Chancellor pledges to ‘protect NHS’ but fails to rule out tax rises for GPs

The chancellor has said she will make the ‘necessary choices’ to ‘protect our NHS’, but has failed to rule out tax rises that could affect GPs ahead of the Autumn Budget.

In a pre-Budget speech at Downing Street this morning, Rachel Reeves acknowledged that there has been ‘a lot of speculation’ around the announcements she is expected to make at the Budget on 26 November.

This included a rumoured new tax on limited liability partnerships (LLPs), which caused uncertainty for GPs as reports in the national media suggested that this would represent a ‘tax raid on GPs’ or that the tax rise would ‘target GPs’ specifically.

Speculation has also included a rumoured 2p rise in income tax and a simultaneous cut to National Insurance, which experts have warned could leave most GPs worse off overall.

The chancellor mentioned the NHS as one of the priorities ahead of the Budget but failed to rule out tax increases.

She said: ‘I will make the choices necessary to deliver strong foundations for our economy – for this year, and years to come.

‘It will be a budget led by this Government’s values, of fairness and opportunity and focused squarely on the priorities of the British people: protecting our NHS, reducing our national debt and improving the cost of living.

‘You will all have heard a lot of speculation about the choices I will make. I understand that – these are important choices that will shape our economy for years to come.

‘But it is important that people understand the circumstances we are facing, the principles guiding my choices – and why I believe they will be the right choices for the country.’

She added that the Budget will ‘continue to deliver on the priorities of the British people’, including cutting NHS waiting lists. 

She added: ‘We finished the pandemic with higher death rates and higher debt than our peers. This isn’t about relitigating old choices. It’s about being honest with people about the consequences those choices have had. It is my job to deal with the world as we find it, not the world as I would wish it to be. Not to commentate or speculate, but to act.’ 

Experts have pointed out that a higher income tax rate could directly increase tax burden for GPs, compounding financial pressure on practices already struggling with rising costs and workload.

Alec Collie, head of medical at specialist financial services mutual Wesleyan, said: ‘The majority of GPs in the UK are self-employed and could be acutely affected if the chancellor proceeds with the rumoured 2p rise in income tax alongside a National Insurance cut.

‘GPs in partnerships paying income tax on profits will not benefit from reductions in employee National Insurance.

‘Only Class 1 employee contributions would be reduced, meaning most GPs could see higher overall tax bills just as practice costs, workloads and living expenses continue to climb.

‘With many still feeling the effects of the last National Insurance rise, this would only deepen the financial strain already facing the profession.

‘These aren’t abstract policy shifts – they are changes that have real, personal impacts on GPs’ financial wellbeing and career decisions.’

Last month, RCGP chair Professor Kamila Hawthorne urged the chancellor not to hike taxes for GPs, and asked her consider the impact tax rises have already had on GP practices, which meant that they ‘can’t afford to replace’ GPs who are retiring, ‘let alone take on more GPs’.

Meanwhile, primary care minister Stephen Kinnock did not directly respond to a question from Conservative MP Katie Lam who asked him how the Government would protect GP partnerships ‘from further NI burdens in the upcoming Budget’. 

A report by think-tank CenTax published last month did not distinguish between limited and unlimited liability partnerships and proposed ‘partnership national insurance contributions’ as part of the Budget.

The proposals laid out in the report were reportedly presented to the Treasury ‘for consideration’ and would affect 96% of GP practice partnerships, raising £250m from GPs. 

But experts told Pulse that if the rise only applied to limited liability partnerships, most GPs would not be affected because GMS and PMS contracts cannot be held in a LLP.