Retiring from a GP partnership does not automatically mean selling your share in the surgery premises. Whether you can keep it, and on what basis, depends first on your partnership deed and any declaration of trust, and then on how NHS England treats the property income once you are no longer a partner in the contractor holding the GMS contract. Both of these need sorting out well before your retirement date, not after it.
We are seeing this scenario more often than we used to. Fewer incoming GPs are willing or able to buy into premises ownership on top of taking on a partnership share, which leaves retiring partners choosing between selling at a time that may not suit the market, or retaining their share and becoming, in effect, a landlord to their former practice. Both are legitimate options, but they carry very different tax, mortgage and NHS reimbursement consequences.
Step One: Check What Your Partnership Deed Actually Says
Before assuming you have a choice, check the partnership deed and any separate declaration of trust relating to the surgery premises. Many partnership deeds oblige a retiring partner to sell their share to the continuing partners, who are in turn obliged to buy it, often within a fixed period after retirement, commonly somewhere between three and twelve months depending on how the deed is drafted. If that is what your documents say, retaining your share is not simply a matter of preference, it requires the unanimous agreement of the continuing partners to depart from the existing arrangement.
This is exactly why we tell property-owning partners to start this conversation at least a year, and ideally two, before their intended retirement date. Negotiating a change to property provisions becomes considerably harder once you have already given notice and your negotiating position has weakened.
Option One: Sell Your Share to the Continuing Partners
This remains the most common route and is often the default position set out in the partnership deed. The continuing partners, or an incoming partner replacing you, buy your share at a valuation typically carried out by the district valuer or an appointed RICS surveyor. This gives you a clean break: no ongoing landlord obligations, no continuing exposure to the building’s condition or the practice’s covenant strength, and a lump sum on retirement.
The trade-off is timing risk. If the continuing partners cannot fund the buy-out immediately, whether from their own resources or through refinancing, you may find yourself waiting for payment or agreeing a deferred consideration arrangement, which starts to look a lot like the lease-back option below in practical terms, just without the same legal protection.
Option Two: Retain Your Share and Become a Landlord
If you keep your interest in the premises after you stop being a partner, you and any other continuing property-owning partners become the landlords, and the practice (through the continuing partnership) becomes your tenant. There are two ways this is usually documented, both of which we advise on as part of our commercial property work for healthcare clients:
- A formal lease. The property owners grant a lease to the partnership as tenant. If the practice wants the rent to be reimbursed by NHS England, that lease needs full NHS approval before it is signed, since payment moves from notional rent to leasehold rental cost reimbursement under Direction 32-33 of the Premises Costs Directions 2024.
- A declaration of trust between the co-owners. Rather than a landlord and tenant relationship, this document sets out how the co-owners (including you as a retired partner) share the property income and outgoings, while at least one continuing partner ensures the practice actually pays the rent due to the property owners.
Which route suits you depends on how long the remaining property-owning partners expect to stay in the practice, whether the premises are mortgaged, and what your accountant says about the tax position, covered next.
The NHS Reimbursement Trap Most Retiring Partners Miss
This is the point that gets overlooked most often. Under Direction 33(10)-(12) of the Premises Costs Directions 2024, if every partner who owns the surgery premises has retired from the contractor, so that no partner in the GMS contractor still owns a share of the building, the contractor stops being entitled to notional rent under Direction 42. NHS England must then reassess the practice as if it had applied for leasehold rental cost reimbursement, and from that point pays the current market rent under Direction 34 instead of notional rent, though NHS England has discretion to keep paying notional rent for an agreed transitional period if it considers it appropriate.
In practice this means that once you retire and hold the building outside the partnership as a landlord, the funding mechanism for the practice’s premises costs changes at the same time. The rent you charge as landlord and the amount NHS England will fund need to be aligned before you retire, not discovered afterwards when a shortfall appears in the practice accounts.
Tax Consequences You Need to Check Before You Decide
| Issue | Why it matters on retirement |
|---|---|
| Capital Gains Tax | Partners are treated for CGT purposes as owning a fractional interest in the premises. Retaining or disposing of your share can trigger a chargeable gain, and your entitlement to reliefs may depend on whether the property remains a partnership asset or moves to personal ownership outside the partnership. |
| Stamp Duty Land Tax | SDLT partnership rules under Schedule 15 to the Finance Act 2003 apply to transfers of land between a partnership and a partner. Moving your interest from partnership ownership to personal, several ownership on retirement can be a chargeable transaction depending on the consideration and connected-persons rules, and HMRC has increasingly queried claimed exemptions in this area. |
| Mortgage terms | If the premises are charged to a lender, many facilities are written on the basis that the whole building is a partnership asset. Retaining a personal share outside the partnership can breach loan covenants unless the lender agrees a variation first. |
None of these issues are reasons to avoid retaining your share. They are reasons to involve your accountant and your solicitor at the same time, well before retirement, so the property and tax documents are consistent with what actually happens to your GMS entitlement and your partnership status.
Where This Overlaps With Other Property Risks
Retaining a property share after retirement is closely tied to two other issues we cover elsewhere in this series. First, the underlying lease or occupation arrangement needs to work properly as a piece of property law in its own right, which we explain in GP Surgery Leases: Why They’re Different from Ordinary Commercial Leases. Second, if you are the last property-owning partner left in the practice and cannot find a successor to take on the building, you can end up carrying liabilities you did not expect, a scenario we cover in The ‘Last Man Standing’ Problem in GP Surgery Ownership.
It is also worth reviewing the position on mandatory retirement ages before assuming your timeline is entirely within your control; our post on whether a mandatory retirement age for GP partners is enforceable and our guide to what to think about before leaving a GP partnership both cover ground that connects directly to your property decisions.
What This Means for Your Practice
The right answer for you will depend on your partnership deed, your personal tax position, and how long your former colleagues expect to remain in the practice. What matters most is timing: start the conversation with your continuing partners, your accountant and your solicitor at least a year before you intend to retire, so the property, the partnership deed and the NHS reimbursement position are all aligned by the time you actually go.
If you are approaching retirement and want to understand your options for the surgery premises, get in touch with our healthcare team or call us on +44 207 566 1188. You can also email us at info@gurvelegal.com.
