Your daily contractor rate before tax.
Include bank holidays if you don't work them.
Day Rate
£500.00 /day
Annual Salary Equivalent
£117,500.00
Effective Tax Rate
Net Daily Rate
£327.48
What is a day rate?
A day rate is the amount a contractor or freelancer charges per working day. Unlike salaried employees who receive a fixed annual salary with benefits, contractors set a daily fee that reflects both their expertise and the additional costs they bear — including unpaid holidays, no employer pension, no sick pay, and the administrative overhead of running a limited company or umbrella arrangement. When comparing a day rate to an employed salary, it's essential to account for these hidden costs, which typically add 15–25% to the true salary equivalent.
Working days and utilisation
The number of working days per year is the most important variable in any day rate calculation. A contractor working 5 days per week with 25 holiday days has 235 billable days per year. However, in practice, gaps between contracts, training days, and illness can reduce this to around 220–230 days. Experienced contractors factor in a utilisation rate when setting their day rate, ensuring they earn enough during working periods to cover non-billable time. This calculator uses your specified working pattern to give you an accurate salary equivalent and full tax breakdown based on HMRC rates for the 2025/26 tax year.
How do I convert day rate to salary?
Multiply your day rate by the number of working days per year. For example, a £500/day rate with 235 working days equals £117,500 annual gross salary equivalent. However, remember that as a contractor you won't receive paid holidays, pension contributions, or other employee benefits — so the true equivalent salary is lower.
What's a typical contractor day rate?
Contractor day rates vary significantly by industry, experience, and location. In the UK, junior roles might command £200–£350/day, mid-level £350–£550/day, and senior or specialist roles £550–£1,000+/day. IT and finance contractors in London tend to be at the higher end. Rates outside London are typically 10–20% lower.
How many working days in a year?
A standard year has 52 weeks × 5 days = 260 weekdays. After deducting 8 bank holidays and a typical 25 days of personal holiday, you get approximately 227 working days. Contractors often use 230–235 days as a planning figure, accounting for the fact that they may not take as much holiday as employees.
Should I include bank holidays?
Yes, if you don't work on bank holidays, include them in your holiday days count. The UK has 8 bank holidays per year (England and Wales). If you work through bank holidays, you can exclude them and your working days — and therefore your salary equivalent — will be higher.
How does IR35 affect my day rate?
If your contract falls inside IR35, you'll be taxed as an employee — paying income tax and both employee and employer National Insurance on your earnings. This typically reduces your take-home pay by 20–25% compared to working outside IR35. Many contractors increase their day rate by 15–20% to compensate when working inside IR35.
HMRC-Aligned: Based on HMRC rates for 2025/26. This calculator provides estimates only — for IR35 assessments and complex contractor tax situations, consult a qualified accountant or tax adviser.
This calculator uses official rates and thresholds from:
Last verified: February 2026 · Tax year 2025/26. Results are indicative — consult a qualified accountant for personalised advice.
Reviewed by M. Samiuddin Quadri, ACCA — Chartered Certified Accountant at Gladstone & Co. · Updated for the 2025/26 tax year.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms