Contractor vs Permanent Salary Calculator UK
Compare contractor day rates against permanent salary packages, including IR35 deductions, estimated take-home pay, pension, holidays, and bonuses.
Sample defaults are loaded: £600/day contractor vs £90,000 salary, Inside IR35, 223 working days, and a 10% annual bonus.
The day rate is treated as the umbrella assignment rate before employer NI, levy and umbrella fees. The 223-day default roughly allows for weekends, bank holidays, holidays and time between contracts. Permanent paid holiday is shown as context, not added again on top of salary.
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Contractor vs Permanent Calculator — FAQ
Answers to common questions about how we compare contractor day rates and permanent salary packages.
We compare your contractor earnings (day rate × working days) against the permanent package value. For permanent roles, the package value includes base salary, employer pension contributions, and annual bonus (as % or fixed). Paid holiday is shown separately as context because it is normally already included in a salaried role. For contractors, we optionally deduct IR35-related costs (employer's NI bands, Apprentice Levy, umbrella fees) or outside‑IR35 business costs (accountant, bank and insurance).
You enter your expected working days per year. The default is 223, which roughly accounts for weekends, bank holidays and time off between contracts or for holidays. You can change this to suit your situation.
If you select Inside IR35, the day rate is treated as the umbrella assignment rate before employer costs. We apply Employer's NI above the £5,000 secondary threshold using the percentage you enter, plus Apprentice Levy at your chosen %, and umbrella company fees (either a % of income or a fixed weekly fee × 52).
Percentage fees scale with your income (e.g. 3% of annual income). Fixed weekly fees are converted to an annual amount by multiplying by 52. Choose the option that matches your umbrella company.
We include typical limited‑company costs you input: accountant fees (monthly × 12), bank fees (monthly × 12), and business insurance (annual). These are subtracted from your contractor total to show an after‑costs figure.
We add the employer pension contribution (as a % of salary) and the annual bonus (either % of salary or a fixed £ amount) to the salary package. Paid holiday context is displayed separately for transparency, but it is not added again on top of salary.
Contractor daily rate is the amount you enter; contractor hourly rate is that daily rate divided by (hours per week ÷ 5). Permanent daily rate is the annual package value divided by working days (52×5 minus your holiday days). Permanent hourly rate is annual value divided by (52 × hours per week).
We compare the contractor figure after applicable deductions/costs to the permanent annual package value. The label shows which is higher, by how much per year, and the percentage difference.
For Inside IR35, yes: the result includes an estimated take-home pay comparison using the Workmax payroll calculation engine with a standard 1257L tax code, NI letter A and the employee pension percentage you enter. For Outside IR35, contractor take-home is not modelled because salary, dividends, corporation tax, VAT and expenses vary.
Yes — all IR35 percentages/fees and outside‑IR35 costs are editable in the form so you can reflect your real situation.
No. This tool is for guidance and education only. Consider seeking professional advice before making decisions.
