Why a day rate has to be higher than salary ÷ 260
An employee on £55,000 costs their employer much more than £55,000. On top of salary there is employer National Insurance, pension contributions and benefits, and the employer pays for 28 days of holiday, sick days and the weeks when there is nothing to do. As a contractor you only get paid for the days you work, and you carry all of those costs yourself.
How we calculate it
- Full employment package = salary + employer NI (15% above £5,000 in 2026/27) + employer pension + other benefits.
- Divide by billable days, not 260. Most contractors bill around 200–230 days a year.
- Add a contractor premium for gaps between contracts, insurance, accountancy and risk.
Day rate = (Salary + employer NI + pension + benefits) ÷ billable days × (1 + premium)
Rules of thumb
| Salary | Typical equivalent day rate |
|---|---|
| £35,000 | £220 – £260 |
| £50,000 | £320 – £380 |
| £65,000 | £420 – £490 |
| £80,000 | £510 – £600 |
A quick shortcut many contractors use is salary ÷ 1,000 × 6.5, but it ignores your pension, benefits and how many days you really bill, so use the calculator for a proper figure.
What about tax and IR35?
This calculator compares gross amounts. How much you take home depends on whether you work as a sole trader, through your own limited company or through an umbrella company, and whether the contract is inside or outside IR35. Sole traders can estimate their tax with our UK self-employed tax calculator.
Frequently asked questions
How do I convert a salary to a contractor day rate?
Add employer National Insurance, pension and benefits to the salary, divide by the number of days you expect to bill (usually 200–230) and add a premium of 15–30% for gaps and risk.
How many days a year does a contractor work?
Most UK contractors bill between 200 and 230 days a year after holidays, bank holidays, sickness and gaps between contracts.
What is a £400 day rate as a salary?
With 220 billable days, a 20% premium, 5% pension and £1,500 of benefits, £400 a day is roughly equivalent to a £60,500 permanent salary.
Is employer National Insurance 15% in 2026/27?
Yes. Employer Class 1 National Insurance is 15% on earnings above the £5,000 secondary threshold for 2026/27.
Sources
This calculator gives estimates for planning only. It is not tax, legal or financial advice. Rules and fees change, so check the official source or a qualified professional before making decisions.