Partnership Agreements
A plain-English guide to the document that governs your practice — what should be in it, what goes wrong when it isn't, and how to get it right.
What is a partnership agreement?
A partnership agreement is the legal document that defines how your practice operates as a business. It sets out who owns what, how profits are divided, how decisions are made, what happens when someone joins or leaves, and how disputes are resolved.
Think of it as the constitution of your practice. Without one, your partnership is governed entirely by the Partnership Act 1890 — a Victorian-era law that knows nothing about NHS contracts, QOF, PCNs, or notional rent. Under that Act, every partner shares profits equally regardless of workload, any partner can dissolve the entire partnership without notice, and there are no procedures for anything. That's not a theoretical risk. It's what actually happens to practices that operate without a written agreement.
If your partnership agreement is sitting in a filing cabinet unchanged since 2012, or worse, if you've never had one at all, this guide is for you.
Why this matters right now
With Neighbourhood Health contracts on the horizon (expected 2027–28), ICB mergers reshaping commissioning, and ongoing workforce pressures, the way your partnership is structured will determine how resilient your practice is through the next wave of NHS reform. Getting your agreement right isn't a nice-to-have — it's foundational.
The Partnership Act 1890 — and why it's not your friend
If you don't have a written partnership agreement, or if your agreement is silent on a particular issue, the Partnership Act 1890 fills the gap. Here's what that means in practice:
Equal profit sharing
Every partner receives an equal share of profits, regardless of how many sessions they work, how much they contribute, or how long they've been at the practice. A partner working three sessions a week takes the same as one working eight.
Equal management rights
Every partner has an equal say in every decision. No managing partner, no weighted voting, no reserved matters.
Partnership at will
Any partner can dissolve the entire partnership at any time, with no notice period. Not leave the partnership — dissolve it. The practice ceases to exist as a legal entity.
No expulsion
You cannot remove a partner, no matter what they do, unless your written agreement specifically allows it.
No restriction on competition
A departing partner can set up across the road and take your patients the next day.
What this means for your practice
If you're operating as a “partnership at will” — meaning you either have no agreement or your agreement has expired — you are one disagreement away from a crisis. Any partner can walk away and trigger dissolution. Your NHS contract, your staff employment, your premises arrangements — all of it is at risk. This is the single most important reason to get a written, current agreement in place.
What should be in your partnership agreement?
A comprehensive partnership agreement covers the full lifecycle of the partnership — from how it operates day to day, to how it handles crises, to how it eventually ends. Here are the core areas every agreement must address.
1. The basics
Name and purpose. The name of the practice, its principal address, and a statement that the partnership exists to provide NHS general medical services under a GMS, PMS, or APMS contract.
Duration.Whether the partnership is for a fixed term or continues indefinitely. Most modern agreements are open-ended but include clear exit provisions — avoiding the “partnership at will” trap.
Partners. Who the current partners are, when each joined, and their status (full equity, fixed-share, or other arrangements).
2. Financial arrangements
This is where most disputes originate, so precision matters.
Capital contributions. How much each partner has invested in the practice (equipment, fixtures, sometimes property). New partners typically buy in over time. Your agreement should specify the amount, timeline, and what happens to capital on exit.
Profit sharing. The formula for dividing profits. This deserves its own section — see below.
Drawings. How and when partners draw money from the practice. Most practices use monthly drawings based on estimated annual profit, with a reconciliation at year end. Your agreement should set a ceiling on drawings to protect cash flow and specify what happens if a partner overdraws.
Tax.Each partner is responsible for their own income tax and National Insurance (partners are self-employed). The agreement should clarify how tax reserves are handled and when they're released.
NHS Pension implications.How partnership profit share is structured directly affects each partner's pensionable pay. Your agreement should be clear about which income streams count as pensionable earnings and which don't — your accountant needs this to complete the annual certificate of pensionable profit. Get this wrong and you may underpay (or overpay) pension contributions for years.
Expenses. Which expenses are borne by the practice and which are personal. Common grey areas include indemnity subscriptions (now largely covered by the Clinical Negligence Scheme for General Practice since April 2019), professional development, and travel.
