A GP surgery building does not have to be held inside the medical partnership, and in many practices it is better if it is not. Whether the property counts as “partnership property” under section 20 of the Partnership Act 1890, or is held separately by some or all of the partners as co-owners outside the partnership, changes who has a say over it, how it is taxed, and what happens to it when the medical partnership itself changes shape.
Our commercial property and partnership teams are regularly asked to unpick this after the fact, when it would have been far simpler to set up correctly from the outset. This is a decision every property-owning GP practice makes, whether deliberately or by default. If nothing is documented, the default statutory position under the 1890 Act applies, and that default position is rarely what a group of GPs with different levels of investment and different retirement timelines would actually choose if asked directly.
What “Partnership Property” Actually Means
Section 20 of the Partnership Act 1890 defines partnership property as anything originally brought into the partnership or acquired on account of the firm, and it must be held and applied by the partners exclusively for partnership purposes, in accordance with the partnership agreement. If the surgery building is partnership property, every partner has an interest in it that rises and falls with their partnership share, not a fixed, standalone share in the bricks and mortar.
Section 20(3) of the same Act deals with a different scenario: where co-owners of land are partners only as to the profits generated from using that land, not as to the land itself, further property bought with those profits belongs to them as ordinary co-owners in their original proportions, not as partnership property, unless they agree otherwise. This is the legal basis for the structure many GP practices actually use in practice: a separate property-owning arrangement that sits alongside, but is legally distinct from, the medical partnership that holds the GMS contract.
Two Structures, Compared
| Feature | Building held as medical partnership property | Building held separately (co-ownership / declaration of trust) |
|---|---|---|
| Who has a share | Every partner, automatically, in line with their partnership share | Only the partners who actually invested, in whatever proportions were agreed |
| What governs it | The main partnership deed, often as a minor clause among many others | A dedicated declaration of trust setting out valuation, decision-making and exit terms specific to the property |
| Effect of a partner joining | New partner’s property interest is whatever the deed says, but the deed may not have been updated to reflect actual buy-in arrangements | New partner buys in (or not) separately, on terms set at the time, without disturbing the wider partnership deed |
| Effect of a partner retiring | Falls away with their partnership share unless the deed specifically preserves it | Retiring partner can retain their property interest independently of leaving the medical partnership, if the trust deed allows it |
| Risk if documentation lapses | All property provisions can fall away if the partnership deed is not kept current | Property terms are ring-fenced in their own document, less exposed to drift in the main deed |
Why Many Practices Use a Separate Declaration of Trust
In our experience, minimal property provisions tucked into a wider partnership deed cause more disputes than they prevent. A dedicated declaration of trust tends to work better for several concrete reasons:
- The people are often different. Not every medical partner owns a share of the building, and some owners may be retired GPs who kept their share. A document that only deals with current medical partners cannot properly reflect this.
- Decision-making and valuation rules differ. How you value a partnership share for profit-sharing purposes is rarely how you would want to value a building for buy-in or buy-out purposes, and conflating the two in one document creates ambiguity exactly when it matters most.
- Tax planning is easier to build in. Structuring ownership to reflect actual capital contributions, rather than partnership profit shares, opens up planning options that a generic partnership deed clause does not accommodate.
- Overage and inheritance provisions need dedicated drafting. If you want to capture future development value or deal with what happens to a share on death, these are complex clauses that sit awkwardly inside a medical partnership deed built for an entirely different purpose.
The Tax Position You Need to Check Either Way
How the building is held changes the tax analysis in two areas that HMRC scrutinises closely for GP practices:
Capital Gains Tax. Partners are treated as owning a fractional interest in each partnership asset. Moving the building’s ownership structure, for example from full partnership property into a separate co-ownership arrangement, can itself be a disposal for CGT purposes for some or all of the owners, depending on how the change is implemented.
Stamp Duty Land Tax. Schedule 15 to the Finance Act 2003 sets out special SDLT rules for partnerships, including transfers of land into a partnership, between partners, and out of a partnership on retirement. These rules can produce relief in some scenarios and a full charge in others depending on the consideration given and the connected-persons position, and HMRC has increasingly queried SDLT exemptions claimed on GP surgery property transactions. Any restructuring of how the building is held should be checked against Schedule 15 before it happens, not after the transfer has completed.
NHS Reimbursement Does Not Care How You Structure Ownership Internally, But It Does Care Who Owns It
The NHS (General Medical Services – Premises Costs) Directions 2024 pay notional rent to a contractor that owns its premises, and leasehold rental costs where the contractor rents from a landlord. NHS England is not concerned with the internal mechanics of your declaration of trust, but it is very much concerned with who the legal and beneficial owners are, because that determines which reimbursement route applies and whose consent is needed for lease and rent review decisions. Getting the internal ownership structure and the external-facing lease or notional rent position aligned is essential, and we cover the reimbursement mechanics in full in GP Surgery Leases: Why They’re Different from Ordinary Commercial Leases.
How This Connects to Retirement and Liability Risk
The structure you choose now shapes two problems you will meet later. First, if a partner retires and wants to keep a property interest, a separate declaration of trust makes that considerably easier to accommodate cleanly than unpicking a share embedded in the main partnership deed; we cover the retirement mechanics in Retaining Your Property Share After GP Retirement. Second, unclear or outdated property provisions are a recurring driver of the ‘last man standing’ problem, precisely because nobody is sure who is actually still on the hook for the building.
What This Means for Your Practice
If your surgery building is currently dealt with in a couple of paragraphs inside your main partnership deed, it is worth asking your solicitor to review whether a dedicated declaration of trust would serve the property-owning partners better, particularly if ownership shares do not match partnership profit shares, or if some owners are no longer clinical partners at all. This is not a decision to leave until a partner change forces the issue. Our guide to GP partnership agreements sets out what the wider deed should cover alongside the property arrangements, and our partnership agreements team can review your current documents against both.
If you would like to review how your surgery building is currently held, get in touch with our healthcare team or call us on +44 207 566 1188. You can also email us at info@gurvelegal.com.
