When a mid-market business finally accepts it needs senior tax leadership, the instinctive next step is to recruit a Head of Tax. It feels like the responsible thing to do. But for most businesses between £10m and £150m of turnover, a full-time hire is the wrong first move — not because in-house expertise is bad, but because the numbers rarely justify it until a business is considerably larger. This is the honest cost-benefit comparison.
The real cost of a full-time Head of Tax
A full-time Head of Tax in the UK mid-market commands a base salary of roughly £130,000 to £200,000. But salary is only the visible part of the cost. The true all-in figure includes:
- Employer's National Insurance at 15% on earnings above the secondary threshold — on a £160,000 salary, roughly £23,000.
- Pension contributions — typically 3% to 10% of salary.
- Bonus — a senior tax hire will expect 10% to 25% of base.
- Recruitment cost — a specialist tax search fee is commonly 20% to 30% of first-year salary, so £30,000 to £50,000 before they start.
- Onboarding and ramp-up — the months before a new hire is fully productive.
Add these together and a £160,000 base salary becomes an all-in annual cost in the region of £210,000 to £250,000 — plus a one-off recruitment cost on top. That is the genuine price of the decision, and it is the number that should be compared against the alternative, not the headline salary alone.
The utilisation problem
The cost is only half the issue. The other half is utilisation. A mid-market business with, say, £40m of turnover, a couple of overseas subsidiaries, some property and an R&D claim has real tax complexity — but it does not generate five days a week of senior tax work. Realistically it needs the judgement of a Head of Tax for perhaps two to four days a month: reviewing the position, directing the specialists, reporting to the board, and stepping up around transactions.
Hire full-time, and you pay for five days a week of capacity while using a fraction of it. The expensive senior person ends up either underused, or — more commonly — drifting into work well below their pay grade simply to fill the time: reviewing routine VAT returns, chasing compliance, doing what a junior could do. You are paying director rates for manager work.
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How the fractional model works
A Fractional — or Outsourced — Head of Tax inverts the equation. Instead of buying a full-time person and hoping to use them, you buy the senior time your business actually needs, on a retained basis. The same seniority, the same board-level judgement, the same accountability — scaled to a few days a month, at a fee that is a fraction of a full-time package.
The model works because tax leadership is intermittent by nature. The strategic questions — is the structure right, where is the risk, what will due diligence find — do not need daily attention. They need senior attention at the right moments, by someone who holds the whole picture in their head. A fractional model delivers exactly that, and nothing you do not need.
Side by side: the comparison
Consider a representative mid-market business — say a £40m-turnover group with two overseas subsidiaries, property on the balance sheet, and an active R&D programme. The two routes compare like this:
| Factor | Full-time in-house hire | Fractional / Outsourced Head of Tax |
|---|---|---|
| All-in annual cost | ~£210,000–£250,000 + recruitment | A fraction of that — scaled to days used |
| Capacity | 5 days/week (mostly underused) | Matched to actual need |
| Breadth of expertise | One person's specialisms and blind spots | Firm-level breadth behind one lead |
| Single-person risk | High — illness, departure, gaps | Low — continuity and cover built in |
| Time to value | Months (recruit, onboard, ramp) | Weeks |
| Scalability | Fixed cost regardless of activity | Flexes up around transactions and enquiries |
The hidden risk of a single hire
There is a risk in the in-house route that rarely makes it onto the business case: you are concentrating your entire tax capability in one person. Every individual has specialisms and blind spots. A Head of Tax who came up through corporate tax may be light on VAT or employment taxes; one from a transactions background may be less strong on day-to-day compliance governance. You inherit their gaps as well as their strengths.
You also inherit key-person risk. If they are ill, on leave, or resign, your tax leadership simply stops — at exactly the moment you may need it most. A firm-backed fractional model carries the breadth of a team behind the named lead, so cover and continuity are built in, and the blind spots of any one individual are filled by others.
When a full-time hire is the right call
To be fair to the in-house route: there is a point at which it becomes the right answer. As a business grows past roughly £150m to £200m of turnover, acquires real international complexity, or reaches a scale where tax genuinely generates full-time work, a permanent Head of Tax — and eventually a team — becomes justified and necessary.
The fractional model is not a permanent substitute for an in-house function at the top end. It is the right answer for the long middle: the years when a business has outgrown pure compliance but has not yet reached the scale where a full-time tax director earns their keep five days a week. For many mid-market businesses, that middle phase lasts a long time — and a fractional model is also the natural bridge that builds the governance and structure an eventual in-house hire will inherit.
📌 Putting numbers to it
Take a £40m group with two overseas subsidiaries, property, and an R&D programme. A full-time Head of Tax to oversee it would cost ~£160k base — call it £230k all-in once you add employer's NIC, pension, bonus and a £40k recruitment fee. For that, the business genuinely needs perhaps three days of senior tax time a month.
The same oversight, delivered fractionally, costs a fraction of that figure — and flexes up only when a transaction or enquiry demands it. The business gets board-level tax leadership without carrying a £230k fixed cost for capacity it cannot use.
The bottom line for CFOs
The decision is not "do we need senior tax expertise" — if you are asking the question, you probably do. The decision is "how do we buy it efficiently". For most mid-market businesses, a fractional Outsourced Head of Tax delivers the same institutional-grade oversight, board representation and risk management as a full-time hire, for a fraction of the cost, with less risk and faster time to value.
Spend £210,000-plus on capacity you will not fully use, or buy the leadership you need at the level you need it. For the businesses we work with, the answer is rarely the full-time hire — at least not yet.
To understand the wider role this leadership plays, read our pillar guide on what an Outsourced Head of Tax actually is, or learn about when a business needs tax leadership in the first place.
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Frequently asked questions
How much does a fractional Head of Tax cost compared with a full-time hire?
A full-time Head of Tax has an all-in cost of roughly £210,000–£250,000 a year (salary plus employer's NIC, pension, bonus and recruitment). A fractional Outsourced Head of Tax is engaged on a retained fee scaled to the days your business actually needs, typically a fraction of that figure.
Does a fractional Head of Tax give the same quality as an in-house hire?
Yes — the same seniority and board-level judgement, and often greater breadth, because a firm-backed fractional lead has a team behind them rather than one person's specialisms and blind spots. The difference is how much of their time you buy, not the quality of it.
When should we hire a Head of Tax in-house instead?
When the business grows past roughly £150m–£200m of turnover, acquires substantial international complexity, or reaches a scale where tax genuinely generates full-time work. Below that, a fractional model is usually the more efficient choice.
What is the risk of relying on one in-house tax hire?
Concentration and key-person risk. Every individual has specialisms and blind spots, and if they are ill or leave, your tax leadership stops. A firm-backed fractional model builds in breadth, cover and continuity.