Day rate to salary calculator: what's it really worth?

Converting between day rate and salary requires accounting for the structural differences between contracting and permanent employment. The calculator handles this in three layers.

1. Gross conversion. Day rate × days per week × weeks worked = annual contractor gross. The calculator defaults to 5 days/week and 46 working weeks (the industry-standard assumption for unpaid bench, holiday, and sickness contingency).

2. Tax routing. The contractor figure is then run through both the Outside IR35 Limited Company structure (with the £12,570 director salary + dividends model, corporation tax with marginal relief, and the post-April-2026 dividend tax rates) and the Inside IR35 Umbrella structure (employer NI 15%, apprenticeship levy, PAYE, employee NI). Both produce a "real" annual take-home.

3. Permanent comparison. The permanent salary equivalent is calculated as gross PAYE with the same 2026/27 income tax bands and employee NI, but without the unavoidable employer-side costs that contractors absorb. This is what makes the comparison meaningful — you\'re seeing the same money flow through three different tax structures.

The calculator is intentionally pessimistic about contractor income (46 weeks, no expense optimisation, no pension contributions) to keep the comparison honest. Real contractors who optimise (employer pension into the Ltd, legitimate expense claims, structured retained profit) typically beat these figures by £2,000–£5,000/yr — but the unoptimised baseline is what you should plan around.