3. Property and premises
Premises are often the most valuable and complicated asset in a partnership. Your agreement needs to address:
Ownership structure. Are the premises owned by all partners jointly, by some partners, by a separate property partnership, or leased from a third party? Each structure has different implications for departing partners.
Notional rent. If partners own the premises and use them for NHS services, the practice receives notional rent from NHS England based on the current market rental value. This is assessed by an independent surveyor and must be reviewed every three years. Your agreement should specify how notional rent income is allocated — to the property-owning partners only, or shared across all partners.
Cost rent. A legacy arrangement for premises built under the old cost rent scheme. Rarely applies to new builds now, but if your premises were built before 2004, check whether cost rent still applies.
What happens when a property-owning partner leaves. This is where it gets painful. The departing partner is typically entitled to their share of the property value. If the remaining partners can't buy them out, the property may need to be sold or refinanced. Your agreement should include a clear valuation mechanism and a realistic timeline for buyout — otherwise you're heading for a dispute.
Recent change
The NHS (General Medical Services — Premises Costs) Directions 2024 introduced significant procedural changes to how NHS England funds GP premises. If your agreement references the old Directions, it needs updating.
4. Workload and commitments
Sessions and hours. How many sessions each partner is expected to work, what constitutes a session, and how additional commitments (on-call, extended hours, home visits) are allocated.
Outside commitments.Whether partners can undertake outside work — private practice, medicolegal reports, teaching, ICB roles, appraisal — and whether income from those activities is personal or shared. This needs to be explicit. Arguments about “what counts” are among the most common partnership irritants.
Managing partner. If you have a managing partner or senior partner role, define it. What decisions can they make unilaterally? What additional responsibilities do they carry? Is there additional remuneration? How is the role rotated or terminated?
5. Leave and absence
GP partners are not employees. You have no statutory right to annual leave, sick pay, maternity pay, or any other employment benefit. Your partnership agreement is the only document that gives you these rights. It must cover:
Annual leave. How many weeks per year, how leave is requested and approved, what happens when partners want the same dates, and any blackout periods.
Sick leave. How long a partner can be absent before their profit share is affected, what medical evidence is required, and what happens during prolonged illness. The BMA recommends at least 26 weeks at full profit share for illness.
Maternity, paternity, and adoption leave. Duration, profit share during absence, arrangements for covering clinical work. Since GP partners have no statutory maternity rights, your agreement is the only protection. The BMA publishes model maternity and paternity clauses that many practices use as a starting point — ask BMA Law or your solicitor for the current template. Be generous and specific — this is a recruitment and retention issue as much as a legal one.
Sabbaticals and study leave.Whether they're permitted, how long, and on what terms.
What this means for your practice
If your agreement is silent on maternity leave, a pregnant partner has no contractual right to any paid time off. In 2026, that's not just unfair — it's a practice that will struggle to recruit. Modern agreements should offer leave provisions that are at least as generous as the statutory minimums for employees.
6. Decision-making and governance
Voting. How decisions are made — simple majority, supermajority (typically two-thirds), or unanimity. Most agreements use majority voting for day-to-day decisions but require unanimity for major matters.
Reserved matters. Decisions that require unanimity (or a supermajority) regardless of the general voting rule. Typically these include: admitting a new partner, expelling a partner, changing the profit-sharing formula, taking on significant debt, changing the premises, or altering the NHS contract.
Meetings. How often partners meet, quorum requirements, how meetings are called, and how decisions are recorded.
Delegation. What powers are delegated to a managing partner, practice manager, or committee. Clear delegation avoids both micromanagement and surprises.
7. New partners — joining the practice
Mutual assessment.Most practices have a 6–12 month assessment period for new partners, with either side able to exit on one month's notice. During this period, the new partner may receive a fixed profit share rather than full equity.
The partnership deed should be signed before the new partner starts working — not at the end of the assessment period. Without a signed deed, the new partner is working in legal limbo, potentially as a partner at will with all the risks that entails.
