The short answer: which is cheaper for a care home?
For most single-site care homes, outsourcing is the cheaper option by a wide margin. A full-time in-house bookkeeper on a £32,000 salary costs close to £40,000 a year once you load on employer National Insurance, pension and the cost of cover when they are off. Outsourcing the same monthly bookkeeping, payroll, VAT and year-end accounts to a specialist starts from around £4,188 a year for a home up to 30 beds. That is roughly a tenth of the in-house figure for the same core work.
The reason people still ask the question is that the salary looks affordable on its own. £32,000 feels manageable. It is the invisible costs stacked on top, and the fact that one person cannot be in two places at once, that change the maths. We look after care homes and domiciliary providers across London and the rest of the UK, and this is one of the most common decisions an owner brings to a first call. For the wider picture on how care businesses are supported, see our healthcare and care accountants page.
The honest answer is not "never hire". It is "hire once the volume justifies a full-time salary, and even then keep specialist support for the technical work". A bookkeeper records what happened. A care accountant tells you what it means for your tax, your margin and your CQC position. Those are different jobs, and small homes rarely need a whole salaried person doing the first one.
What an in-house care home bookkeeper actually costs
A £32,000 salary is not what an in-house bookkeeper costs you: the real figure is closer to £40,000 a year. The gap is made up of statutory on-costs and the practical cost of keeping the role running, and most owners underestimate it because a salary is the only number on the job advert.
Start with the pay itself. A bookkeeper who can run shift-pattern payroll, reconcile CQC fee income, chase local authority remittances and produce a monthly management pack sits at the higher end of the market. The UK average bookkeeper salary is around £28,000 to £30,000, but a care-capable one earning £30,000 to £35,000 is realistic. We will use £32,000 as a mid-point.
Now the statutory costs. Employer secondary Class 1 National Insurance contributions (NIC) are charged at 15 percent on earnings above the £5,000 secondary threshold in the 2026/27 tax year, so on £32,000 that is 15 percent of £27,000, which is £4,050. Auto-enrolment pension adds a minimum 3 percent employer contribution on qualifying earnings, roughly £770 on this salary. Those two alone add nearly £4,800 before you have bought a single piece of software.
Then the running costs that never make the advert. Payroll and bookkeeping software for a care home, training and CPD to keep the person current, recruitment amortised over the average stay, and, the big one, cover. When your single finance person is off sick or on annual leave, payroll still has to run and invoices still have to go out. Either you pay for temporary cover or the work does not get done. Realistically that bundle is another £3,000 a year.
What outsourcing the same work costs
Outsourcing the identical monthly finance work to a specialist costs a small care home a fraction of an in-house salary, typically from £4,188 a year. That figure buys the bookkeeping, the payroll, the VAT position and the year-end accounts as a fixed monthly fee, with no employer National Insurance, no pension, no software licences and no gap when someone is off.
There are two outsourced routes, and they are not the same. A generic high-street accountant will often quote a low headline fee, then bill ad-hoc for anything beyond the year-end return. By the time you add payroll, VAT and the odd query, a generalist doing a care home properly usually lands somewhere from £6,000 a year, and they still may not touch the care-specific work. A care specialist charges a fixed monthly fee that already includes the technical parts. For a single-site home up to 30 beds that is from £349 a month, and for larger or multi-site homes from £699 a month.
The chart below puts the three routes on the same axis. It is not that outsourcing is a bit cheaper. For a home that does not have enough daily volume to fill a full-time seat, it is a different order of magnitude. For the mechanics of running payroll specifically, our guide on payroll and PAYE and the detail in how much payroll costs for a care home both go deeper.
What a care home bookkeeper has to get right
A care home bookkeeper is not doing ordinary small-business bookkeeping: the work sits on top of rules that a generalist rarely handles, and getting them wrong is expensive. This is the real reason cost is not the only test. Three areas quietly decide whether your books are safe.
Sleep-in shifts and National Minimum Wage
Night cover is where payroll goes wrong. The National Living Wage rose to £12.71 an hour for staff aged 21 and over from 6 April 2026, and how you pay sleep-in shifts affects whether you are compliant. Following the Supreme Court ruling in Royal Mencap Society v Tomlinson-Blake, workers on a genuine sleep-in are entitled to the minimum wage only for time spent awake and working, but the averaging of pay across a period can still pull a carer below the legal floor if no one is watching. It is enforced under HMRC's National Minimum Wage guidance, and the penalty for underpayment is up to 200 percent of the arrears. A bookkeeper who does not understand the rule will process the payroll exactly as instructed and never flag the risk.
