GP Practice Management, GP Practice Payroll, National Living Wage 2027

Minimum Wage Is Rising 3.9% in April. Has Your Practice Budgeted for the Knock-On Effect?

From April 2027, the national living wage 2027 GP practice teams must pay will rise again. For many practices, the bigger issue is not the headline figure, but the quiet pressure it adds to already tight payroll budgets and staff expectations.

1. The new rate – and why Band 2 and 3 should make you pause

The Autumn Budget on 28 October 2026 confirmed a 3.9% rise in the National Living Wage for workers aged 21 and over, from £12.71 to £13.21 an hour from 1 April 2027. The same 3.9% uplift applies to the National Minimum Wage rates for younger staff and apprentices. This is the baseline every GP practice must meet, regardless of funding.

NHS Employers notes that the current entry rate for Agenda for Change Band 2 is £12.92 an hour and the entry point to Band 3 is £13.17. Both sit below the new £13.21 National Living Wage. If the 2027/28 NHS pay award is not confirmed in time, NHS Employers has said it will discuss interim arrangements with government to ensure minimum wage compliance. For practice managers and PCN Clinical Directors, that gap is a clear signal to revisit your own pay scales now rather than wait.

2. What is changing – and for whom in your practice?

From 1 April 2027 the hourly rates will be:

• National Living Wage (21+): £13.21

• 18–20 year olds: £11.27

• Under 18s and apprentices: £8.31

In many GP practices, receptionists, administrators and healthcare assistants are closest to these thresholds. The minimum wage rise GP practices now face is above the 2.4% pay increase the government has proposed for doctors in its evidence to the DDRB for 2027/28. Earlier this year, the 2026/27 contract used a 2.5% pay assumption while the minimum wage rose 4.1% and Agenda for Change increased by 3.3%, according to AISMA. Medical accountants say practices have “barely recovered from the last hike”.

3. No confirmed 2027/28 funding – so plan scenarios now

The Budget did not set out how GP contract funding for 2027/28 will reflect the rise. AISMA has warned that the increase will put pressure on already stretched GP practice staff costs and that core funding uplifts in recent years have fallen well short of minimum wage rises. Until the contract is known, the safest approach is to model several GP practice payroll budget scenarios: one where funding keeps pace, and one where it does not. Your accountant and LMC can help sense-check assumptions for your locality.

4. Pay compression – the hidden cost in the middle of your scale

Pay compression happens when entry pay rises, but the people already above that level do not move, narrowing the gap between new starters and experienced staff. HR research cited by IRIS found that 71% of employees with two to five years’ experience struggled to feel motivated to train new starters earning almost as much as them.

Imagine you bring a new receptionist in at the legal minimum. To stay compliant in April, you increase that starting rate. If you only uplift the new starter, your longer-serving receptionist, who has taken on complex tasks and mentoring, may now be on virtually the same hourly rate. To keep a meaningful gap, you decide to move the experienced receptionist up as well. The same pattern repeats across other roles near the minimum. None of these adjustments look large in isolation, but together they can significantly increase your wage bill.

Small uplifts across reception and admin teams can add up quickly in practice budgets.

5. Compliance risks – and why accuracy matters

Underpaying the minimum wage, even by mistake, carries real risk. Underpayments over £500 can lead to public naming, with arrears repaid at current rates and penalties of up to 200% of the underpayment. The Fair Work Agency has been looking more closely at the healthcare sector. Employers must also provide a written statement of employment particulars from day one. IRIS has highlighted that from January the qualifying period for ordinary unfair dismissal claims falls to six months and the compensatory award cap is removed. Always confirm the detail with your HR adviser and check individual cases with your accountant and LMC rather than relying on general guidance.

6. A practical 2027/28 budgeting checklist for practice managers

• List every role within about 10% of the new minimum in each age band, including reception, admin and healthcare assistants.

• Model the extra pay for those roles and add employer National Insurance and pension contributions to see the true cost.

• Decide your policy on pay gaps between new starters and more experienced staff before April to manage pay compression fairly.

• Check contracts and written statements to ensure they reflect current roles, hours and pay structures.

• Prepare to raise the impact of minimum wage and pay compression in contract and ICB conversations, using clear worked examples.

• Talk to your accountant about cashflow, including tax changes requiring more in-year payments for self-employed partners and GPs.

7. Staff costs, capacity and keeping GP sessions predictable

As staff costs rise, predictable outgoings become more important to maintaining capacity. While you work through pay compression GP practice implications for non-clinical staff, it may help to keep GP session costs as stable as possible. Flex GP by GP Connect offers one transparent annual fee, paid in 12 monthly instalments, with sessions agreed upfront, a GP typically placed in around two weeks, up to 12 months to assess fit, and replacement, sickness and annual leave cover included. That kind of predictability can make it easier to plan alongside the new Agenda for Change Band 2 minimum wage pressures and wider payroll changes.

The minimum wage rise for April 2027 is fixed; how your practice responds is not. Taking time now to review your GP practice payroll budget, model scenarios and firm up your approach to pay compression will put you in a stronger position when the 2027/28 contract finally lands. If you would like to explore how more predictable GP capacity could support your wider staffing plan, start a conversation with GP Connect today.