Incorporating a GP practice means transferring the business, including the GMS, PMS or APMS contract, out of the partnership and into a limited company. It is legally possible, but it is not a simple change of paperwork: it requires your Integrated Care Board’s consent to novate the contract, restructures how partners are taxed and pensioned, and replaces the flexibility of partnership law with the statutory framework of the Companies Act 2006.
Incorporation has genuine benefits for some practices and genuine drawbacks for others, and the right answer depends heavily on individual circumstances rather than a general rule. This guide sets out what incorporation actually involves, what it changes, and the questions worth answering before committing to it.
What Incorporation Actually Means
Incorporation, in this context, means setting up a limited company and transferring the practice’s business and contracts into it, rather than continuing to hold them personally as partners. Of the available corporate structures, a company limited by shares is the only vehicle currently capable of holding a GMS or PMS contract, which rules out a company limited by guarantee or an LLP as the primary contract-holding entity for most practices, even though those structures might otherwise be attractive.
Once incorporated, the practice ceases to be an unincorporated partnership governed by the Partnership Act 1890 and instead becomes a company governed by the Companies Act 2006, with all that implies for reporting, governance and director duties. We advise on this transition through our company formations work, alongside the regulatory side covered by our NHS regulatory compliance team. We cover the difference between the partnership model and incorporation in the context of Primary Care Networks specifically in PCN Incorporation: The Why and the How, and the underlying partnership structure most practices are moving away from in GP Partnership Agreements: What Every Partner Should Know.
Who Can Own Shares
Share ownership in a company holding a GMS contract is not open-ended. The regulatory framework restricts shareholding to defined categories connected to medical practice: at least one share must be legally and beneficially owned by a general medical practitioner, other shares held by a medical practitioner must be held by a qualifying general medical practitioner or one employed within the NHS, and any remaining shares must be held by individuals or bodies falling within a specified permitted list. This is a materially different ownership model from a typical SME, and it means the shareholder agreement and articles of association need to be drafted with these restrictions built in from the outset, not retrofitted once shares have already been issued.
Getting Your Contract Novated
There is no automatic right to move a GMS or PMS contract into a limited company. The change requires the consent of your Integrated Care Board, which assesses incorporation requests against NHS England’s published common assessment framework. If approved, the ICB will require a Novation Agreement documenting the transfer, and these agreements frequently include guarantees and restrictions that need careful review before signing, since an unfavourable novation agreement can undo much of the benefit incorporation was meant to deliver.
| Area | Partnership (Partnership Act 1890) | Company limited by shares (Companies Act 2006) |
|---|---|---|
| Liability | Partners are jointly and severally liable for partnership debts and obligations | Shareholder liability generally limited to the value of their shares |
| Contract ownership | Held by the partners collectively, changes with membership | Held by the company itself, unaffected by changes in directors or shareholders |
| Governance | Governed by the partnership agreement, flexible and largely private | Governed by Companies Act 2006, articles of association and a shareholders’ agreement; core statutory requirements cannot be contracted out of |
| Removing a partner/shareholder | No statutory expulsion mechanism; must be drafted into the agreement | Also requires careful drafting; removing a shareholder-director is procedurally complex, involving both company law and employment law |
| Public filings | None required beyond HMRC and CQC notifications | Annual accounts and confirmation statement filed at Companies House and publicly viewable |
| Staff | Partners are self-employed; staff employed directly by the partnership | Staff, including former partners who become directors, are generally employees under PAYE; existing staff transfer under TUPE |
Staff, Pensions and TUPE
Where a practice fully incorporates and its GP contract is novated, existing staff transfer into the new company by operation of the Transfer of Undertakings (Protection of Employment) Regulations, commonly known as TUPE, unless an individual employee objects. This means a proper staff consultation process is required before the transfer, and the new company inherits existing employment terms.
Pension treatment is one of the areas practices most often get wrong when weighing up incorporation. Individual limited companies generally cannot access the NHS Pension Scheme unless the company itself qualifies as an Employing Authority under the scheme’s rules, and even where it does qualify, only salary counts as pensionable income within the company structure, not dividends. For GP partners who have historically maximised their NHS pension through partnership profit share, this is a genuine trade-off: tax efficiency gained through dividends can come at the direct cost of pension growth, and because corporation tax is paid before profits are distributed, there is an inherent leakage that partnership profit share does not suffer from. This makes incorporation more attractive to GPs with substantial non-NHS income, those already near pension allowance limits, or those planning an eventual practice sale, and less attractive to GPs relying heavily on NHS pension accrual as their main retirement provision.
Regulatory Obligations That Follow the Company
A company delivering CQC-regulated activities must itself be registered with the CQC in its own right; operating regulated activities without registration is a criminal offence, so incorporation is not something that can be completed and then followed up on CQC registration at leisure. We cover what makes CQC compliance for GP practices distinct from other regulated settings in CQC Compliance for GP Practices: What’s Different from Care Homes.
Once incorporated, the company is also bound by the Companies Act 2006’s statutory director duties, including the duty to promote the success of the company, to exercise independent judgement, to exercise reasonable care, skill and diligence, and to avoid conflicts of interest. These duties apply in addition to, not instead of, the clinical and NHS contractual obligations individual GP directors already carry, and they come with annual filing obligations, including statutory accounts and a confirmation statement at Companies House, both of which are publicly available in a way partnership accounts are not.
Other Practical Considerations
Whether existing leases, non-clinical contracts and supplier agreements can transfer into the new company depends entirely on their individual terms. Leases in particular often restrict assignment without landlord consent, so this needs checking well before a novation date is fixed, and we cover the specific features of GP surgery leases that make this more complicated than an ordinary commercial assignment in GP Surgery Leases: Why They’re Different from Ordinary Commercial Leases. Setting up the company itself is the straightforward part of the process, costing as little as £12 through Companies House with same-day or next-day turnaround, but that simplicity is precisely why practices sometimes underestimate how much preparatory legal and tax work needs to happen before incorporation, not after it.
What This Means for Your Practice
Incorporation genuinely suits some GP practices, particularly those with significant non-NHS income streams, a clear future sale in mind, or partners already constrained by pension tax limits. It suits others far less well, and the decision should never be taken on tax grounds alone without weighing the pension, governance and regulatory consequences alongside it. We work with GP practices and their accountants on the legal side of incorporation decisions, from share structuring through to ICB novation and CQC registration. If this affects your practice and you would like to talk it through, get in touch with our healthcare team or call us on +44 207 566 1188. You can also reach us by email at info@gurvelegal.com.
