Example: £500/day for 46 working weeks
At £500 per day, 5 billable days per week and 46 working weeks, annual contract revenue is estimated at £115,000 before expenses, taxes and company extraction choices.
Contractor income
Estimate contractor take-home pay
Compare self-employed and limited company scenarios from a day rate or hourly rate, with an equivalent employee salary benchmark. Results are estimates, not tax advice.
Selected route annual take-home
£70,443.46
Limited company salary + dividends estimate monthly average: £5,870.29
Annual contract revenue
£115,000
Monthly gross revenue
£9,583
Billable days
230.0 days
Selected route
Limited company salary + dividends estimate
Tax breakdown
- Expenses
- £2,000.00
- Corporation tax
- £25,107.50
- Salary income tax
- £0.00
- Employee NI
- £0.00
- Dividend tax
- £17,449.04
- Money left in company
- £0.00
- Effective tax/deduction rate
- 38.74%
Contractor income route comparison
Estimated take-home from the same annual contract revenue.
Sole trader estimate is based on self-employed taxable profit after expenses.
Limited company estimate includes the configured salary/dividend split and corporation/dividend tax assumptions.
The employee salary benchmark below is separate from these contractor income route scenarios and is not a full umbrella or inside-IR35 calculation.
Equivalent employee salary
The approximate gross PAYE salary needed to match the selected route's take-home pay.
- Selected route
- Limited company salary + dividends estimate
- Selected route annual take-home
- £70,443.46
- Equivalent PAYE salary
- £104,963.32
These scenarios are simplified and are not an accountant's recommendation. Real contractor take-home can change due to IR35 status, umbrella fees, employer NI treatment, VAT, expenses, pension contributions, accountancy costs and money retained inside the company.
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How this contractor calculator works
The estimate multiplies day rate by billable days and active weeks. For hourly mode, hourly rate is converted to a day value first. Expenses reduce sole trader and company profit, while limited company income can be modelled as salary and dividends.
What this estimate includes
It includes income tax, employee NI for director salary, self-employed NI, a corporation tax assumption, dividend tax, and pension or student loan deductions where supported by the selected scenario.
What this estimate does not include
It does not include VAT, IR35 determination, full employer NI complexity, accountancy fees unless entered as expenses, insurance, equipment, travel, benefits, sick pay, employment rights or exact personal tax advice.
When this estimate may be wrong
Results can differ if your billable weeks are too optimistic, IR35 status changes, umbrella fees apply, VAT treatment matters, employer NI is passed on, expenses vary or profits are retained inside a company.
Estimate-only disclaimer
Contractor tax depends on the contract, working practices, company accounts and personal circumstances. This page does not decide IR35 status and does not replace payroll, HMRC, accountant or tax advice.
Frequently asked questions
What is a good contractor day rate in the UK?
A good day rate depends on sector, seniority, location, contract length, IR35 position and demand. This calculator helps translate a rate into estimated take-home so you can compare scenarios.
How do I convert a day rate to annual income?
Multiply the day rate by billable days per week and active billable weeks per year. Allowing for holidays, sickness, admin time and gaps between contracts usually gives a more realistic annual figure.
How many working days should a contractor assume per year?
Many contractors model fewer than 260 weekdays because holidays, gaps between contracts, training and admin time reduce billable days. The default here uses 5 days per week for 46 weeks.
Is contracting through a limited company more tax efficient?
It can be different, but this calculator does not recommend a structure. Limited company results depend on company profit, salary, dividends, corporation tax, expenses and personal circumstances.
Does this calculator include IR35?
No. It does not determine IR35 status or model full inside-IR35 payroll treatment. The equivalent employee salary benchmark is not an IR35 or umbrella-company calculation.
What is the difference between sole trader and limited company take-home?
A sole trader is taxed on business profit through income tax and self-employed National Insurance. A limited company may pay corporation tax, salary through payroll and dividends to shareholders.
Does this include VAT?
No. VAT is not included in this phase. Enter business expenses excluding or including VAT consistently with your own records and accountant's approach.
Do I need an accountant as a contractor?
Many contractors use an accountant, especially for limited companies, VAT, payroll, company accounts and tax returns. This calculator is only an estimate and does not replace professional advice.
Related calculators and guides
Inside IR35 vs Outside IR35 CalculatorCompare contractor take-home inside and outside IR35.Director Salary & Dividend CalculatorEstimate personal take-home from a limited company salary and dividends.UK Dividend Tax CalculatorEstimate dividend tax based on salary, other income and dividends.UK Salary CalculatorEstimate annual salary, monthly take-home pay and deductions.Contractor Day Rate vs SalaryCompare contractor rates with employee salary in a practical way.Inside IR35 vs Outside IR35 GuideUnderstand how IR35 status can change contractor take-home pay comparisons.MethodologySee the assumptions behind tax, NI, pensions, loans and comparison data.