CQC fee income and financial viability
Your income needs reconciling against occupancy, not just against the bank. Fees from the local authority, the NHS and private residents arrive on different terms, and an empty bed is lost income that should show up in your numbers before it hits your cash. The Care Quality Commission also expects financial soundness under Regulation 13 of its registration requirements, so the figures need to be clean enough to stand up to scrutiny. Reconciling CQC fee income properly is a care skill, not a generic one, and it is the difference between spotting a void early and finding it at year-end.
The welfare VAT exemption
VAT on care is a trap for the untrained. Care supplied by a CQC-registered provider is usually exempt from VAT, which sounds like good news until you realise it makes the VAT on a refurbishment or a big equipment purchase irrecoverable. Handle a mixed supply wrongly and you either overpay VAT or expose the home to an assessment. Our note on when a care home is VAT exempt and when it is not walks through where the line sits. A bookkeeper focused on data entry will not see the issue coming.
When an in-house hire does make sense
An in-house bookkeeper starts to earn its keep once the home is large enough to keep that person busy every day. The tipping point is usually around 40-plus beds, or a group running several sites, where the sheer daily volume of invoices, fee runs, staff changes and supplier queries genuinely fills a full-time role. Below that, you are paying a full salary for part-time work.
Even at that size, the smart structure is rarely "in-house instead of an accountant". It is "in-house alongside an accountant". The salaried person handles the daily processing, the supplier payments, the fee runs and the first line of payroll. The outsourced specialist handles the technical layer: the year-end statutory accounts, the corporation tax, the welfare VAT position, the sleep-in National Minimum Wage checks, and the CQC financial viability figures if you are registering a new location. That split gives you responsiveness on the day-to-day and expertise on the parts that carry real risk.
What almost never works is hiring a single bookkeeper and assuming they replace the accountant entirely. Very few bookkeepers are qualified to file company accounts or sign off a tax position, so most homes that go in-house end up carrying both costs anyway. If you are weighing this against your current arrangement, our guide on when a care home owner should switch to a specialist covers the signals that it is time to change. There is a real risk in a one-person finance function too: when that person leaves, the knowledge of how your payroll and fee reconciliation work walks out of the door with them.
In-house vs generic vs specialist, side by side
Cost is only half the decision: the other half is what each route actually does for a care home. The table below compares the three approaches across the things that matter, not just the price tag.
Here is how the three routes compare for a care home finance function:
| What you need | In-house bookkeeper | Generic accountant | LOYALS specialist |
|---|---|---|---|
| True annual cost | ✗ ~£40,000 all-in | ● from £6,000 | ✓ from £4,188 |
| Runs sleep-in and shift-pattern payroll to National Minimum Wage | ● If trained | ✗ Rarely | ✓ Built in |
| Reconciles CQC fee income against occupancy | ● Data only | ✗ | ✓ Management accounts |
| Handles the welfare VAT exemption correctly | ✗ | ● If asked | ✓ Reviewed |
| Files year-end accounts and corporation tax | ✗ Not qualified | ✓ | ✓ |
| Cover when your finance person is off sick or on holiday | ✗ Single point of failure | ✓ | ✓ Team-based |
| Available Mon to Sat for urgent questions | ● Office hours | ✗ Mon to Fri 9 to 5 | ✓ 10am to 7pm Mon to Sat |
This is why most single-site and mid-size care homes outsource to a specialist rather than carry a full salary, and why larger groups run a bookkeeper and a specialist together.
What this means for you: how to decide
The decision comes down to volume, risk and cover, and you can work through it in a few minutes. None of it is complicated once you see the real numbers rather than the salary alone.
- Count your beds and your volume. Under roughly 40 beds on a single site, a full-time bookkeeper will be underused. The daily finance work does not fill the seat, so you are paying £40,000 for part-time output.
- Load the true salary cost. Take any salary you are considering and add 15 percent employer National Insurance above £5,000, 3 percent pension, software, and a realistic figure for cover. The honest number is around a quarter higher than the headline.
- Price the outsourced alternative properly. Ask for a fixed monthly fee that names exactly what is included: bookkeeping, payroll, VAT, management accounts and year-end. A specialist fee that already covers the care work is not the same as a cheap generalist quote that bills extra for everything.
- Protect against the single point of failure. If one person holds your payroll and fee reconciliation and they leave or fall ill, what happens on the next pay run? A team-based outsourced function does not have that gap.
- Keep the technical work with a specialist either way. Sleep-in National Minimum Wage, welfare VAT and CQC financial viability are where care homes lose money quietly. Whoever does your day-to-day books, make sure someone who understands the care rules signs off the position.
Most owners who run these numbers land in the same place. Until the home is large enough to keep a full-timer genuinely busy, outsourcing to a care specialist is cheaper, safer and does more. You can check your home's position in a free call with LOYALS, and we will tell you honestly which side of the line you sit on.