Should you take a £400/day Outside IR35 contract or a £65k permanent job?
Under the assumptions used here, the contractor value after modelled costs is £87,706 a year versus a £73,450 permanent package. Contracting is ahead by approximately £14,256.
Direct answer
Contractor is financially stronger
Break-even is approximately £336/day. The current rate sits above that threshold.
Annual difference
Break-even day rate
Key takeaways
What matters in this comparison
Annual value
The package comparison at a glance
| Contractor gross income | £89,200 |
|---|---|
| Contractor after costs | £87,706 |
| Permanent package | £73,450 |
| Annual difference | +£14,256 |
| Break-even rate | £336/day |
Recalculate £400/day vs £65k
Adjust the working days, benefits and Outside IR35 costs to replace the benchmark assumptions with your own.
Next move
Would you seriously consider contracting?
Negotiation equivalent
What salary would make permanent worth staying for?
Approximate salary to match
£77,500.00
This estimates the permanent salary needed to match the current contractor package value after costs, using your current pension and bonus assumptions.
Money is not everything
Risk and lifestyle score
Wealth projection
How the gap compounds over time
Simple projection using the current annual package value gap. It does not include investment returns, inflation, or rate changes.
1 year gap
+£14,256.00
3 year gap
+£42,768.00
5 year gap
+£71,280.00
10 year gap
+£142,560.00
10 year headline
+£142,560.00
What if?
Try common scenarios
One click updates the assumptions and recalculates the result.
Market context
£400.00/day maps to roughly a £85,000.00–£90,000.00 package in this model.
Equivalent package range
£85,000.00–£90,000.00
This sits in a mid-market contractor scenario. This is modelled from your inputs, not live job-market pricing.
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Financial drivers
Contractor is ahead on estimated financial value
In this scenario
Contracting is financially ahead on package value.
The day rate is strong enough to absorb outside-IR35 business costs and still finish ahead of the permanent package.
Break-even contractor rate
£336.07/day
Below this day rate, permanent employment becomes the better financial option using these assumptions.
Estimated take-home pay
What could land in your bank account?
Permanent take-home is estimated with the Workmax payroll calculation engine. Outside IR35 contractor take-home is not modelled because limited-company salary, dividends, corporation tax and VAT treatment vary.
Outside IR35 contractor take-home
Not modelled
Permanent annual take-home
Recalculate for estimate
Take-home difference
Not comparable
Detailed Breakdown
£89,200.00
£73,450.00
Adjustments & Deductions
Effective Daily Rate
£400.00
£312.55
Effective Hourly Rate
£53.33
£37.67
After Contractor Costs
£87,706.00
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Contractor vs Permanent Take-Home Report
Generated 19 Jul 2026 | workmax.co.uk | workmax.co.uk/tools-and-calculators/contractor-vs-permanent-calculator
Financially ahead
Contractor
Annual gap
+£14,256.00
Gap %
19.4%
Break-even
£336.07/day
Contractor take-home
Not modelled
Permanent take-home
Calculating
Take-home gap
Not comparable
After contractor costs
£87,706.00
Annual figures
| Figure | Contractor | Permanent |
|---|---|---|
| Gross / package value | £89,200.00 | £73,450.00 |
| Outside IR35 costs | -£1,494.00 | N/A |
| Value after contractor costs | £87,706.00 | £73,450.00 |
| Annual take-home | Not modelled | Calculating |
| Monthly take-home | Not modelled | Calculating |
| Daily rate | £400.00 | £312.55 |
| Hourly rate | £53.33 | £37.67 |
Inputs and included values
| Input | Contractor | Permanent |
|---|---|---|
| Main rate | £400.00 | £65,000.00 |
| Working time | 223 | 37.5 hrs/week, 25 holidays |
| Status / benefits | Outside IR35 | 3% employer pension, 5% employee pension |
| Costs / bonus | £100.00/mo accountant, £12.00/mo bank, £150.00/yr insurance | 10% bonus |
| Pension value | N/A | £1,950.00 |
| Bonus value | N/A | £6,500.00 |
| Paid holiday context | N/A | £7,813.83 |
The decision line
Your break-even rate is £336/day
Below this rate, the £65k permanent package is financially stronger using these assumptions. Above it, contracting begins to outperform the permanent package.
Current day rate
Break-even rate
Billable days to match
At the current day rate
Pressure test
What changes the answer?
The headline is only as reliable as the assumptions. These four changes show how quickly the gap can move.
20 fewer billable days
Contractor leads. Models four additional unpaid weeks.
6% employer pension
Contractor leads. Tests a stronger permanent benefit.
No permanent bonus
Contractor leads. Shows how much the assumed 10% bonus matters.
£3,000 extra company costs
Contractor leads. Represents extra travel, cover or administration.
Pay-band context
What does £400/day usually represent?
This established-specialist comparison is often finely balanced, making the bonus, pension and number of billable days unusually important.
Typical £400/day comparisons
Contractor roles
- Software engineer
- Infrastructure engineer
- Business analyst
- Project manager
Typical £65k comparisons
Permanent roles
- Senior engineer
- Senior business analyst
- Finance manager
- Project manager
Related Workmax guidance
Go deeper than the headline
Use the wider Workmax calculator and Payroll Hub cluster to check tax status, company payroll, pensions and gross-to-net assumptions.
£400/day vs £65k FAQs
Answers use the same Outside IR35 figures shown in the comparison above.
Using 223 billable days and the assumptions shown on this page, the contract is ahead by approximately £14,256 a year. This is a package-value comparison rather than a guarantee of personal take-home pay.
The contractor value after the modelled costs is comparable with a permanent base salary of roughly £77,616 when a 3% employer pension and 10% bonus are added.
The break-even rate is approximately £336/day. Below it, the £65k permanent package is financially stronger; above it, contracting begins to lead under the same assumptions.
The model needs approximately 188 billable days at £400/day to match the permanent package. Holidays, sickness, training and gaps between contracts can reduce the days actually billed.
Yes. A larger employer pension or bonus increases the permanent package and pushes the contractor break-even rate higher. The calculator below lets you replace the default 3% pension and 10% bonus.
The model deducts accountancy, banking and insurance costs, but it does not calculate corporation tax, dividends, VAT or a personal extraction strategy. Outside IR35 status must also reflect the real engagement, not only the contract label.
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