Katie Collin, partner at healthcare tax and accountancy firm Ramsay Brown LLP, explores the impact of this year's Autumn Budget on GP practices and their pharmacists

Rachel Reeves’ first Budget has come and gone, and while I’ll admit it’s not been as catastrophic as some of the speculation hinted at, the chancellor’s decisions will still have left many pharmacists worried about what the future holds.

For pharmacists working in PCNs, general practice, or high-street pharmacies up and down the UK, the Budget’s ramifications will reach far and wide. But despite Reeves’ hikes in employers’ National Insurance, capital gains and other waves of the fiscal wand, let me tell you, there are other factors that could raise these pressures to boiling point.

It all goes back to July of this year when the government awarded practices and their salaried staff a 6% pay rise. In theory, this all seemed great – practice staff deserve to be rewarded for their near-impossible task of managing ever-increasing workloads with ever-shrinking resources.

But, at Ramsay Brown, we’ve been face to face with the reality: the funding that has come through to practices doesn’t go far enough. It was calculated assuming staff costs, including pharmacists’ salaries, account for 40-45% of a practice’s core income. In reality, though, they take up a far bigger chunk – approximately 60%.

At the end of the day, practices are already struggling to make the pay rise funding go far enough. Add in the hike in employer NI contributions, and it's a recipe for disaster. There’s no additional money in the pot for these on-costs, so it will be incredibly tough for practices to find the cash to pay pharmacists the extra 6%.

This is particularly trying for PCNs at the top end of their Additional Roles Reimbursement Scheme spend. The ARRS allows PCNs to take on extra clinical pharmacists and technicians and reimburses some of their salaries, supposedly giving them breathing room. But, while the scheme is inclusive of some on-costs, many PCNs max out their yearly ARRS budget quickly. With that in mind, the likelihood that this extra funding will ease the NI burden is pretty slim, if not non-existent. It will only eat into the money faster, squeezing practices and jeopardising salary increases.

At worst, this could lead to simmering tensions between practices and pharmacists; pharmacists expect a pay rise, but some practices will have to plunge themselves into a deficit to meet the extra costs. At Ramsay Brown, again, we have seen how acute this issue is; day in and day out, practice partners are at their wits’ end trying to find the funds.

But employer NI is only one string in this troublesome bow; it’s the changes to the Business Asset Disposal Relief (BADR) scheme that will bring even more issues to a head.

The BADR scheme, in short, reduces the rate of capital gains tax (CGT) you must pay when selling part or all of your business for some owners (GOV.UK). But, while it’s still intact, it came under fire in the Budget. The tax will increase to 14% in April 2025 and climb even higher to 18% in 2026 (GOV.UK), penalising entrepreneurial pharmacists who have built and scaled their businesses. This change comes alongside hikes to the main rates of CGT, too.

All considered, frankly, I don’t envy Reeves’ position; she had a mammoth task before her, but we all know how much strain our medical sector is under.

Pharmacists have already been impacted by the funding challenges and growing workload bogging down practices, PCNs, and pharmacy businesses, and the chancellor’s changes could exacerbate their woes. In one fell swoop, Reeves has mounted further pressures on pharmacists and their employers and in the worst cases, it could even push some to head for the exit signs.