Partnership under the new Contract: What’s changing and what you can do
By Alec Collie, Head of Medical at Wesleyan Financial Services
In the light of the new GP contract, partnership remains attractive to most GPs. But the financial case has shifted significantly.
Ahead of the contract coming into effect, Wesleyan polled GPs on how the changes made them reflect on their professional and financial futures. 61% of GPs considering partnership are now worried about increased financial risk and liability, with rising practice costs, tax changes, and uncertain contract arrangements squeezing profitability at a critical moment.
The new contract doesn’t fundamentally change what partnership means. It still requires unlimited personal liability for practice debts, premises leases, and management. It still demands meeting operational obligations and delivering same-day urgent access. But it intensifies these commitments at a time when the financial context has become less predictable.
What’s squeezing partnership profitability
Three pressures are increasing simultaneously. Rising practice costs directly impact partner drawings – premises, staffing, technology, compliance – these costs must be met before partner income can be calculated.
On top of this, tax changes linked to the new contract have now taken effect.
The dividend tax rose 2%, affecting how partners extract income. Frozen tax thresholds until 2031 mean more partners will be pulled into higher marginal rates as their pay progresses. For those drawing income through a mix of salary and dividends, the calculations have shifted.
The 10-Year Plan also remains unclear on implementation. Talk of neighbourhood health centres and technology investment lacks concrete detail on timelines or funding – seven in 10 GPs believe the reforms will intensify workload pressures yet lack clarity on how they’ll be implemented or funded.
GPs don’t know whether practices will be restructured, merged, or incorporated into larger provider structures. That uncertainty makes long-term partnership commitments much harder to evaluate.
What the contract requires
Under the 2026/27 terms, partners must guarantee same-day access for urgent cases, meet new operational and administrative requirements, and continue managing premises, compliance, HR, and clinical delivery. These obligations apply regardless of profitability or practice circumstances.
While you can’t opt out of these terms, you can structure how you respond to them financially.
Understanding your liability exposure is an essential first step. Partnership means unlimited personal liability, yes, but it can be mitigated. Ensure any partnership agreement you’re considering is robust, covering profit-sharing, dispute resolution, and exit terms clearly. Partnership protection insurance in case of illness or death is also vital.
Premises arrangements are another important consideration. Premises reimbursement and ownership affect both personal liability and income extraction. Some practices own premises, others lease – understanding how arrangements interact with your liability and income is critical before committing.
Modelling different scenarios can be very helpful for evaluating your options. Before entering partnership, stress-test your assumptions: consider scenarios where practice costs rise further, reforms lead to practice restructure, or the partnership is dissolved. Understanding your exposure across different scenarios will help you make informed decisions.
Reviewing your income extraction options is also a must. With the dividend tax rise and frozen thresholds now in effect, there is more emphasis on how income is extracted. Consider whether to prioritise salary over dividends, and how pension contributions fit. A financial adviser who understands NHS partnership income can help determine the most tax-efficient approach for your circumstances.
If you’re already in partnership
Those already in partnership should review their income structure in light of the new tax rates. The balance between your salary and dividends may have shifted, and adjusting your extraction method could help to improve your financial position.
It’s also key to ensure your partnership agreement reflects current circumstances and provides clarity on everyone’s obligations. If it was written before these changes, it may now need updating.
With some details still not certain, staying informed on contract implementation and 10-Year Plan developments as they emerge will keep you best positioned to make informed decisions. As details become clearer, your financial planning may need to adjust.
What matters now
Partnership decisions are made on financial viability as much as principle. Our research shows 37% of GPs are considering early retirement within the next year because of contract pressures. Partnership recruitment – traditionally the route for senior GPs – is at risk if the financial case becomes unclear or unattractive.
When partnership viability becomes uncertain, GPs pursue alternatives, such as private work, portfolio careers, or leaving the NHS entirely. That has substantial implications for workforce retention and service delivery.
The new contract creates complexity, but clear-eyed financial planning can help you steer through it.
Right now, specialist guidance is essential, particularly from advisers who understand how the new contract, tax changes, and partnership structures interact.
Before making any decisions, get advice, model your scenarios, and understand your liability exposure. Only then can you make an informed decision about whether partnership works for you.