Contractor Day Rate vs Permanent Pay Calculator
Compare a UK contractor day rate with permanent pay, including take-home estimates, IR35, pension, bonus, holiday and the break-even day rate.
Start with the offer already on your desk.
Each guide answers a specific day-rate and salary decision before letting you replace the assumptions with your own working days, benefits and costs.
Compare contractor day rate, IR35 and permanent salary outcomes
Use this calculator when the question is contractor income versus a permanent salary package. If you only need a standard salary calculator, start with the take-home pay calculator or salary-to-hourly tool.
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Manage director payroll, PAYE submissions, pension deductions and payslips in one place when your contracting income needs a proper payroll workflow.
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.
