Day Rate to Salary Calculator
See what a contract day rate works out to across a year, once unpaid weeks and the cost of running your business are taken off.
Between 1 and 7.
46 allows for holiday, illness and gaps between contracts.
Advanced options
Extra days you will not bill: admin, training, sickness.
Insurance, accountancy, equipment, software, travel.
Allows for employer National Insurance, employer pension and paid holiday.
Why a day rate is not the same as a salary
An employee is paid for holiday and sick leave, has employer pension contributions and employer National Insurance paid on their behalf, and keeps being paid between projects.
A contractor covers all of that out of the day rate, along with equipment, professional insurance, accountancy fees and the weeks with no work. That is the gap this calculator is trying to make visible.
Salary equivalent before tax
£115,000.00
- Billable days a year
- 230
- Gross annual revenue
- £115,000.00
- Gross monthly equivalent
- £9,583.33
- Gross weekly equivalent
- £2,211.54
- Annual business costs
- £0.00
- Revenue after business costs
- £115,000.00
What this means
Billing £500.00 a day for 230 days brings in £115,000.00 a year, or about £9,583.33 a month. After £0.00 of business costs, £115,000.00 is left — that is the figure to compare with a salary. It is a comparison of gross figures. It does not work out your tax, and it does not tell you what lands in your bank account.
Quick answers
- What salary is equivalent to a £500 day rate?
- At 5 days a week for 46 billable weeks (230 days), £500 a day is £115,000 of gross annual revenue — not a salary. Once business costs and the extra costs an employer would carry are allowed for, the comparable salary figure is lower.
- How many billable days are normally assumed?
- 230 is a common default: 5 days a week for 46 weeks, leaving roughly five to six weeks a year for holiday, illness and gaps between contracts.
- Why isn't day rate × 260 a fair salary comparison?
- 260 assumes every weekday of the year is billed, with no holiday, illness or gap between contracts. That never happens in practice, so it overstates true annual revenue.
- Does this calculator tell me my IR35 status?
- No. IR35 depends on the working relationship, not day rate arithmetic, so it cannot be determined here.
- Is contract revenue the same as take-home pay?
- No. The figures shown are gross revenue before personal tax, dividend tax, company tax and business costs, not what ends up in your bank account.
A day rate needs to cover more than working days
Contractors usually need the rate to absorb unpaid holiday and sick days, pension, insurance, equipment, accounting costs and gaps between engagements.
Comparing a day rate with a salary works best once those costs are taken out, which is what the after-costs figure above is for.
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How we calculated it
Billable days = working days per week × working weeks per year − unpaid days. Gross annual revenue = day rate × billable days.
Monthly equivalent divides the annual figure by 12; the weekly equivalent divides by 52, so it spreads the earnings across the whole year rather than only the weeks you bill. Revenue after costs subtracts the annual business costs you enter, and that is the simple salary-equivalent figure.
The optional employed-equivalent comparison treats the money left after costs as an employer's total budget and works backwards to the gross salary that would fit inside it once employer National Insurance and an employer pension contribution are paid.
Assumptions
You bill every scheduled day at the same rate, invoices are paid, and the working pattern is steady across the year. The default of 46 weeks leaves room for holiday and gaps between contracts; 52 billable weeks is not a realistic assumption. All figures are before personal tax and exclude VAT.
How this calculator works
A day rate multiplied by 260 working days looks like a large salary, but the two are not the same thing. An employee is paid for holiday, gets sick pay, has an employer paying into their pension and paying employer National Insurance, and does not carry gaps between contracts.
A contractor funds all of that from the same day rate, and also pays for equipment, professional insurance, accountancy and the weeks nobody is buying. That is why a day rate usually needs to be well above the daily equivalent of a salary before the two are genuinely comparable.
This calculator does not determine your IR35 status, your personal tax, your dividend tax or your company tax, and it does not calculate exact take-home pay. Contract revenue is not the same thing as take-home pay — what you actually keep depends on how you trade and how you draw money from the business. Compare salary vs dividend options, or check sole trader vs limited company for how the structure affects what lands in your bank account. If you are weighing a contract against a permanent role, the employee cost calculator shows what an employer actually pays for a given salary.
Worked examples
£250 a day
Working 5 days a week for 46 billable weeks gives 230 billable days a year. Gross annual revenue is £250 × 230 = £57,500, around £4,791.67 a month or £1,105.77 a week spread across the whole 52-week year. That is before any business costs or personal tax.
£500 a day
The same 230 billable days at £500 gives gross annual revenue of £115,000, about £9,583.33 a month. Deduct whatever insurance, accountancy, software and equipment cost for the year to reach the revenue-after-costs figure that is comparable with a salary.
£750 a day
At £750 a day and 230 billable days, gross annual revenue is £172,500, roughly £14,375 a month. This is contract revenue, not take-home pay — it is still before personal tax, and it says nothing about IR35 status.
Key terms explained
- Billable days
- The number of days in a year you actually expect to invoice for, after allowing for holiday, illness, admin time and gaps between contracts — typically fewer than the total working days available.
- Annual equivalent
- A day rate multiplied by billable days for the year, giving a gross annual revenue figure. It is a comparison tool, not a salary, tax or take-home pay calculation.
Common mistakes
Multiplying day rate by 260 working days
260 assumes every weekday is billed with no holiday, illness or gap between contracts. A more realistic figure is 220–235 billable days a year, depending on how secure your pipeline of work is.
Treating gross revenue as take-home pay
The headline result is contract revenue before personal tax, dividend tax, company tax and business costs. Use salary vs dividend or sole trader vs limited company to see what actually lands in your pocket.
Assuming the calculator settles IR35 status
Day rate arithmetic has nothing to do with IR35. Status depends on the working relationship — control, substitution and mutuality of obligation — and needs to be checked separately.
Ignoring the cost of running the business
Insurance, accountancy, software, equipment and unpaid admin days all reduce what a day rate is really worth. Leaving them out overstates the comparable salary figure.
Common questions
How should holidays be treated?
A contractor is not paid for holiday, so time off is simply unbilled time — it reduces billable days rather than being added as a separate cost. The optional employed-equivalent comparison values the paid holiday an employee would receive, to make the two figures more comparable.
What costs does a contractor pay that an employee may not?
Professional indemnity insurance, accountancy fees, equipment, software licences, and unpaid time spent on admin, marketing or between contracts. An employee typically has these covered or does not incur them at all, which is part of why a day rate needs headroom over an equivalent salary.
Does this calculator determine IR35 status?
No. IR35 depends on the reality of the working relationship — such as control, substitution and mutuality of obligation — not on the size of the day rate. This calculator only converts a rate into an annual figure; it cannot and does not assess employment status.
Last reviewed: 7 September 2026. This calculator is information only and is not tax, accounting or financial advice.