What permanent salary is your day rate really worth?
Contractors bear costs that employers cover for permanent staff: holiday, sick pay, pension, employer NI, professional fees. Strip those out and see what your day rate actually equates to.
A permanent employer would need to pay £108,615 total cost (salary + employer NI) — equivalent to £485/day for 224 billable days.
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What you might calculate next
How it works
Why the multiplier matters
A permanent employee on £80,000 costs their employer roughly £92,000 (salary + employer NI). Add pension contributions and the employer cost can exceed £95,000. As a contractor charging £400/day on 224 days = £89,600 gross — which looks similar but includes no holiday, sick pay, or employer benefits.
Billable days
A calendar year has 260 working days. Subtract 28 days statutory holiday, 8 bank holidays, and any admin/business development time. Most contractors realistically bill 200–230 days per year.
Business costs
Accountancy fees (£1,200–£2,500/year), professional indemnity insurance (£500–£2,000), public liability, IR35 contract review, and software all reduce take-home. Input them here for an accurate net figure.
Ltd vs sole trader
Using a limited company with a low director's salary (£5,000 or £12,570) and dividend extraction is usually the most tax-efficient route for contractors earning above £30,000 profit.