The reason patients have to pay is because the NHS will not cover the cost of this sort of work, he told the BBC.
"The NHS provides general medical services. Letters for patients for third parties are not a health service," Dr Holden said.
"This is not money into the doctor's pocket. This is the gross turnover of the practice. Who's going to pay the secretary to type the letter? Who's going to pay the receptionist to sort it out?"
The GP is the only member of staff in the practice who generates external income, whether from the NHS or private sources, he added.
"Anything you do that is not part of the NHS, you have to recuperate your time and your overheads from somewhere - there is only one place and that is from the patient."
Dr Holden said it is widely accepted that a GP needs to earn a gross pay of "over £200 an hour" to keep a surgery open, and that writing even a short letter is not as straightforward as it may appear.
"What people forget is even for a one-liner the General Medical Council requires we verify that what we say and sign is true. That means a trawl through the notes to confirm that it's true.
"That takes time. The production of a one-liner can easily take 20 minutes," he said.
However Dr Holden did acknowledge that some doctors do charge too much, and blamed the introduction of the 1998 Competition Act for creating a "free for all".
"Some doctors will be very reasonable and one or two will be overstepping the mark and I do not condone that," he said.
"When the Competition Act came in, we said this would cause this kind of problem. The fact is the government said 'no, it has to be free for all