abolition of the Lifetime Allowance: What It Really Means

Although the LTA has been removed, GPs must still consider:

• The tax-free lump sum remains capped at 25% of £1.073m (£268,275)
• Complexities around how pension benefits are withdrawn still apply
• Future governments may revisit this policy

Read more about how Nichols Medical can help GPs prepare for retirement.

Annual Allowance Is Still the Main Risk

The Annual Allowance remains £60,000 in 2025—but tapering applies if your adjusted income exceeds £260,000, potentially reducing your allowance to as little as £10,000.

GPs with rising earnings, growing pension pots, or multiple income sources are particularly at risk. Without proper monitoring, this can lead to unexpected tax bills.

Tax Planning Moves for GPs in 2025

Here’s how you can stay ahead of the financial curve this year:

1. Watch for Transitional Profits

If your practice doesn’t use a March year-end, you may be affected by Basis Period Reform, which could trigger a large one-off tax bill in January 2025—especially for exiting partners. 

2. Use Pension Contributions Strategically 

Contributions can reduce adjusted net income; help preserve your personal allowance and mitigate the child benefit tax charge. 

3. Plan for Scheme Pays 

Breaching the AA? The Scheme Pays facility allows you to cover tax using your NHS pension—but you need to elect in time. Early action is essential.

Expert Guidance for NHS Professionals

Navigating these changes on your own can be overwhelming. That’s where the expertise of Nichols Medical Accountants makes a difference. They provide:

• Tax modelling for Annual Allowance forecasts
• Support with Scheme Pays and pension growth reviews
• Basis Period Reform planning
• Exit and retirement strategy support for GP partners
• Personal tax optimisation tailored to NHS clinicians

Visit Nichols Medical’s to explore support and insights tailored to you.

Final Thought: Don’t Let 2025 Catch You Off Guard

From pension reforms to shifting tax rules, GPs are navigating a more complex financial landscape than ever. Whether you’re planning to retire, restructure your income, or simply want clarity, the time to act is now.

Get proactive with Nichols Medical Accountants and ensure you’re protected in 2025 and beyond.