Pay rises and National Insurance increases… what is it really going to cost you?

In April 2024, practices received a £2.84 increase in their global sum, which equated to an increase of 2.7% for 2023/24. Fast forward to the summer of 2024 when the DDRB announced that their 2024/25 pay increase was to be 6% for the second year in a row.

A pay rise, as understood by us, is always the increase in the employees gross pay and the related on-costs that the practice has to bear. This is around 28% when factoring employers’ National Insurance and employers’ pension.

Inevitably, this led to significant unrest amongst GP practices, It was clear that if this pay rise was to be awarded, it would come straight out of practice profits.

NHS England recognised the shortfall and it was announced that the global sum uplift of £2.84 would increase to £7.77. This gave practices an increase of 7.4% for 2024/25 to allow for the 6% pay rise to be awarded and, in theory, to give partners a “pay rise” too. The monies were received by practices in September 2024.

Unfortunately, when it comes to increases in the global sum there isn’t a “one size fits all” formula. Therefore, it is difficult to say whether the £7.77 per patient truly does allow for a pay rise for everyone working within the practice.

We’ve run this calculation for around 100 of our practices. Our findings showed that an average practice spends around 60% of its global sum on staff costs. NHS England work out their increase using a figure of 44%. So, before we’ve even started, there will be very few practices who, after awarding a 6% pay rise, would have been left with a 6% pay rise for themselves.

Ultimately, the pay rise was discretionary, although for those who have a standard BMA contract, it is a contractual obligation to award a pay rise once a year in line with the DDRB recommended uplift. We are aware of many practices who did pay over the full 6% and roughly the same number of practices who didn’t. We also know that many practices were under pressure to give these pay rises with many awarding them mid-September or mid-October, before the payroll runs took place.

On 30^th October 2024, Budget Day, there was an unsurprising announcement that the employers’ National Insurance rate would increase from 13.8% to 15%, from April 2025, an increase of 1.2%.

What many hadn’t expected was that there would be a reduction in the basic rate band from £9,100 down to £5,000. This reduction of the band gives rise to an instant increase of £615 per employee. Therefore, if your practice has 30 employees, you can very quickly work out that even before the 1.2% increase this is going to cost you an extra 30 x £615 = £18,450. We’re anticipating, for a practice with 30 employees, that the total cost to a practice will be around £25,000-£30,000 per annum.

Of course, this all comes after practices have already awarded a pay rise for 2024/25, meaning that not only will there be an increase in the employee cost, but this National Insurance increase will doubly hit practices. The second sting in the tail is that because GP practices are public sector bodies they don’t qualify for the employment allowance that private companies do. Rachel Reeves increased the employment allowance, which reduces an employer’s National Insurance liability, from £5,000 to £10,500 to mitigate against the increase but GP practices cannot take advantage of this relief.

We don’t yet know what NHS England is proposing for the global sum 2025/26. However, if the increase in April 2025 is only 2-3%, as it was in April 2024, then we can look to there being a similar wave of unrest and practices putting pressure on NHS England to further increase the global sum to allow practices to carry on awarding their staff in line with DDRB recommendations, continue employing new staff and not let staff go. Not the best start to a new tax year, when patients are struggling to see a GP due to a lack of staff.