Compensation benchmarking is one of the most practical tools available to HR teams and tax hiring managers. When it’s done well, it ensures that your pay structures are competitive, defensible and aligned with what the market is actually delivering.
For tax functions, where specialist skills are in high demand and the talent pool is relatively narrow, accurate benchmarking is especially important. A tax salary guide provides the foundation for that process.
What benchmarking actually means
Benchmarking is the process of comparing your internal compensation levels against external market data. The goal is to understand whether your pay structures are competitive and if they’re not, to identify where the gaps are.
For tax functions, benchmarking typically covers:
− Base salary ranges for each role level
− Bonus structures and typical award levels
− Benefits provision, including pension contributions, healthcare and flexible working arrangements
− Total compensation – the full picture, not just the headline salary figure
Effective benchmarking requires access to data that is current, specific to the tax profession and granular enough to be useful. Generic pay survey data rarely meets that bar.
Why generic pay data falls short
Many HR teams rely on broad pay surveys that cover multiple functions and industries. These can be useful for some purposes, but they have real limitations when it comes to tax.
The problem is specificity. Tax roles vary enormously in their technical requirements, and the compensation market reflects that. A Corporate Tax Manager in a listed business operates in a very different market to an Indirect Tax Specialist in a consultancy or a Head of Tax in a multinational group. A professional focused on international tax structuring commands different rates to someone specialising in compliance or reporting.
Generic surveys often don’t capture these distinctions in enough detail to be reliable. The result is benchmarks that look plausible on the surface but don’t reflect the market that tax professionals operate in.
How a specialist tax salary guide adds value
A specialist tax salary guide is built around data gathered from actual placements and market activity in the tax profession. It reflects the real rates that employers are paying and candidates are accepting, which is a better guide to the market than aggregated survey data.
The best tax salary guides will break data down by:
− Role level and seniority
− Specialism – corporate tax, indirect tax, employment tax, transfer pricing and so on
− Sector – practice, in-house, financial services, listed corporates, private equity-backed businesses and others
− Geography – with specific data for key markets rather than broad regional averages
This level of detail makes the data genuinely useful for compensation decisions, rather than simply providing a broad reference point.
Using salary data to inform compensation decisions
Once you have reliable benchmarking data, you can use it in a number of ways. These include:
− Setting salary ranges for new roles – ensuring that job descriptions and compensation structures are aligned with what the market expects
− Preparing for salary reviews – identifying where existing pay levels have fallen behind the market
− Informing offer negotiations – giving hiring managers a clear view of what a competitive offer looks like
− Supporting the business case for investment in the tax function – demonstrating to senior leadership the compensation levels required to attract and retain the right talent
In each case, the quality of the data underpinning these decisions matters. Poor data leads to poor decisions.
Keeping benchmarks current
Compensation benchmarking is not a one-off exercise. Markets move, and in tax where demand for skilled professionals remains strong, they can move quickly. Benchmarks that were accurate 18 months ago may no longer reflect the current market.
Building an annual benchmarking review into your HR calendar is good practice. It ensures that your compensation structures remain competitive and that you’re not losing ground on talent retention without realising it.
Where to access reliable tax salary data
The tax salary guide published by Brewer Morris is updated regularly and draws on data from an active tax recruitment practice. It covers a wide range of roles, sectors and geographies and is designed to give tax and HR professionals the specific, actionable data they need.
If you’d like to discuss how to use salary benchmarking as part of your tax talent strategy, get in touch with the Brewer Morris team. We’d be glad to help.
