Contractor Day Rate Calculator

Day rates are the standard pricing unit in British contracting. Converting a permanent salary into one starts by dividing the annual figure across the days you can actually bill, usually 220 to 230 once holidays, bank holidays and an allowance for time between contracts have come out. A premium then goes on top to cover the benefits and the job security you are giving up.

A common rule of thumb divides the salary by 200, so £60,000 becomes £300 a day, and the hourly version divides it by 1,000, giving £60 an hour. Dividing by 200 rather than by the 220 or so days actually billed builds in about 10%. Outside IR35, through a limited company, that is roughly the break-even point for matching a permanent employee's take-home and employer pension. Inside IR35 the break-even is nearer salary ÷ 185, because employer NI, the Apprenticeship Levy and the umbrella margin come out of the rate, and neither version leaves anything over for long gaps between contracts, sick days or the notice and redundancy rights given up.

This calculator works backwards from the take-home you want. Enter a target annual take-home and the days you expect to bill, choose inside or outside IR35, and it finds the lowest day rate, rounded up to the next £5, that delivers the target, with the revenue and take-home at that rate. Outside IR35 it assumes a limited company paying a £12,570 salary and the rest as dividends after Corporation Tax, with any business costs you enter deducted first. Inside IR35 it assumes an umbrella company that takes its weekly margin, employer NI and, if ticked, the 0.5% Apprenticeship Levy from the assignment rate before paying a salary taxed through PAYE.

Working the other way, a day rate multiplied by 220 gives the annual gross, so £400 a day is £88,000. Outside IR35, after £2,100 of accountancy and insurance, that leaves take-home of about £58,550, which a permanent employee would need a salary of about £82,700 to match. Inside IR35 through an umbrella it leaves about £54,570, the take-home on a salary of about £75,900. Those figures already allow for 40 unbilled weekdays, but not for the employer pension, sick pay and notice rights a contractor gives up or for longer gaps between contracts, which is why many contractors add 25 to 35% to the salary-per-day figure before quoting a rate.

IR35 status changes the arithmetic more than the day rate does. On £80,000 of revenue, a limited company outside IR35 paying a £12,570 salary and dividends leaves about £55,760 after Corporation Tax and dividend tax, an effective rate of about 30% before business costs. Inside IR35 through an umbrella, with employer NI, the 0.5% Apprenticeship Levy and a £25 weekly margin over 44 weeks taken from the rate before PAYE, the same revenue leaves about £50,550, an effective rate of about 37%, so the gap is a little over £5,000. Since April 2021 medium and large clients decide the status. A client company is small, leaving the decision to the contractor's own company, if it meets two or more of these tests: turnover of £15 million or less, a balance sheet total of £7.5 million or less, and 50 employees or fewer (the thresholds from 6 April 2025).

Running costs are easy to forget when the headline rate looks generous. Setting up a limited company costs £200 to £500 through an agent, or £100 online directly with Companies House. An accountant charges £100 to £200 a month, so £1,200 to £2,400 a year. Professional indemnity insurance is £60 to £200 a year, public liability £50 to £150 and IR35 enquiry insurance £200 to £400. Pension contributions are entirely your own responsibility, and holiday is unpaid, so 20 days off costs £8,000 to £15,000 in fees not earned. Operating costs usually come to 5 to 8% of revenue. None of these is in the minimum day rate unless you enter them in the business costs box, which applies outside IR35.

Rates in 2026 vary by discipline. A mid-level IT contractor in Java, .NET or DevOps gets £400 to £700 a day outside IR35, a PMP-qualified project manager £450 to £800, a management consultant from a Big 4 background £600 to £1,500 and a senior architect £800 to £1,500. Locum doctors in a specialty earn £80 to £140 an hour and consulting lawyers £500 to £2,000 and upwards. Day rates fell 10 to 20% between 2022 and 2025 as IR35 pushed roles inside, while London still carries a 30 to 50% premium. Plan around 80% utilisation, meaning 44 weeks worked and 8 unpaid, and keep a 6-month emergency fund.