Contract versus permanent calculator
A day rate that looks like a big rise on a salary usually is not, once you have paid for your own holiday, pension, sick pay and the weeks between contracts.
That is £42,458 a year after income tax, National Insurance and anything else coming off your pay.
- Income tax
- £9,432
- National Insurance
- £3,110
- Effective rate
- 22.8%
- Marginal rate
- 42.0%
| Year | Month | Week | Hour | |
|---|---|---|---|---|
| Gross pay | £55,000.00 | £4,583.33 | £1,057.69 | £28.21 |
| Income tax | £-9,432.00 | £-786.00 | £-181.38 | £-4.84 |
| National Insurance | £-3,110.00 | £-259.17 | £-59.81 | £-1.59 |
| Take-home pay | £42,458.00 | £3,538.17 | £816.50 | £21.77 |
What day rate matches a salary
| Salary | Plus 6% pension | Plus holiday | Day rate needed (220 days) | At 200 days |
|---|---|---|---|---|
| £35,000 | £37,100 | £41,552 | £188.87 | £207.76 |
| £45,000 | £47,700 | £53,424 | £242.84 | £267.12 |
| £55,000 | £58,300 | £65,296 | £296.80 | £326.48 |
| £70,000 | £74,200 | £83,104 | £377.75 | £415.52 |
| £90,000 | £95,400 | £106,848 | £485.67 | £534.24 |
Two hundred and twenty billable days assumes you work 44 weeks and never miss one. Two hundred is more realistic for most contractors once you allow for gaps between contracts, and it is the column to negotiate against.
What the salary quietly includes
Twenty-eight days of paid holiday including bank holidays, which is about 12% of your working year. An employer pension contribution, usually at least 3% and often much more. Sick pay beyond the statutory minimum. Redundancy rights after two years. Employer National Insurance at 15% on everything above £5,000, which a contractor operating through an umbrella pays out of the assignment rate.
Add all of that up and a contract needs to pay meaningfully more than the equivalent salary before it is the same deal, let alone a better one.
Questions people actually ask
How do I convert a day rate to a salary?
Multiply by the days you will genuinely bill, not 260. Then subtract what you will have to provide yourself: holiday, pension, and the gaps.
Is contracting worth it?
Financially, only above a meaningful premium to the salaried equivalent. The other reasons — variety, control, exit — are usually the real ones.
Related
Figures on this page are for the 2026/27 tax year (6 April 2026 to 5 April 2027) and were last checked on 29 August 2026. Every rate we use is listed on the sources page.