CalcOrchard

Day Rate ⇄ Salary Calculator

Offered a contract at £X/day and wondering what salary that really equals? This converts a UK contractor day rate into the equivalent permanent salary — and back again — by comparing against the employer's true cost of a permanent hire (salary + employer NI + pension), not just the headline number. 2024/25 rates.

£

Permanent staff are paid ~5.6 weeks holiday + bank holidays; billing 46 weeks prices that in. Lower it for gaps between contracts.

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Annual contract billings
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Equivalent permanent salary
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Employer NI + pension
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On-costs a perm employer also pays

Equivalence is on a gross total-package basis for 2024/25 (employer NI 13.8% above £9,100). It compares what a company spends on a permanent hire versus your contract billings — it is not a net take-home figure. Your actual take-home depends on IR35 status and how you draw the money. Not personal financial advice.

See the net take-home for every route

This tool tells you the gross equivalence. The next question is which route keeps more of it. The IR35 Inside vs Outside Decision Kit is a £19 Excel workbook with a 20-question CEST-style scorecard and side-by-side net take-home for Outside IR35 (Ltd), Inside IR35 and Umbrella on your actual day rate. 7-day refund. Free 2025/26 update.

Get the IR35 Decision Kit — £19 → or try the free IR35 take-home calculator →

How day-rate-to-salary conversion actually works

The mistake most people make is comparing a day rate against a headline salary. But an employer spends far more than your salary to keep you on the books. On top of the gross figure they pay employer's National Insurance at 13.8% on everything above £9,100, and typically a pension contribution of at least 3%. A £70,000 salary can cost an employer over £80,000 once those on-costs are added.

So the honest comparison is between your annual contract billings and the total cost of a permanent hire. This tool solves for the salary whose full employment cost equals what you'd invoice:

  • Day rate → salary: annual billings = day rate × days per week × weeks billed. We then find the salary S where S + employer NI(S) + pension equals those billings.
  • Salary → day rate: we take the salary's total employment cost and divide by the days you expect to bill, giving the rate that leaves you no worse off before tax.

The contracting premium

Matching the equivalent salary should be the floor, not the target. Contracting carries no holiday or sick pay, no notice period, gaps between engagements, and the admin of running a company. Most contractors aim for a day rate comfortably above the break-even so that the premium compensates for that risk — and, if they're genuinely outside IR35, the more efficient salary-plus-dividends mix means the same gross converts into a higher net take-home than an employee would get.

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Frequently asked questions

How do you convert a day rate into an equivalent salary?

A permanent salary is only part of what an employer actually spends on you. On top of the headline salary they pay employer's National Insurance (13.8% above £9,100) and usually a pension contribution (3% minimum, often more). So the fair way to compare is against the employer's total cost of employment. This tool takes your annual contract billings (day rate × days per week × weeks worked) and solves for the salary whose total employment cost equals it — that's your equivalent permanent salary.

Why does the tool ask for weeks worked instead of assuming 52?

Because a contractor only earns when they bill. A permanent employee is paid for roughly 5.6 weeks of holiday plus bank holidays and any sick days; a contractor isn't. If you bill 46 weeks a year, that already prices in six weeks of holiday and downtime, and the equivalence is calculated on that basis. Lower the weeks-worked figure if you expect gaps between contracts, and you'll see the day rate you need rises to compensate.

Should I include employer National Insurance and pension?

For a like-for-like comparison, yes. When you're permanent, your employer quietly pays employer's NI and a pension contribution on top of your salary — money that never shows on your payslip but is part of your total package. As a contractor you have to generate that from your day rate yourself. Including them gives the honest equivalent. Untick them if you only want to compare against the headline salary figure.

Does a contractor actually take home the equivalent salary?

Usually more, if you're genuinely outside IR35 and work through a limited company. Because you can take a small salary plus dividends, you avoid most National Insurance and pay lower dividend tax rates, so your net take-home from the same gross is typically higher than an employee on the equivalent salary. Inside IR35 or via an umbrella, the advantage largely disappears. Use our IR35 calculator to see the actual net figures for each route.

What day rate do I need to match my current salary?

Switch the tool to 'Salary → required day rate'. Enter your current salary, and it works out the total employment cost (salary + employer NI + pension) and divides by the days you expect to bill. That's the day rate that makes you no worse off before tax — anything above it is your contracting premium for the extra risk, lack of holiday pay and admin.

Is this inside or outside IR35?

The equivalence maths here is about gross package value and is the same either way. What changes with IR35 status is your net take-home: outside IR35 through a limited company is the most efficient, inside IR35 or umbrella is taxed much like employment. This tool is the starting point; the IR35 Decision Kit models all three routes on your actual numbers.