How has the Autumn Budget impacted doctors?

Changes to Employers National Insurance

The headline change in the budget was a significant increase in employer’s National Insurance where two changes were made;

1. The rate was increased from 13.8% to 15% with effect from April 2025.
2. The income threshold where National Insurance is applied was reduced from an annual income of £9100  to £5000.

These changes increase the number of employees where Employer’s National Insurance is payable, coupled with the higher rate to be applied. For example, an employee earning £30,000 will see a rise in employer national insurance costs of £866 per annum.

The government protected smaller businesses with an increase to the Employment Allowance, which is available to offset employer's National Insurance. Previously, this was £5,000, increasing to £10,500 from April 25. However, it should be noted that this does not apply to General Practice or anyone who has more than 50% of their business in the public sector.

National Insurance is also a UK wide cost so all countries will be affected.

Changes to the minimum wage

The national minimum wage is also due to increase in April 2025 from £11.44 to £12.21 per hour. For those age 18 to 20 it is being increased by from £8.60 to £10 per hour with a view to aligning this with the full adult rate in future years. Doctors employing staff will therefore need to ensure they are compliant with minimum wage legislation and budget for the rise in costs from April.

Whilst both changes apply to all businesses including Private Doctor Practices. this will be particularly challenging in General Practice where the ability to increase income is limited by the contracts available to them. The 2025/26 contract reviews will therefore be critical and it is hoped that funding will flow through these contracts to compensate for some of the costs though no information is yet available.

Practice’s and PCN’s therefore need to prepare ahead to work out how much additional cost they will face from April 2025 when these changes happen as in many cases the combined impact will be significant.

Pension tax relief

There will be some comfort that pension tax relief was not changed nor were the regimes impacting lifetime allowance tax, maximum tax free lump sum or annual allowance tax. This does not mean that annual allowance tax has gone away, and is a problem we will continue to see for many high earners.

Outside of the budget it is worth reminding doctors that the NHS pension schemes are in the process of updating pension records to reflect the McCloud judgement. As part of this there may be a requirement to review annual allowance tax declarations for the eight years from 2015/16 to 2022/23. Many doctors are receiving a remedial pension saving statement (RPSS) letter at the moment which will need action. Further information can be found here.

Other changes announced in the Autumn Budget

There were some other significant changes to capital gains tax, stamp duty land tax and inheritance tax and these are covered in our full budget briefing. 

In particular, doctors should be aware that capital gains tax is increasing, which will increase the tax due on surgery and other asset disposals. Previously, surgery disposals could qualify for a reduced 10% tax rate on gains up to the value of £1m. From April 25, the rate will increase to 14%, further increasing to 18% from April 26. GP surgery values have increased over the years, so it’s likely longer standing partners will have capital gains – retirement planning will be key and terms within the partnership agreement should be reviewed, to understand the date of sale.

Inheritance tax is also changing, which will impact particularly those doctors with private pension savings in addition to their NHS pension, by bringing them within the scope of their estate. Again careful planning will be required.

Get in touch

If you wish to discuss how your business is impacted by these changes, please reach out to your usual healthcare contact or by using the button below. 

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