Contractor day rate calculator 2026/27
A day rate is not a salary. Enter yours to see the annual figure and your real take-home — inside IR35 through an umbrella, or outside IR35 through your own company.
IR35 status
England, Wales & NI, 2026/27. Outside-IR35 assumes a £12,570 salary and no expenses; inside-IR35 assumes a £25/wk umbrella margin.
£99,000 a year · outside IR35
2026/27- Annual contract value
- £99,000
- Company & employer taxes
- −£19,989
- Personal tax (dividends & salary)
- −£14,274
Your take-home
a year, after all tax
£64,737
You keep 65% of the contract — £5,395 a month. Compare inside vs outside →
Verified · 2026/2721 June 2026
How this was calculated
We multiply your day rate by your billable days to get the annual contract value. Outside IR35 we run it through your own limited company — a director’s salary (£12,570), employer National Insurance, Corporation Tax with Marginal Relief, then dividends and dividend tax for 2026/27. Inside IR35 we run it through an umbrella — margin, employer NI and the Apprenticeship Levy, then PAYE. Each rate is traced to a dated gov.uk source; real figures depend on expenses and your IR35 status.
The full method and every source is on our methodology page.
Built & maintained by the Pay Packet team · methodology sourced from HMRC · last reviewed 21 June 2026. About our figures →
Reading a day rate honestly
A day rate looks large next to a salary, but it has to absorb everything an employer normally provides separately — holiday, sick pay, pension, and the employer’s own taxes. The first step is honest billable days: a contractor rarely bills all 260 weekdays, so 220 is a realistic year after holiday and gaps.
From there, your take-home depends entirely on IR35 status. Outside IR35, your own limited company pays Corporation Tax on profit and you draw dividends — usually the most efficient route. Inside IR35, you are taxed broadly as an employee, typically through an umbrella company. See the full side-by-side on the IR35 calculator, or the overall picture on the contractor take-home calculator.
Day rate questions
- How do I convert a day rate to an annual salary?
- Multiply the day rate by the number of days you actually bill in a year. A permanent employee works about 260 weekdays, but a contractor loses days to holiday, illness and gaps between contracts — 220 billable days is a realistic planning figure. £450 a day × 220 ≈ £99,000 of contract income.
- Why is a day rate not the same as a salary?
- A day rate has no holiday pay, sick pay, employer pension or job security built in, and it carries employer costs (and, outside IR35, company taxes) a permanent salary does not. So a £450/day rate does not equal a £117,000 salary in the hand — this calculator shows the real take-home.
- Inside or outside IR35 — which should I pick?
- It is not your choice; it is determined by how you actually work and (for medium/large clients) decided by the client. Inside IR35 you are taxed broadly like an employee, usually via an umbrella; outside IR35 you can use your own limited company, which is normally more tax-efficient. This tool shows both so you can see the gap.
- How many billable days should I assume?
- Most contractors plan on 220–230 billable days after 5–6 weeks of holiday and a buffer for gaps and illness. Use a lower figure if you expect time on the bench between contracts.
Guidance for 2026/27, not tax or financial advice. The limited-company figure uses standard assumptions (a £12,570 salary, no expenses, no associated companies); your accountant’s figure will differ. Always confirm your IR35 status and the detail with a qualified adviser and gov.uk/HMRC.