Rachel Reeves' GP tax 'double whammy' risks crippling NHS, warns lawyer

Rachel Reeves is jeopardising the future of the NHS with a "double whammy" of tax hikes on GPs, a leading accountant has claimed. Katie Collin, partner at specialist medical accountancy firm Ramsay Brown LLP, fears the Chancellor's plans could trigger mass surgery closures and an exodus of doctors.

Ms Collin, who advises around 3,000 UK healthcare professionals on finances and restructuring, spotlighted the threats ahead of Ms Reeves' autumn Budget on November 26: a mooted National Insurance (NI) charge on partnership incomes and a suspected "pension tax raid", potentially slashing the £268,275 tax-free lump sum for retiring medics, reported in The Times. Ms Collin warned: "If Reeves goes for the double whammy and goes ahead with both NI on partnerships and a pension tax raid, I'd go as far as to say that it would cripple the Government's 10-year plan for the NHS."

The proposals, drawn from think-tank recommendations, initially aimed to close a tax loophole by extending employer NI contributions to limited liability partnerships (LLPs) used by professionals such as lawyers and accountants.

However, the plans were broadened to cover all partnerships - including the general partnerships that most GP practices use - potentially raising £2bn to help address a £30bn public finance shortfall.

Of the UK's approximately 8,000 GP practices, the vast majority - around 7,450 across the UK - are NHS-contracted, leaving a smaller cohort of about 550 private providers potentially exposed without exemption.

Ms Collin detailed the personal toll: "Ultimately, it would hit partners' income - GPs are already looking at reducing their sessions to ease the income tax burden, and this extra charge would only encourage them to cut their hours further.

"Given the levels of dissatisfaction already rife across general practice - and the numbers that are telling me they're considering leaving... it could also end up pushing GPs out of UK general practice entirely. If partners who own their practices head for the door by taking early retirement or emigrating, we could see whole surgeries close."

Ramsay Brown's client insights reveal the fragility: most GPs keep just 30% of earnings after tax and pensions, making added levies potentially "non-viable" for the partnership model.

Early retirement has rocketed 9.3% year-on-year since 2008, and Ms Collin predicted panic if pensions are hit: "A swathe of GPs will cut and run to get their money out fast."

Labour's NHS blueprint relies on robust primary care, targeting one full-time GP per 1,800 patients - yet the UK scrapes by with 2,200.

Ms Collin stressed: "They have placed so much focus on primary care since they got the keys to Downing Street, and for their plans to succeed, a strong GP workforce and a healthy network of practices are non-negotiables." She added: "But they're just not going to stick around if both their pensions and income are hit."

Yesterday's last-minute reprieve - Ms Reeves' announcement exempting NHS GPs from the NI levy averts an immediate £200m sting atop last year's employer NI hikes for the bulk of practices.

Ms Collin noted: "Last year's employer NIC hikes placed significant financial strain on practices, which had to allocate far more money for their staff costs.

"At the end of the day, it's the practices' partners that end up shouldering this financial burden." However, she dismissed it as too little for the sector overall: while NHS practices are shielded, non-NHS ones remain vulnerable, and pension fears endure amid policy flux.

Ms Collin advised the Treasury to classify GP outfits as "public-private partnerships" immune from private-sector squeezes like those on law firms. She urged: "You can't group GP practices in with other private business partnerships.

"They are public-private partnerships that have a hugely significant role in the NHS, and they must be treated as such." Ms Collin warned that GPs could cut hours to reduce tax burdens, leading to "serious implications for patient care" and added pressure on primary care from potential closures. This risks undermining the government's pledges to expand GP capacity, given existing shortages.

This GP peril forms part of Ms Reeves' wider tax measures, including an inheritance tax (IHT) clampdown on affluent estates to bankroll services. IHT hauls hit £4.4bn in the first half of 2025/26, buoyed by static thresholds and asset inflation.

Proposals could involve extending the seven-year gifting window to 10 years - taxing bequests up to a decade pre-death - and curbing surplus income gifts, now instantly exempt. From 2026, business relief caps at £1m, hitting farms and firms with 20% levies on excess.

Ms Collin demanded prompt fixes if the hikes advance. She said: "GPs got a significant funding boost this year, which was sorely needed... but I worry that these proposals would completely undermine any progress made since then.

"Carve-outs, reversals or stay-put perks are vital 'immediately', to fend off NHS 'hollowing out'."

A Treasury spokesperson said on Wednesday: "We do not comment on speculation on future changes to tax outside of fiscal events." The British Medical Association has warned that further pressures could lead to closures, estimating an extra £865 per employee on £30,000 salaries.