Freelance Day Rate & Hourly Rate Calculator
Calculate what to charge as a freelancer to match your equivalent employment salary — accounting for tax, holiday, sick days, and business expenses that employees take for granted.
Freelance Rate Setting Guide
Why Freelance Rates Must Be Higher
A freelancer earning £400/day gross does not earn the equivalent of a £400/day employee. Freelancers must cover: income tax and NI on all profits (combined ~30-42% depending on earnings), no employer pension contribution (~5% of salary), no paid holiday (28 days = 11% of working year lost as unpaid time), no sick pay, accountancy fees (£800-2,500/year), professional insurance, equipment and software, and the cost of non-billable time (business development, admin, training). A £60,000 employment
Billable Days Calculation
A standard UK working year has 260 working days (52 weeks × 5 days). Subtract: bank holidays (8 days), target holiday (25 days = typical employment entitlement), sick days (estimate 5-10 days/year), non-billable time — business development, admin, training, proposal writing (typically 15-20% of time for most freelancers). Result: approximately 180-220 truly billable days per year for a typical freelancer. Many new freelancers overestimate billable days and underestimate non-billable time, leadin
IR35 and Tax Considerations
IR35 (off-payroll working rules) determines whether a contractor is treated as employed or self-employed for tax purposes. If caught by IR35, the contractor pays employment taxes on income but receives none of the employment benefits. Key IR35 risk factors: working exclusively for one client, using the client's equipment, no ability to send a substitute, client controlling how work is done. If operating via a limited company, the IR35 determination for public sector and large private sector clie
Raising Your Rates
Most freelancers undercharge, especially when starting out. Practical strategies for increasing rates: annual rate reviews (inflation-linked minimum, typically 5-10% per year). Specialisation increases rate power — a generalist web developer might charge £300/day while an expert in a specific niche or technology commands £500-800/day. Raise rates with new clients first, then gradually bring existing long-term clients to the new level. Give 30-60 days notice of rate increases and frame them as an
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