Parity. How quickly a new partner reaches full profit-share parity. Some practices offer immediate parity; others phase it in over 2–3 years. The trend is towards faster parity as a recruitment tool.
Capital buy-in. How much the new partner needs to invest, over what period, and what it covers. Transparency here prevents resentment later.
What this means for your practice
With GP partner numbers falling 25% since 2015, making partnership attractive matters. A clear, fair joining process — with a signed deed from day one, a reasonable assessment period, and a transparent path to parity — is essential for recruitment. If your process feels opaque or adversarial, talented GPs will choose salaried roles elsewhere.
8. Suspension and expulsion
This is the clause you hope never to use, but must have.
Grounds for suspension. Circumstances that allow the partnership to suspend a partner — typically GMC investigation, criminal charges, prolonged unexplained absence, or conduct that puts the practice at risk.
Grounds for expulsion.More serious — GMC erasure or suspension, conviction, persistent breach of the agreement, bankruptcy, or conduct fundamentally incompatible with continuing as a partner. Your agreement should list specific grounds rather than relying on vague “misconduct” language.
Procedure. Written notice, opportunity to respond, a meeting, a vote (typically requiring unanimity of the remaining partners or a supermajority), and a right of appeal or arbitration. Cutting corners on procedure — even when the grounds are clear — risks a legal challenge.
Financial consequences.What happens to the suspended or expelled partner's profit share, capital, and any property interest during and after the process.
9. Partner exits — retirement, resignation, and death
Notice period. Typically 6–12 months for retirement or resignation. Longer notice protects the practice; shorter notice is more attractive to the departing partner. Most agreements settle on 6 months as a reasonable compromise.
Restrictive covenants.A clause preventing a departing partner from practising within a defined area for a defined period — typically within the practice catchment area for 1–2 years. Courts will enforce restrictive covenants, but only if they are reasonable in scope, duration, and geography. An overly broad covenant (e.g., “within 20 miles for 5 years”) is likely unenforceable. A focused one (e.g., “within the practice boundary for 12 months”) is more likely to hold.
Goodwill.Under Section 259 of the NHS Act 2006, it is illegal to sell the goodwill of an NHS general practice. This means a departing partner cannot be paid for their “share” of the practice's patient list or reputation. Goodwill is valued at nil. The only payments a departing partner can receive are for their share of tangible assets (property, equipment) and any outstanding profit entitlement.
What this means for your practice
The goodwill prohibition is one of the most commonly misunderstood areas of GP partnership law. If your agreement includes any provision that could be interpreted as a sale of goodwill, get legal advice now. NHS England can — and does — investigate. The penalties are serious.
Final accounts.How the departing partner's final profit share is calculated, when it's paid, and how outstanding liabilities (tax, loans, capital repayment) are settled. Your agreement should specify a timeline — typically 3–6 months after departure — and a mechanism for resolving disputes about the figures.
Death of a partner.What happens to a deceased partner's share, how the estate is compensated, and whether the remaining partners have an option to buy any property interest. Life insurance provisions should be addressed.
PCSE notification. Any change to the partnership must be notified to Primary Care Support England (PCSE) at least 28 days before the change takes effect. Late notification can delay payments and cause administrative chaos. Your agreement should specify whose responsibility it is to notify PCSE.
10. Dispute resolution
Mediation first. Most modern agreements require partners to attempt mediation before any other dispute resolution mechanism. Mediation is voluntary, confidential, and non-binding — but it resolves the majority of partnership disputes without the cost and damage of formal proceedings. Healthcare-specialist mediators understand the NHS context.
LMC involvement. Your Local Medical Committee can provide confidential advice and, in some cases, informal mediation for partnership disputes. They understand the local commissioning landscape and can offer practical guidance that a generic solicitor may not.
Arbitration. If mediation fails, the agreement should provide for binding arbitration — a private process where an independent arbitrator makes a final decision. This is faster, cheaper, and more confidential than going to court.
