What a British marketing hire costs on top of the salary, and when an agency is the cheaper answer

A British company with a fixed monthly amount can hire one marketing person or retain one agency. The comparison almost everybody makes is a salary against a retainer, and it is wrong before it starts, because a salary is not what an employee costs and a retainer is not what an agency costs. Here are the real numbers on the employment side, read from gov.uk, then the five differences that decide it.

The employer costs, from gov.uk, read on 22 October 2026

Three statutory costs sit on top of a salary, and all three are published.

• Employer National Insurance. From the HMRC rates and thresholds for employers 2025 to 2026, the secondary threshold is GBP 5,000 a year, which is GBP 417 a month or GBP 96 a week, and the employer contribution rate for category A is 15% on earnings above it. The figures apply from 6 April 2025 to 5 April 2026.
• Pension auto enrolment. From the gov.uk guide on workplace pensions for employers, 'You must pay at least 3% of your employee's qualifying earnings into your staff's pension scheme', and under most schemes qualifying earnings are total earnings between GBP 6,240 and GBP 50,270 a year before tax. The same guide states you must enrol and contribute for staff aged between 22 and State Pension age who earn at least GBP 10,000 a year and normally work in the UK.
• Everything else on the payroll side. Holiday, equipment, software seats, recruitment cost and the management time the person will need. These are real and they are yours to calculate.

So the honest employment figure is the salary plus 15% of most of it, plus at least 3% of the qualifying band, plus the rest. Run that arithmetic before you compare anything.

The VAT line that belongs on the other side

The standard rate of VAT is 20%, from gov.uk's VAT rates page read the same day. An agency invoice carries it and a salary does not. For a VAT registered business making taxable supplies, that changes what the agency actually costs you compared with the headline on the invoice, and the treatment in your specific circumstances is a question for your accountant. Ask it before you decide rather than after, because for some companies it moves the comparison and for others it does not move it at all.

The five differences that actually decide it

1. Breadth against depth. One hire is one skill set. If the work needs search, paid, content and design, your hire will be strong at one and learning the rest on your payroll.
2. Who accumulates the context. An employee learns your business in a way an agency never will, and it compounds. This is the strongest argument for hiring and it only pays if they stay.
3. Continuity risk. An agency absorbs holiday, illness and resignation. One hire leaving mid programme stops the programme.
4. Production capacity. An agency is already staffed to produce. A hire has to brief, buy or make everything, which usually means a second cost appears.
5. Who can say no. An employee can refuse a bad internal idea. An agency will generally do the work and invoice for it. Underrated, and a genuine argument for the hire.

The answer that works for most British companies at a middling budget

One internal owner plus bought execution. The internal person owns the buyer, the message, the numbers and the supplier relationships. The agency or freelancers produce. That puts the thing you cannot buy inside the company and buys the thing that is cheaper outside it.

Sequence matters. Buy execution first, find out which channel pays, then hire into it. Hiring first means the first two quarters are spent learning the same lesson at employment cost rather than at supplier cost.

What the UK market looks like from the outside, measured

One input to this decision is what buyers are told about your category, because it tells you which problem you are solving. On 22 October 2026 we put a 198 question set of British buying questions to ChatGPT and Gemini, with the market written into the prompt because the country parameters on the search API are accepted and then ignored. That produced 64 blind readings.

British agencies were named repeatedly without any question naming them, led by Impression in 18 of the 64 readings, with Brainlabs in 4 and Builtvisible in 3. Global software was named as often, with Semrush in 13 readings, Ahrefs in 11 and HubSpot in 10. Across all 64, 34 readings named at least one supplier and 30 named nobody at all.

Read that as a hiring input rather than a league table. Agencies in this market have a measurable public presence that a single hire does not, which matters if part of what you are buying is association. And since 30 of 64 answers named nobody, the opportunity in this market is publishing rather than outbidding, which is work either option can do.

What British companies ask when choosing between a hire and an agency

What seniority should the hire be? Senior enough to brief and judge suppliers, which is usually more senior than the budget suggests. A junior hire plus an agency often beats a mid level hire alone.

Does the Employment Allowance change the National Insurance arithmetic? It may, depending on your circumstances, and the gov.uk employers guide covers it alongside the rates above. Check your own eligibility with your accountant rather than assuming it applies.

Is a fractional or part time hire a third option? Yes, and often the right one between the two, because it buys the ownership without the full employment cost. Define the hours and the single number they own.

How do we judge an internal hire? Against the same number you would use for an agency, chosen before they start. The usual failure with a hire is that nobody ever defined what success was.

What if we choose wrong? An agency is reversible within a notice period and an employee is not, which is itself an argument for buying first at an uncertain stage.

Run the arithmetic before the interview, not after the offer

Take the salary you were going to offer. Add 15% of everything above GBP 5,000, add at least 3% of the qualifying band, add equipment, software seats and recruitment. Put that total next to an agency quote with VAT on it and ask your accountant which side of the comparison your business can actually recover anything from. Most companies do this after the offer is accepted, which is the point at which the answer cannot change the decision.

Then set the single number, whichever you choose, and have somebody outside the arrangement take a reading of where you start. That is the part we do at AI Knows Us, and it matters more here than usual, because a hire and an agency will both tell you in month six that things improved.

For the approval chain the decision has to pass through in a mid sized British company, see our page on the paperwork that decides how fast British marketing spend gets approved.