What are the tax implications of running a private GP service?

How you are taxed depends on how you work

The tax on private GP income follows your working arrangement, not the fact that the work is private.

How you work	How the income is taxed	Who deals with it
Employed by a clinic	Income Tax and employee National Insurance through PAYE	The clinic, through payroll
Self-employed (sessional work or your own practice as a sole trader)	Income Tax and Class 4 National Insurance on your profits	You, through Self Assessment
Through your own limited company	Corporation Tax on company profits, then personal tax on the salary and dividends you take	The company and you, usually with an accountant

Most GPs who start with a few private sessions are self-employed for that work, so this article concentrates on that. For the company route, including Corporation Tax, dividend tax and the off-payroll (IR35) rules, see should I set up a company?

Income Tax and National Insurance

Private profits are added to your other income, including NHS pay, and taxed at your marginal rate. For many NHS GPs that means most private profit is taxed at the higher rate from the first session.

For the 2026/27 tax year, according to GOV.UK at the time of review:

• Income Tax (England, Wales and Northern Ireland): a personal allowance of £12,570, then 20% up to £50,270, 40% up to £125,140 and 45% above that. The personal allowance falls by £1 for every £2 of adjusted net income over £100,000, so it is gone at £125,140.
• Class 4 National Insurance: 6% on profits between £12,570 and £50,270, and 2% above £50,270.
• Class 2 National Insurance: you no longer have to pay it. If your profits are £7,105 or more (the small profits threshold for 2026/27), it is treated as paid, which protects your National Insurance record. Below that you can choose to pay it voluntarily, at £3.65 a week for 2026/27.

National Insurance is worked out separately on each source: Class 1 on your NHS pay and Class 4 on your self-employed profits. If you are both employed and self-employed, an annual maximum can limit the Class 4 you pay. HMRC describes its purpose as making sure someone with both kinds of income pays broadly the same National Insurance as a person with the same earnings from employment alone. It depends on your own earnings and contributions, so ask an accountant to check how it applies to you before you budget.

Scotland

If you live in Scotland, you pay Scottish Income Tax on earnings, including self-employed profits. For 2026/27 it has six bands above the personal allowance, from a 19% starter rate to a 48% top rate, with a 42% higher rate starting at £43,663. National Insurance and the tax on dividends and savings are the same as in the rest of the UK.

Self Assessment and the payments on account trap

If you are self-employed you must register for Self Assessment. The deadline is 5 October after the end of the tax year in which you started. Online returns and payment are due by 31 January after the tax year ends.

The cash-flow shock for new private GPs is payments on account. If your Self Assessment bill is £1,000 or more, and less than 80% of your tax was collected at source, HMRC asks for advance payments towards next year’s bill. Each is half of the previous year’s bill, due on 31 January and 31 July.

An illustration, not advice: if your first year’s Self Assessment bill is £8,000, on 31 January you pay the £8,000 plus a first payment on account of £4,000. That is £12,000 at once, with another £4,000 due on 31 July. Set aside a share of every payment you receive in a separate account from your first private session.

You can ask HMRC to reduce payments on account if you expect lower profits next year. If you reduce them too far, you pay interest on the shortfall.

Making Tax Digital for Income Tax

Making Tax Digital (MTD) for Income Tax started on 6 April 2026. It applies to sole traders and landlords whose qualifying income from self-employment and property is above a threshold, based on an earlier tax year:

• from April 2026, qualifying income over £50,000 (based on 2024/25)
• from April 2027, over £30,000 (based on 2025/26)
• from April 2028, over £20,000 (based on 2026/27).

Qualifying income is your gross self-employment and property income, not your profit, and it does not include PAYE salary. If MTD applies, you keep digital records and send quarterly updates through compatible software, so it affects which bookkeeping system you choose.

Expenses you can deduct

You pay tax on profit, so keep a record of every business cost. GOV.UK lists allowable expense categories that include:

• insurance, including medical indemnity for your private work, and bank charges
• rent or room hire, and a proportion of home running costs if you work from home
• staff costs
• training courses related to your business
• marketing, advertising and website costs
• phone, stationery and travel for business (not your usual commute).

Equipment such as an ECG machine is usually claimed through capital allowances rather than as an expense. Costs that are partly personal need apportioning. If you use the £1,000 trading allowance instead, you cannot claim expenses as well.

Since 2024/25 the cash basis is the default for sole traders, so income counts when it is received and costs when they are paid. You can opt out. Keep your records for at least five years after the 31 January filing deadline for that year.

VAT

Most private GP consultations are exempt from VAT because their main purpose is the patient’s health. Some work, such as medico-legal reports and pre-employment medicals, is standard-rated, and only those taxable supplies count towards the £90,000 registration threshold. See do private GPs need to charge VAT? VAT is a UK-wide tax, so the rules are the same in Scotland, Wales and Northern Ireland.

Locum work is treated differently from seeing your own patients. When you are supplied as a locum to a practice, clinic or hospital, the question is whether that supply of a doctor is exempt, not whether the consultation is. HMRC’s VAT Notice 701/57 now points locum doctors to Revenue and Customs Brief 6 (2026), published in July 2026. It says supplies of GMC-registered locum doctors may fall within the VAT exemption for providing a deputy for a registered medical practitioner, including when the locum is supplied through an employment business. It does not cover other healthcare professionals. If VAT has been charged on locum work, the brief explains how to claim back overdeclared VAT for the last four years, so check your arrangements with an accountant.

Pension

Private fees are not pensionable in the NHS Pension Scheme, whatever your business structure. If you need retirement saving on your private profits, you will need a personal or company pension. Pension contributions can reduce your tax, so this belongs in the same conversation with your accountant. See how much does a private GP earn? for how private income fits alongside NHS pay.

When to get an accountant

Get advice before your first private session, not after your first tax bill. An accountant who works with doctors can model sole trader against company, sort out VAT on mixed work, set up bookkeeping that meets MTD and tell you how much to put aside each month. Budget for their fee in your start-up costs.