Freelance Day Rate & Salary Equivalent Calculator
Calculate what day rate you need as a freelancer to match a permanent salary — accounting for all the benefits and security you are giving up.
Freelance Pricing Guide
The True Cost Comparison
When comparing freelance to permanent, permanent employers pay much more than the salary figure: salary: £65,000. Employer National Insurance (13.8% above £9,100): ~£7,714. Pension employer contribution (5% auto-enrolment minimum): ~£3,250. Holiday pay (28 days statutory = 28/260 working days): ~£7,000. Sick pay, life insurance, private health: ~£2,000-4,000. Total employer cost: approximately £82,000-85,000. This is the true baseline for freelance comparison — you need to match what it would co
Day Rate Calculation
Working days per year: 52 weeks × 5 days = 260 days maximum. Less holidays (28 statutory = 5.6 weeks), bank holidays (8 days), sick days (average 4.5 days): ~233 available days. Less unbillable time (business admin, training, gap between contracts): typically 10-20% of available time. Realistic billable days: 180-220 per year. Day rate formula: required annual revenue / billable days. For £82,000 cost equivalent at 200 billable days: day rate = £82,000/200 = £410/day. Add 20% buffer for risk, ma
Limited Company vs Sole Trader
Limited company: pay corporation tax (19-25%) on profits, not income tax. Draw salary below personal allowance (£12,570) + dividends for tax efficiency. Dividends taxed at lower rates than salary (10.75% basic rate, 35.75% higher rate after £500 allowance). Outside IR35: the most tax-efficient structure for most freelancers billing above £40k. IR35: HMRC's anti-avoidance rules — if your contract resembles employment, IR35 applies and full PAYE tax is due. Sole trader: simpler accounts. Tax on all
Setting Your Rate
Research market rates: LinkedIn salary insights, recruitment agency rate surveys (Hays, Robert Half). IT Jobsboard, Contractor Calculator.co.uk show typical IT day rates. Common day rates by sector (UK 2024): IT developer (mid-level): £400-600/day. Data analyst: £300-500/day. Project manager: £400-700/day. Finance contractor: £350-550/day. Marketing: £250-450/day. Raising your rate: time for rate increase every 6-12 months. At renewal, add 5-10%. New clients: always quote high and negotiate down
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