Should you take a £700/day Inside IR35 contract or a £100k permanent job?
Under the assumptions used here, the contractor value after modelled costs is £127,972 a year versus a £113,000 permanent package. Contracting is ahead by approximately £14,972.
Direct answer
Contractor is financially stronger
Break-even is approximately £618/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 | £156,100 |
|---|---|
| Contractor after costs | £127,972 |
| Permanent package | £113,000 |
| Annual difference | +£14,972 |
| Break-even rate | £618/day |
Recalculate £700/day vs £100k
Adjust the working days, benefits and Inside 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
£113,000.00
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
+£14,971.50
3 year gap
+£44,914.50
5 year gap
+£74,857.50
10 year gap
+£149,715.00
10 year headline
+£149,715.00
What if?
Try common scenarios
One click updates the assumptions and recalculates the result.
Market context
£700.00/day maps to roughly a £120,000.00–£135,000.00 package in this model.
Equivalent package range
£120,000.00–£135,000.00
This sits in a high-value 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 Inside IR35 deductions and still finish ahead of the permanent package.
Break-even contractor rate
£617.62/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?
Tax, NI and employee pension are estimated with the Workmax payroll calculation engine using tax code 1257L and NI letter A. Employer pension value and paid holiday value are shown separately from net cash.
Contractor annual take-home
Recalculate for estimate
Permanent annual take-home
Recalculate for estimate
Take-home difference
Recalculate for estimate
Detailed Breakdown
£156,100.00
£113,000.00
Adjustments & Deductions
Effective Daily Rate
£700.00
£480.85
Effective Hourly Rate
£93.33
£57.95
After Contractor Costs
£127,971.50
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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
+£14,971.50
Gap %
13.2%
Break-even
£617.62/day
Contractor take-home
Calculating
Permanent take-home
Calculating
Take-home gap
Not comparable
After contractor costs
£127,971.50
Annual figures
| Figure | Contractor | Permanent |
|---|---|---|
| Gross / package value | £156,100.00 | £113,000.00 |
| IR35 / umbrella deductions | -£28,128.50 | N/A |
| Value after contractor costs | £127,971.50 | £113,000.00 |
| Annual take-home | Calculating | Calculating |
| Monthly take-home | Calculating | Calculating |
| Daily rate | £700.00 | £480.85 |
| Hourly rate | £93.33 | £57.95 |
Inputs and included values
| Input | Contractor | Permanent |
|---|---|---|
| Main rate | £700.00 | £100,000.00 |
| Working time | 223 | 37.5 hrs/week, 25 holidays |
| Status / benefits | Inside IR35 | 3% employer pension, 5% employee pension |
| Costs / bonus | 3% umbrella, 15% NI, 0.5% levy | 10% bonus |
| Pension value | N/A | £3,000.00 |
| Bonus value | N/A | £10,000.00 |
| Paid holiday context | N/A | £12,021.28 |
The decision line
Your break-even rate is £618/day
Below this rate, the £100k 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.
5% umbrella fee
Contractor leads. Tests a higher umbrella margin.
Pay-band context
What does £700/day usually represent?
This principal-specialist comparison creates a larger financial spread, but commercial risk and time between engagements also carry more weight.
Typical £700/day comparisons
Contractor roles
- Enterprise architect
- Data architect
- Change programme lead
- Specialist consultant
Typical £100k comparisons
Permanent roles
- Engineering director
- Head of product
- Transformation director
- Senior finance leader
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.
£700/day vs £100k FAQs
Answers use the same Inside IR35 figures shown in the comparison above.
Using 223 billable days and the assumptions shown on this page, the contract is ahead by approximately £14,972 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 £113,249 when a 3% employer pension and 10% bonus are added.
The break-even rate is approximately £618/day. Below it, the £100k permanent package is financially stronger; above it, contracting begins to lead under the same assumptions.
The model needs approximately 197 billable days at £700/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 quoted day rate is treated as an umbrella assignment rate. Employer NI, a 0.5% levy and a 3% umbrella fee are deducted before the contractor value is compared with salary, so the assignment rate is not the same as taxable gross pay.
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