Convert between contractor day rates and annual salary equivalents. Accounts for holiday, bank holidays, and working patterns.
Deduct holiday and bank holidays from billable days
This calculator shows gross income equivalents before tax. As a contractor, you may also need to account for pension, insurance, and IR35 considerations.
Annual Equivalent (accounting for holiday)
£102,150.00
Based on 227 billable days per year
| Day Rate | £450.00 |
| Hourly Rate (8-hour day) | £56.25 |
| Weekly Income | £2,250.00 |
| Monthly Income | £8,512.50 |
| Annual Equivalent | £102,150.00 |
Total Working Days
260
Days Off
33
Billable Days
227
| Day Rate | Annual (with holiday) | Monthly |
|---|---|---|
| £200 | £45,400 | £3,783.33 |
| £300 | £68,100 | £5,675.00 |
| £400 | £90,800 | £7,566.67 |
| £450 | £102,150 | £8,512.50 |
| £500 | £113,500 | £9,458.33 |
| £600 | £136,200 | £11,350.00 |
| £700 | £158,900 | £13,241.67 |
| £800 | £181,600 | £15,133.33 |
| £1000 | £227,000 | £18,916.67 |
If you are a contractor, freelancer, or considering a move to contracting, understanding how day rates translate to annual salaries is essential. This Calculator Site tool helps you make a fair comparison by accounting for the key differences, like unpaid holidays and benefits, between contract and permanent work.
A contractor charging £500 per day might appear to earn far more than a permanent employee on £60,000 per year. However, the comparison is not straightforward. Contractors do not receive paid holiday, employer pension contributions, or sick pay. They also bear additional business costs. To see how this affects net income, check our Take-Home Pay Calculator.
The Contractor Premium: A Rule of Thumb
To achieve a comparable financial package to a permanent employee, contractors often need to charge a day rate that is 1.3 to 1.5 times the pro-rata permanent salary. This "premium" is not extra profit; it covers the costs of benefits (pension, sick pay), business expenses (insurance, accounting), and the lack of job security and gaps between contracts.
One of the biggest differences is holiday pay. A permanent employee is paid during their time off, but a contractor is not. This means a contractor has fewer billable days in a year and must earn more on those days to match an annual salary. Our Salary Calculator can provide more detailed breakdowns.
260
Standard work days in a year
33
Typical unpaid days off
227
Resulting billable days
Since the IR35 reforms, tax treatment has become more complex. If a contract is "inside IR35", you are taxed similarly to an employee, which significantly reduces take-home pay. It is vital to factor IR35 status into your calculations. For more on tax, see our Salary Calculator with Tax Code.
How to use this Calculator Site tool
Use the toggle to switch between converting a day rate to an annual salary or vice-versa. Enter your figures and working pattern. For an accurate comparison with a permanent role, ensure the "Account for unpaid holiday" box is checked. The calculator will then show you the equivalent gross income based on the number of billable days.
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