Outsourced HR cost in the UK: 2026 guide
Quick answer: For a UK SME in 2026, outsourced HR typically costs £200 to £600 per month on a retainer, or £80 to £150 an hour ad hoc. One-off pieces such as a compliance audit or a contract and handbook set usually run from a few hundred pounds to around £1,500. Low-tier memberships for very small employers start around £100 a month. The figure depends on your headcount, how much support you actually use, and whether HR software is included. The number most buyers forget to work out is the total across the contract term: a £300 a month contract on a five-year tie-in is an £18,000 commitment. Beagle HR’s retained support starts from £299 per month plus VAT on a twelve-month term, then rolling.
Typical costs in 2026
| Service | Typical UK range | Beagle HR (from) |
|---|---|---|
| Low-tier membership (1 to 10 staff) | £75 to £150 per month | £99 per month |
| Retained HR support (monthly) | £200 to £600+ per month | £299 per month |
| Hands-on retained support with monthly hours | £400 to £1,500+ per month | £599 per month |
| One-off HR compliance audit | £300 to £1,500 | £495 |
| Contracts and handbook | £400 to £1,500 | £695 |
| Employee issues and investigations | £300 to £1,200 per case | From £795 per case |
| Redundancy support | £300 to £1,000+ | £695 for a single role |
| Ad hoc advice (per hour) | £80 to £150+ | £135 per hour, billed in 15-minute blocks |
| HR software (per employee, per month) | £3 to £20 | Breathe set up for you, paid direct to Breathe |
Ranges are general market estimates for 2026 and vary by provider and region. All Beagle HR figures exclude VAT. Full banded pricing is on our pricing page.
The number nobody quotes you
Every provider sells on the monthly figure. Almost none of them lead with the contract term, and that is where the real cost sits.
When the Competition and Markets Authority examined this market in 2016, third parties told it that contracts for employment law and HR consultancy services typically last between three and ten years. Several national providers renew automatically for a further period equal to the original term unless you give notice months in advance, and some charge a percentage of the remaining fees if you agree to leave early.
So before you compare monthly prices, do this:
| Monthly fee | Over 12 months | Over 36 months | Over 60 months |
|---|---|---|---|
| £150 | £1,800 | £5,400 | £9,000 |
| £299 | £3,588 | £10,764 | £17,940 |
| £300 | £3,600 | £10,800 | £18,000 |
| £500 | £6,000 | £18,000 | £30,000 |
Those figures exclude VAT and exclude annual increases, which are often built into the terms at somewhere between three and seven per cent a year. A cheaper monthly fee on a five-year term is frequently more expensive than a higher fee on a twelve-month one.
Three questions to ask before you sign anything
- How long is the initial term?
- How much notice do I have to give, and by what date, to stop it renewing automatically?
- What does it cost me to leave early?
Get all three in writing. A provider who will not put them in writing has told you something useful.
What drives the price
- Headcount, and how many employees need covering. Most providers band their pricing by team size.
- How often issues come up. A stable office team costs less to support than a fifty-person hospitality operation with constant turnover.
- Whether HR software is included, and whether the licence is yours or theirs.
- One-off project versus ongoing retainer, and the complexity of your sector. Care, hospitality and construction generally cost more to support than professional services.
- Whether you are buying advice or delivery. Being told what to do is cheaper than having it done.
Ways to buy
- Membership. A low monthly fee for documents, updates and a small allowance of consultant time. Best for one to ten staff.
- Retainer. A predictable monthly fee for ongoing access, casework and updates when the law changes.
- Ad hoc. Pay per issue. Best if HR problems are genuinely rare for you, though it tends to cost more per hour and you are buying at the point of crisis.
- Fixed project. A set fee for a defined piece such as an audit, a set of contracts or a redundancy programme.
Frequently asked questions
Is outsourced HR cheaper than hiring?
For most businesses under about twenty-five to thirty staff, yes. An HR manager in the South East costs considerably more in salary alone than a retainer costs for the year, before pension, national insurance, holiday cover and the recruitment cost of finding them. You also get a wider range of experience than one person can hold.
What is included in a retainer?
Typically phone and email advice, contract and policy updates when the law changes, and support with issues as they arise. Check two things: whether advice is genuinely unlimited or capped at a number of hours, and whether casework such as running a disciplinary is included or charged extra. Providers differ enormously on both.
Are there hidden costs?
The three to watch are VAT, per-employee software fees charged on top of the headline retainer, and annual price increases written into the terms. Ask whether the quoted figure includes VAT, whether software is extra, and what the contract says about yearly uplifts.
How much does an HR compliance audit cost?
Typically £300 to £1,500 depending on headcount and how much documentation exists to review. Beagle HR’s audit starts at £495 plus VAT and covers every contract and written term, right to work evidence, your policies and handbook, and how holiday, sickness, pay and working time are actually recorded. The output is a written report with a prioritised risk register.
What should a small business budget for HR in a year?
For a business under ten staff with no live problems, £1,200 to £3,600 a year covers a membership or light retainer. Add £500 to £1,500 in the first year if your contracts and handbook need building from scratch. Businesses with turnover or an ongoing case should budget more. If you are spending nothing at all, the honest position is that you are self-insuring, and the excess on that policy is the cost of a tribunal claim.
Want a real number for your business? Book a free 15-minute call and we will tell you what it would cost, on the call, before any work starts.