Outsourced Bookkeeping vs In-House: A Cost Comparison for UK Businesses

How much does an in-house bookkeeper cost in the UK?

Budget for 20–30% above the advertised salary. Indeed reports an average bookkeeper salary of around £28,894 in England, while Morgan McKinley’s 2026 guide puts the London range at £28,000–£38,000. The employment cost is what matters, not the headline figure.

The full cost stack for 2026/27

Two figures drive that total. Employer National Insurance is charged at 15% on earnings above the Secondary Threshold of £5,000 a year, unchanged from 2025/26, and the threshold remains frozen until 2030–31. On the pension side, the minimum total contribution is 8% of qualifying earnings, of which the employer must fund at least 3%, calculated on the band between £6,240 and £50,270 for 2026/27.

The Employment Allowance changes the maths. Eligible employers can reduce their employer NI bill by up to £10,500 in 2026/27, and the previous £100,000 eligibility cap was removed from 6 April 2025. For a company that has not already used the allowance elsewhere, the £3,750 NI cost drops to nil, bringing total employment cost closer to £31,100. A single-director company with no other employees cannot claim it, but hiring a bookkeeper often creates eligibility.

One further point for 2026/27: the Employment Rights Act 2025 makes Statutory Sick Pay payable from day one and removes the earnings floor for eligibility. Absence now carries cost from the first day.

How much does outsourced bookkeeping cost?

Expect £150 to £600 a month for a typical UK small business. Fixed retainers generally run from £150 to £950 a month in 2026/27, with hourly rates between £20 and £50. Pricing follows transaction volume, the number of bank accounts, VAT status and whether payroll is included.

A rough guide to where businesses land:

• Sole traders and micro businesses: £150–£300 a month for light transaction volume
• Small VAT-registered companies: £300–£600 a month at around 100+ transactions
• Higher-volume businesses: £600–£950+ a month with 300 or more transactions, multiple bank accounts and payroll to reconcile

At £400 a month, the annual cost is £4,800. That figure carries no employer NI, no pension liability, no holiday or sick pay, and no recruitment cost. Software is frequently bundled, though this varies by provider, so confirm it before comparing quotes. Fees also step up for multi-currency accounts, stock, CIS and Making Tax Digital quarterly submissions.

Outsourced bookkeeping vs in-house: side-by-side comparison

The cost gap only closes when the workload is large enough to occupy someone full time. Below that, an employee is paid for hours the business does not need.

When does hiring an in-house bookkeeper make sense?

Hiring is the better option when the work genuinely fills the week. Clear signals include:

• Daily cash handling, stock movements or trade counter sales
• Credit control that needs same-day chasing to protect cash flow
• Several trading entities with constant intercompany activity
• A finance function where bookkeeping is one of a wider set of duties
• Transaction volumes above roughly 500 a month across multiple accounts

The honest counterpoint is that many businesses hire too early, then fill the spare capacity with general admin. That masks the real cost of the decision and leaves the bookkeeping under-supervised.

Hidden costs most businesses miss

Four costs rarely appear in the comparison:

1. Absence cover. Holiday and sickness leave the books unattended, and catch-up work after a gap often costs more than routine processing.
2. No second review. A sole in-house bookkeeper has nobody checking the work, so coding errors and VAT misclassifications can run for months before a year-end review finds them.
3. Training and CPD. Keeping current with VAT rules and MTD requirements for VAT-registered businesses is an ongoing cost.
4. Your own time. Supervising, reviewing and answering queries pulls directors away from fee-earning work.

Which option is right for your business?

Work through these six questions:

1. Does the bookkeeping workload reliably exceed 25 hours a month?
2. Are you VAT registered, and does someone need to prepare returns?
3. Do you handle daily cash or stock movements?
4. Can you claim the Employment Allowance, or is it already used?
5. Do you need management accounts as well as record-keeping?
6. Would a fixed monthly fee suit your cash flow better than a salary?

Three or more “yes” answers to questions 1–3 point towards hiring. Otherwise, outsourcing is normally the more efficient route.

Costs vary by sector, location and transaction volume. Check all rates and thresholds against current GOV.UK guidance before making a hiring decision, and take professional advice on your own circumstances.