Day Rate to Salary Calculator

Multiply day rate × billable days. A £500/day rate × 220 days = £110,000 annual income. However, you need to account for holiday pay, sick pay, employer pension, and benefit values a permanent employee receives.

A common rule of thumb is that a day rate of 1% of desired annual salary (e.g., £500/day ≈ £50,000 salary) is breakeven. The actual multiplier depends on how many days you bill and the value of benefits foregone.

Permanent employees receive: employer pension contributions (3-10%), paid holiday (5.6 weeks), statutory sick pay, maternity/paternity pay, life insurance, private medical, and job security.

Contractors typically bill 200-230 days per year after holidays (28 days), public holidays (8 days), sick days, and bench time (unpaid gap between contracts). 220 days is a conservative estimate.

Yes. Contractors have no employer NI, no holiday pay, no sick pay, no pension, and carry employment risk. A contractor typically needs 30-50% more gross income to match a permanent employee's total package.

Inside IR35 contractors must pay employment taxes (income tax and NI) as if they were employees but still don't receive benefits. This significantly reduces take-home and often makes the day rate less advantageous.

Umbrella company contractors receive PAYE treatment including holiday pay and pension contributions built in. The apparent day rate through umbrella is lower than limited company due to employer NI deduction.

Mortgage lenders increasingly accept contractor day rate income. Many use (day rate × 5 days × 48 weeks) as annual income. Specialist contractor mortgage brokers can advise.

Limited company contractors often set up a SIPP or SSAS and contribute directly from the company (corporation tax relief). SIPPS (self-invested personal pensions) are the most flexible option.

As a rough guide: if you can bill 220+ days at more than your permanent salary ÷ 200, contracting likely pays more net after accounting for the employment benefits you're missing.

With IR35 tightening in private sector, the advantage has reduced for many roles. The key factors are: outside vs inside IR35 status, day rate premium, consistency of work, and value of benefits foregone.

To negotiate a day rate from a salary: (salary + 30% premium) ÷ 220 days. For a £70,000 equivalent: (£70,000 + £21,000) ÷ 220 = £414/day minimum.