Litigation as last resort. Court proceedings are expensive, public, slow, and destructive to working relationships. A well-drafted agreement makes litigation almost never necessary.
What this means for your practice
The single best investment you can make in your partnership's resilience is a clear dispute resolution clause. Most disputes escalate not because the underlying issue is intractable, but because there's no agreed process for resolving it. Mediation first, arbitration if needed, court never.
Profit-sharing models — explained
How you divide profits is the most consequential decision in your partnership agreement. Get it right and everyone feels fairly treated. Get it wrong and resentment builds until the partnership fractures.
| Model | How it works | Works well when | Breaks down when |
|---|---|---|---|
| Equal shares | Net profit divided equally among all partners | All partners work similar hours and share responsibilities equally | Partners work significantly different hours or carry unequal management loads |
| Per-session | Profit divided proportionally by sessions worked | Partners work different hours and want a direct link between time and reward | Doesn't account for non-clinical contributions — management, governance, PCN work |
| Seniority-weighted | Longer-serving partners receive a larger share | Senior partners have invested more over time and the practice is stable | Discourages new partners — why buy into a system that undervalues you? |
| Prior shares | Specific income streams (QOF, enhanced services, PCN funding) allocated to named partners before the residual is split | Partners contribute differently to income generation — rewards effort on specific contracts | Can create perverse incentives and make overall profit sharing opaque |
| Hybrid | Combines elements — e.g., base share + sessional top-up, equal share + role payments, or prior shares + equal residual | Practices with mixed session patterns and distinct partner roles | Complexity makes it hard to explain to prospective partners |
What this means for your practice
There is no single “right” model. The best profit-sharing arrangement is one that every partner understands, considers fair, and that's written down clearly enough that your accountant can implement it without ambiguity. If you can't explain your profit-sharing model to a prospective partner in five minutes, it's too complicated.
Salaried partners vs equity partners
It's worth understanding the distinction clearly, because confusion here causes real problems.
| Equity partner | Salaried partner | |
|---|---|---|
| Tax status | Self-employed | PAYE employee |
| Income | Share of profits | Fixed salary |
| Capital | Contributes capital | No capital stake |
| Voting | Full voting rights | No vote |
| Liability | Joint and several liability | No personal liability |
The grey area.Some practices have “fixed-share partners” who receive a fixed percentage of profits rather than a salary but have limited voting rights. Whether these individuals are truly self-employed partners or disguised employees is a question of substance, not labels. HMRC can — and does — challenge arrangements where the reality doesn't match the paperwork.
Transition. Moving from salaried to equity partner is a significant step. It typically involves: a mutual assessment period (6–12 months), agreement on capital buy-in, adjustment to self-employed tax status, and a signed partnership deed. The BMA recommends that the deed is signed before the transition, not after.
Joint and several liability — what it actually means
This is the aspect of partnership that most worries new partners, and rightly so.
In an unlimited partnership (which is what most GP practices are), every partner is “jointly and severally liable” for the partnership's debts. This means a creditor can pursue any individual partner for the full amount of a partnership debt — not just their proportional share. If the practice owes £200,000 and your two partners are bankrupt, you personally owe the full £200,000.
Clinical negligence is now largely covered by the Clinical Negligence Scheme for General Practice (CNSGP), which provides state-backed indemnity for incidents from 1 April 2019 onwards. This has significantly reduced — but not eliminated — the financial exposure of partners.
CQC registration requires explicit acceptance of joint and several liability by all registered partners.
What this means for your practice
Joint and several liability is not a reason to avoid partnership — it's a reason to make sure your partnership agreement properly manages risk. Ensure you have adequate insurance, clear financial controls, defined spending limits that require partner approval, and regular financial reporting. A well-governed practice significantly reduces the real-world risk of personal liability.
When to review your partnership agreement
Your agreement should be reviewed:
- Every 3 years as a minimum, even if nothing has obviously changed
- When a partner joins or leaves — every time, without exception
- When the NHS contract changes — the 2024/25 and 2026/27 contract changes both have implications for partnership arrangements
- When your PCN arrangements change — including changes to the Clinical Director role, ARRS staff, or PCN structure
- When there's a significant premises change — lease renewal, notional rent review, or any change to property ownership
- When NHS structures change— if your agreement still references PCTs, CCGs, or pre-2024 Premises Directions, it's out of date
- When you're planning for Neighbourhood Health — if your practice is considering a Single Neighbourhood Provider or Multi-Neighbourhood Provider contract, your partnership agreement will need to reflect that new structure
Red flags in existing agreements
- References to defunct organisations (PCTs, CCGs, SHA)
- No provision for PCN-related governance or income
- Maternity leave provisions that are less generous than statutory employee minimums
- No dispute resolution mechanism (or one that goes straight to litigation)
- Restrictive covenants that are unreasonably broad
- Profit-sharing arrangements that are ambiguous or based on handshake understandings
- No provision for what happens to the NHS contract when a partner leaves
- Property clauses that don't address notional rent or the 2024 Premises Directions
Glossary
Arbitration
A private dispute resolution process where an independent arbitrator makes a binding decision. Faster and cheaper than court.
Capital account
A record of each partner’s financial investment in the practice — money contributed, profits retained, and money withdrawn.
CNSGP
Clinical Negligence Scheme for General Practice
State-backed indemnity for clinical negligence claims from April 2019 onwards.
Cost rent
A legacy NHS funding mechanism for premises built under the old scheme. Reimburses the cost of building or improving premises.
Drawings
Regular payments partners take from the practice as advances against their anticipated profit share.
Equity partner
A partner who shares in profits, contributes capital, has voting rights, and bears joint and several liability.
Fixed-share partner
A partner who receives a defined percentage of profits but may have limited voting or management rights.
GMS
General Medical Services
The standard NHS contract for GP practices, negotiated nationally between BMA and NHS England.
Goodwill
The intangible value of a business — reputation, patient list, location. Under NHS law, it is illegal to sell the goodwill of an NHS practice (s.259 NHS Act 2006).
Joint and several liability
Each partner is individually liable for the full debts of the partnership, not just their share.
LMC
Local Medical Committee
The statutory body representing GPs locally. Provides advice and support on partnership matters.
Managing partner
A partner delegated responsibility for day-to-day management decisions on behalf of the partnership.
Mediation
A voluntary dispute resolution process where an independent mediator helps partners reach agreement. Non-binding unless both parties agree to the outcome.
Mutual assessment
A trial period (typically 6–12 months) before a new partner achieves full equity status.
Notional rent
NHS funding for partner-owned premises, based on the current market rental value as assessed by an independent surveyor. Reviewed every three years.
Parity
The point at which a new partner achieves the same profit share as existing partners.
Partnership at will
A partnership with no fixed term and no written agreement (or an expired one). Any partner can dissolve it at any time without notice.
PCSE
Primary Care Support England
Handles administrative functions including partnership changes, pension forms, and contract variations.
PMS
Personal Medical Services
An alternative NHS contract with locally negotiated terms, usually offering more flexibility than GMS.
QOF
Quality and Outcomes Framework
A performance-related payment system that forms part of the GP contract.
Reserved matters
Decisions that require unanimity (or a supermajority) rather than a simple majority vote.
Restrictive covenant
A clause preventing a departing partner from competing within a defined area and time period.
Supermajority
A voting threshold higher than simple majority — typically two-thirds or three-quarters of partners.
Practice action checklist
Use this checklist to assess where your partnership agreement stands and what needs attention.
Sources and further reading
- BMA: The importance of an up-to-date GP partnership agreement
- BMA: Practical guide for taking on new GP partners
- BMA Law: Partnership Agreement Drafting Service
- BMA Law: Why you should avoid being a partnership at will
- NHS England: Guide to changes in primary care premises policy (2024)
- Partnership Act 1890
- NHS Act 2006, Section 259 — Sale of goodwill prohibition
- PCSE: GMS, APMS and PMS contract changes
- Mills & Reeve: Partnership agreements in general practice
- Hempsons: All about GP partnerships