A group medical practice can look straightforward from the outside. A few clinicians work together, income comes in, staff are paid, rooms are rented, and the practice carries on. In reality, the financial side can get complicated quite quickly. It can affect how profits are taxed, how doctors take money from the practice, how expenses are dealt with and what happens when a new partner joins, or an existing one leaves. That is why group medical practice tax planning should start before the structure becomes difficult to change. Let us break down how you can structure your group medical practice to boost tax efficiency for the 2026/27 tax year. What Counts as a Group Medical Practice? Before getting into structures for group medical practice tax planning, it’s worth being clear about what it means. A group medical practice, for tax purposes, usually refers to two or more GPs, dentists, or other healthcare professionals operating together under a shared business arrangement. Sometimes across multiple sites, sometimes sharing back office functions, premises, or even a management company. It could be a traditional GP partnership with five partners. It could be three dental practices under one holding structure. Or it could be a group of clinics that share a central admin team but keep clinical income separate. The tax treatment can look quite different depending on which of these you actually are. What Are The 4 Common Ways to Structure a Group Medical Practice? There is no single best setup for every group practice. The right choice depends on whether you deal with NHS General Medical Services (GMS), Personal Medical Services (PMS) contracts, or purely private healthcare services. Here are the four main structures used across the UK. 1. The Traditional Partnership A traditional partnership is still very common in UK healthcare. Yes, particularly for GP practices. In a traditional partnership, all partners own a share of the practice. Partnership profits are calculated at partnership level and allocated to the partners according to the commercial profit-sharing arrangement. Individual partners generally report their allocated shares on their own Self Assessment tax returns. Each partner is taxed on their share of the business profit. It does not matter whether all of that profit has been taken out as drawings. This structure is simple and familiar. Also, most NHS contracts (GMS and PMS) are still written with partnerships in mind. The downside of this structure is that partners have unlimited personal liability for practice debts. Also, you cannot leave profits inside the business at a lower tax rate. You pay personal tax on all profits in the year they are earned. Yes, whether you draw the cash out or leave it in the practice bank account. 2. Limited Liability Partnership (LLP) An LLP sits somewhere between a traditional partnership and a company. Members get limited liability protection, which helps with healthcare litigation risks. However, you must be careful. An LLP cannot legally hold an NHS General Medical Services (GMS) contract. This means core NHS GP practices cannot use this structure. However, an LLP does not automatically mean lower tax. Members still need to consider their Income Tax position. They also have to consider National Insurance, where relevant. The salaried member rules can also be relevant in some LLP arrangements. So, if an LLP is being considered, you must look at the actual arrangements between the doctors. Do not focus only on the label. 3. Limited Company (Incorporation) This is where things get more interesting from a group medical practice tax planning point of view. A limited company pays corporation tax on its profits rather than income tax. For 2026/27, that’s: Profit Level Corporation Tax Rate Up to £50,000 19% (small profits rate) £50,001 to £250,000 Marginal relief, effective rate up to 26.5% Over £250,000 25% (main rate) The £50,000 and £250,000 limits can be reduced in some circumstances, including where a company has associated companies or a short accounting period. The doctors become director-shareholders. You take a small and tax-efficient salary alongside dividend payments. Dividend tax rates for 2026/27 are 10.75% for basic rate taxpayers, 35.75% for higher rate taxpayers, and 39.35% for additional rate taxpayers, following the £500 tax-free dividend allowance. Be careful here with NHS pension access. Standard GMS/PMS contracts require at least one GP partner or an approved entity. And, trading via a limited company can alter your NHS pensionable earnings status. Limited companies are used in some private healthcare and secondary-care arrangements, although their suitability depends on the ownership, activities, tax position and commercial objectives of the group. 4. Hybrid Structure (Service Company Setup) For group practices that want to keep their NHS contract in a partnership but still want corporation tax benefits, a hybrid structure works well. The core medical partnership retains the NHS contract and receives the corresponding ICB or health board funding allocations. Meanwhile, you set up a separate service limited company to own the practice assets, hire administrative staff, and provide management services for the main practice. The service company charges a fair commercial management fee to the medical partnership. Where commercially justified, the service company may charge the partnership for genuine services, staff, assets or management support. The amount should be commercially supportable and the tax consequences considered carefully. Profits retained in the company may be subject to Corporation Tax, but extracting those profits personally can create further tax consequences. Profits can be reinvested into medical equipment or modernising facilities. Comparing Group Practice Structures for 2026/27 Here is a quick snapshot of how these choices compare for a medical group: Feature Traditional Partnership Limited Liability Partnership (LLP) Limited Company Hybrid / Service Company Personal Protection No (Unlimited) Yes (Limited) Yes (Limited) Mixed (Partnership + Ltd) Tax Rate on Retained Cash Up to 45% Income Tax Up to 45% Income Tax 19% – 25% Corp Tax 19% – 25% Corp Tax NHS Pension Compatibility High (Direct) Restricted (Cannot hold GMS/PMS contracts) Complex / Restricted High (Partnership holds GMS) National Insurance Class 4 NICs apply Class 4 NICs …

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