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260 weekdays, minus holidays, bank holidays and days lost to quoting, gaps between jobs and sickness.
Your take-home pay, plus the tax you will owe on it, plus a full year of van, tools and running costs.
Turnover needed divided by the days you can charge. Price below it and you earn less than you planned.
How a day rate turns into a yearly figure, and how to work out a daily rate from the salary you want.
Day rate to salary
Multiply your day rate by the days you actually charge for. At 207 working days, which is 260 weekdays minus holidays, bank holidays and lost days, it looks like this:
| Day rate | Yearly turnover |
|---|---|
| £200 | £41,400 |
| £250 | £51,750 |
| £300 | £62,100 |
| £350 | £72,450 |
That is turnover, not salary. Van, tools, insurance and tax all come out of it before you see your take-home pay.
Salary to day rate
Start with the take-home pay you want. Add the tax you will owe on it and a year of running costs. Divide that by the days you can charge for. The calculator above does all three steps for you.
Contractors
The same method works as a contractor or freelance day rate calculator. If you work through a limited company, IR35 can change how you are taxed, so check your position with an accountant.
Add your target take-home pay, the tax you will owe on it and a year of running costs, then divide by the days you can actually charge for. £40,000 take-home, 25% set aside for tax and £11,000 of costs needs about £64,300 a year. Over 207 days that is roughly £311 a day.
Usually around 200 to 210. There are 260 weekdays in a year. Take off around 20 days of holiday, 8 bank holidays and the time lost to sickness, quoting, travel and gaps between jobs, and you are left with far fewer days than most people expect.
A common rule of thumb for sole traders is 25 to 30% of profit for Income Tax and National Insurance. The right figure depends on your profit and any other income, so check it with your accountant, especially in your first year of trading.
Use your day rate as the floor either way. Price by the job when customers want a fixed quote, but check that the days behind it still add up to at least your day rate. If they do not, the job is costing you money.
A day rate is what you charge for one full working day, usually around eight hours on site. It has to cover your pay, your tax, and every running cost of the business, not just your time.
Multiply your day rate by the days you charge for in a year. Most tradespeople charge for around 200 to 210 days. A £250 day rate over 207 days is £51,750 of turnover, before costs and tax.
Add the tax you will owe to the take-home pay you want, then add your yearly running costs. Divide the total by the days you can charge for. That is the lowest daily rate that pays you the salary you want.
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