The Chancellor’s 2026 Budget avoided many of the tax changes healthcare professionals had been concerned about. Income tax and pension taxation remain unchanged, enhanced mileage rates have been made permanent, and there are incentives to encourage business investment.
However, against the backdrop of the NHS 10-Year Health Plan, the Budget offered little clarity on how primary care will be funded to deliver an expanded role in neighbourhood healthcare. For many GP practices, rising employment costs, increasing patient demand and workforce pressures remain the more pressing concerns.
Alongside this, the Budget introduces changes that healthcare professionals should start planning for now, particularly around the timing of tax payments, investment income and future retirement planning.
Our View
This Budget provides welcome stability in several areas and avoids many of the tax increases healthcare professionals feared. However, it does little to address the fundamental pressures facing primary care. The Government continues to place general practice at the centre of NHS reform, yet there remains limited clarity on how practices will be resourced to deliver expanding services while managing rising costs and increasing demand. Technology and AI may help improve productivity, but they are unlikely to remove the need for sustainable investment in frontline services.
For many healthcare professionals, the key question remains unchanged: how will primary care be funded to deliver the transformation it is being asked to lead?
Self Assessment Reform: Tax Paid Sooner
One of the most significant announcements for many healthcare professionals was the planned reform of Self Assessment Payments on Account. From April 2029, taxpayers who currently make Payments on Account will move to more frequent tax payments throughout the year, bringing tax closer to the point at which income is earned.
For GP partners and self-employed dentists and consultants, this is likely to mean less time between earning income and paying the associated tax, reduced cashflow flexibility, greater importance of setting funds aside regularly for tax liabilities and increased focus on cashflow forecasting and budgeting.
The new arrangements may involve a move to quarterly payments, although further details are awaited. While 2029 may seem some way off, now is the time to start considering whether your current approach to tax reserves would remain manageable under a more frequent payment regime.
Higher Taxes on Savings and Property Income
The Budget confirmed a further increase in tax rates applying to savings and property income from April 2027. This follows a 2% increase announced in Budget 2025, with a further 2% increase now confirmed, resulting in a total increase of 4% over current rates. This will be particularly relevant to those who hold buy-to-let properties, investment portfolios, significant cash savings or other investments generating taxable income.
Many doctors and dentists increasingly rely on investment income alongside pensions as part of their retirement planning. The changes will reduce post-tax returns and may make it worthwhile reviewing investment structures and long-term financial plans.
Retirement and Succession Planning
The Budget also includes changes affecting the tax treatment of business disposals. From April 2027, the amount of qualifying gains that can benefit from the lower rate of Capital Gains Tax on a business disposal will reduce from £1 million to £500,000 over an individual’s lifetime. For dental practice owners, where goodwill usually represents a significant proportion of a practice’s value, this could increase the tax cost of a future sale.
For GP partners, the impact is more limited because practice goodwill under NHS contracts cannot be sold. However, the changes may still be relevant where partners hold a significant investment in surgery premises and expect to dispose of their property interests in the future. The changes reinforce the importance of reviewing retirement and succession plans well in advance of any future transaction.
Capital Allowances: Encouraging Investment
The Government has reduced the rate at which tax relief is obtained on some ongoing capital expenditure but increased First Year Allowances for qualifying investment. Practices investing in clinical equipment, technology, practice refurbishments and digital infrastructure may benefit from enhanced upfront tax relief.
For those considering significant investment over the next few years, it may be worth reviewing the timing of expenditure to maximise available reliefs.
National Living Wage Increase
From April 2027, the National Living Wage will increase by 3.9%, rising from £12.71 to £13.21 per hour. For GP practices and dental practices this represents a further increase in operating costs. While supporting employees through higher pay is important, many practice owners will be concerned about whether future funding settlements will fully cover these additional costs.
Higher Mileage Rates
The Government has made the enhanced mileage rates permanent: 55p per mile for the first 10,000 business miles and 35p per mile thereafter. This will be welcomed by clinicians carrying out home visits, working across multiple sites or travelling significant distances as part of their role.
NHS Investment, Technology and AI
Alongside investment in robotic-assisted surgery, the Chancellor announced an independent review into NHS productivity and the opportunities presented by AI and technology.
The aim is to reduce administrative burdens, improve efficiency and allow clinicians to spend more time with patients. Most healthcare professionals will welcome that ambition, although success will depend on effective implementation and investment in the supporting infrastructure.
Actions for Healthcare Professionals
• Review personal and practice cashflow planning ahead of the Self Assessment changes due from 2029.
• Assess whether more frequent tax payments could create future cashflow pressures.
• Review savings and property investment strategies in light of higher taxation from April 2027.
• Reassess retirement and succession plans, particularly for dental practice owners and GP partners with interests in surgery premises.
• Budget for higher employment costs following the National Living Wage increase.
• Review planned capital expenditure to determine whether earlier investment could improve tax relief outcomes.
• Monitor future announcements on NHS funding, technology and AI.
Talk to Our Healthcare Team
The Budget contains several changes that could affect your personal finances, practice profitability and long-term plans. Now is a good time to review your position and ensure you are prepared for the changes ahead.
If you would like to discuss the impact of the Budget on your practice, tax position, retirement plans or investment strategy, please contact a member of our Healthcare Team. We would be delighted to help you identify opportunities and plan confidently for the future.
This material is for informational purposes only and should not be relied upon as professional advice.
