In the 2024 Autumn Budget, the UK government announced an increase in employer National Insurance contributions (NICs) from 13.8% to 15%, effective from April 2025. While NHS hospital trusts and some public sector organizations are exempt from this rise, GP practices are not included in these exemptions.
The exemption meant that NHS bodies such as NHS trusts, foundation trusts, ambulance services, mental health providers, and other directly funded NHS organisations did not have to pay the additional 1.2% on top of standard employer NI contributions. This was designed to ensure that the funds intended for improving healthcare were not redirected back into government coffers through increased payroll taxes.
The rationale was to allow NHS organisations to retain more of their budgets to support workforce capacity, patient services, and operational costs, particularly in light of the COVID-19 pandemic’s impact. The exemption also acknowledged the rising costs faced by the NHS, including inflationary pressures and recruitment challenges.
Why GP Surgeries Were Excluded
Despite being an integral part of the NHS, general practices (GP surgeries) were excluded from this specific exemption. GP surgeries operate as independent contractors to the NHS rather than as NHS organisations themselves. They are often small or medium-sized private businesses contracted to deliver primary care services.
Because of their status, GP practices were treated like other private sector employers and thus remained subject to the full rise in employer National Insurance contributions. This led to concerns among GPs and their representative bodies, including the British Medical Association (BMA), who argued that the exemption should have been extended to include all NHS-contracted services, including primary care
In February 2025, the House of Lords passed an amendment to the National Insurance Contributions (Secondary Class 1 Contributions) Bill, proposing that GP practices, among other health and care providers, should be exempt from the NICs increase. This amendment aimed to maintain their contributions at the previous rate of 13.8%.
However, on March 19, 2025, the House of Commons voted against this amendment, effectively overturning the proposed exemption for GP practices. As a result, GP practices are required to pay the increased NICs rate of 15% from April 2025.
This decision has raised concerns among healthcare professionals and organizations. The British Medical Association (BMA) highlighted that the NICs increase could add approximately £20,000 annually to the tax bill of the average GP surgery, exacerbating existing financial pressures.
In summary, despite exemptions granted to certain NHS entities, GP practices are not exempt from the upcoming employer NICs increase and will need to adjust their financial planning accordingly.
