Day rate calculator: what to charge
Enter the permanent salary you want to match. You get what that salary leaves after tax, the day rate that leaves the same through a limited company, and the usual rule of thumb.
Rates for the 2026/27 tax year. Checked 6 November 2026.
| Permanent salary | £60,000.00 |
|---|---|
| Income tax | − £11,432.00 |
| Employee NI | − £3,210.60 |
| Employee take-home | £45,357.40 |
| Day rate giving the same take-home via a Ltd | £277.20 |
| Rule of thumb: salary ÷ 220 × 1.25 | £340.91 |
Break-even ignores what you give up as a contractor, such as paid holiday, sick pay, employer pension and notice, so quote above it.
Worked example: matching £60,000
To match a £60,000 salary outside IR35 you need just over £300 a day. The employee takes home £45,357.40 after £11,432 income tax and £3,210.60 National Insurance. Through a limited company billing 220 days, with a £12,570 salary and £2,000 of costs, just over £300 a day leaves the same £45,357. The rule of thumb, salary divided by 220 and multiplied by 1.25, gives £341.
Why the rule of thumb is higher
The 1.25 is not a tax adjustment. It prices what you give up as a contractor, such as paid holiday, sick pay, employer pension, notice, training and the weeks between contracts. Treat break-even as the lowest rate you would accept and negotiate up from there.
When this calculator is wrong for you
- You will be inside IR35; use the IR35 comparison.
- Your permanent job has a salary sacrifice pension; set the employer pension field to match.
- You live in Scotland.
Questions people ask
How many days a year do contractors bill?
Many bill 180 to 200 once bench time, bank holidays and unpaid absence are counted. 220 is a full year with five weeks off, so price on the lower number.
Should I add my accountant’s fee?
Yes, in running costs. Typical contractor accountancy is £1,000 to £1,800 a year.
Does a higher rate always mean more take-home?
Yes, but the retained share falls as you cross the dividend higher-rate band around £50,270 and the personal allowance taper at £100,000.
Should my day rate include VAT?
Normally no. You quote ex-VAT, then add VAT on top and pass it to HMRC, so it does not change these sums.
How this is worked out
Employee take-home is salary less income tax (personal allowance £12,570, bands 20%, 40%, 45%) and employee NI (8% to £50,270, 2% above). The break-even rate is found by searching for the day rate at which the limited-company take-home model (see the take-home calculator) equals that figure. The rule of thumb is salary divided by 220 days, multiplied by 1.25.
Full formulas, rounding rules and test cases are on the methodology page. Every rate update is listed in the changelog.