PayTaxTools
2026/27 rates

Contractor Day Rate to Salary Equivalent Calculator

A day rate is not a salary. This tool converts between the two properly — accounting for unpaid holiday, unpaid bank holidays, no employer pension contribution, employer National Insurance as a real cost of employment, and the unpaid gaps between contracts that a permanent salary doesn’t have. Every assumption below is an input you can change, not a hidden constant.

What do you want to work out?
Contract type

Modelled as a small salary at the NI secondary threshold plus dividends for the rest — a common approach, not the only possible optimal split. See the director salary/dividend calculator for the exact optimal split for your numbers.

Jurisdiction

Unpaid for a contractor. A permanent employee's statutory minimum is 20 days plus bank holidays.

Defaulted to England's 8. Northern Ireland has 10 (it shares this tool's tax jurisdiction with England but not its bank holiday calendar) — adjust if that applies to you.

Unpaid for a contractor, who self-insures via this deduction rather than getting Statutory Sick Pay.

A market rule of thumb, not a fact — it depends heavily on sector, seniority and market conditions. Your mileage will vary substantially; treat this as a starting assumption to stress-test, not a forecast.

Defaults to the 3% statutory minimum employer contribution — the legal floor a permanent employer must provide, and a reasonable floor for a contractor comparing like-for-like.

£91,277.44

Permanent salary needed to match your net take-home (outside IR35, own limited company)

Net take-home matched:£63,498.32 £0.00

This is an estimate

There is no statutory formula for “day rate to salary” — this is a private-sector modelling exercise, not a tax liability calculation. The result depends entirely on the assumptions on the left. It also doesn’t account for VAT/Flat Rate Scheme surplus, company running costs (accountancy, insurance, equipment), or a day rate that varies across the year — all real reductions to a true net figure that this tool doesn’t model. Treat the headline number as a starting point for a negotiation, not a guaranteed equivalence.

Naive vs realistic annualisation

Multiplying a day rate by 260 calendar working days (5 days × 52 weeks) gives £130,000.00 — the figure a less careful calculator would show you. Accounting for holiday, bank holidays, sick days and the gap-between-contracts allowance above, the realistic annual figure is £101,000.00, over 202 days.

How we got to your billable days
ItemAmount
Calendar working days (5/week × 52 weeks)260 days
Less: annual leave (your choice, unpaid)-25 days
Less: public holidays (unpaid for a contractor)-8 days
Less: assumed sick days (unpaid)-5 days
Less: assumed gap between contracts (4 weeks)-20 days
Billable days per year202 days
Your contracting income, broken down
ItemAmount
Gross contracting income (day rate × billable days)£101,000.00
Less: self-funded pension contribution-£3,030.00
Director salary (set at the NI secondary threshold)£5,000.00
Less: employee National Insurance on salary-£0.00
Less: income tax on salary-£0.00
Less: corporation tax on remaining profit-£20,887.05
Dividends extracted (remaining post-tax profit)£72,082.95
Less: dividend tax-£13,584.63
Net take-home£63,498.32
Sensitivity: how the answer moves with the gap-between-contracts assumption
ItemAmount
0 weeks between contracts222 days billable£99,175.20
2 weeks between contracts212 days billable£95,226.33
4 weeks between contracts202 days billable£91,277.44
8 weeks between contracts182 days billable£83,379.68
12 weeks between contracts162 days billable£75,481.91
Show your working
  1. Calendar working days (5/week × 52 weeks)260 days
  2. Less: annual leave (your choice, unpaid)-25 days
  3. Less: public holidays (unpaid for a contractor)-8 days
  4. Less: assumed sick days (unpaid)-5 days
  5. Less: assumed gap between contracts (4 weeks)-20 days
  6. Billable days per year202 days
  7. Contracting: Gross contracting income (day rate × billable days)£101,000.00
  8. Contracting: Less: self-funded pension contribution-£3,030.00
  9. Contracting: Director salary (set at the NI secondary threshold)£5,000.00
  10. Contracting: Less: employee National Insurance on salary-£0.00
  11. Contracting: Less: income tax on salary-£0.00
  12. Contracting: Less: corporation tax on remaining profit-£20,887.05
  13. Contracting: Dividends extracted (remaining post-tax profit)£72,082.95
  14. Contracting: Less: dividend tax-£13,584.63
  15. Contracting: Net take-home£63,498.32
  16. Permanent: Salary (gross)£91,277.44
  17. Permanent: Less: income tax-£23,942.98
  18. Permanent: Less: employee National Insurance-£3,836.15
  19. Permanent: Net take-home£63,498.31

UNVERIFIEDIPSE — the self-employed/contractor body (general reference, not a specific citation)Last checked 2026-08-23

SECONDARYgov.uk bank holidays (public holiday count, checked per nation/year)Last checked 2026-08-23

SECONDARYThe Pensions Regulator — statutory minimum employer pension contributionLast checked 2026-04-06

VERIFIEDgov.uk — employer National Insurance rateLast checked 2026-04-06

Contract vs permanent, like for like

Contracting — outside IR35

£63,498.32

net take-home per year

Day rate
£500.00/day
Billable days
202 days
Gross contracting income
£101,000.00
Pension contribution
£3,030.00
Tax, NI & (if applicable) corporation tax
£34,471.68

Assumes one flat day rate for every billable day, and no company running costs (accountancy, insurance, equipment) — see the estimate notice above.

Equivalent permanent salary

£91,277.44

£63,498.31 net take-home — matches your contracting figure

Gross salary
£91,277.44
Income tax + employee NI
£27,779.13
Employer NI (employer cost, not yours)
£12,941.62
Employer pension (employer cost, not yours)
£2,738.32
True cost to employ you
£106,957.38

Employer NI and employer pension are costs to the business, not part of your take-home — shown so you can see what this role actually costs to provide.