Turn your day rate into a yearly turnover, an equivalent permanent salary and an estimated take-home — so you can compare a contract offer against a permanent role on a like-for-like basis.
Convert & compare
Contract roles quote a day rate, while permanent roles quote a salary — so comparing them needs two adjustments. First, convert the day rate to turnover by multiplying by the days you actually bill. Second, recognise that a contractor funds their own holiday, pension, sick pay and gaps between contracts, so a turnover figure isn't the same as an employee salary.
| Day rate | × 220 days | Equivalent salary (≈) |
|---|---|---|
| £300 | £66,000 | £50,000 |
| £400 | £88,000 | £66,000 |
| £500 | £110,000 | £83,000 |
| £650 | £143,000 | £107,000 |
The same turnover produces very different take-home depending on your IR35 status. Outside IR35, you can use a tax-efficient salary-plus-dividends mix through your own limited company. Inside IR35, the income is taxed close to employment via PAYE — closer to an umbrella arrangement. Check the full company picture on the contractor take-home calculator.
Multiply the day rate by your billed days. £450 × 220 = £99,000 turnover. For an equivalent permanent salary, discount turnover by 20–30% for missing holiday, pension and benefits.
A common planning figure is 220 days, allowing for holidays, bank holidays, sickness and gaps between contracts.
£110,000 turnover over 220 days — broadly an £80,000–£90,000 permanent salary, though your outside-IR35 take-home can be higher.
If VAT-registered you add 20% VAT on invoices, but it's not your income — you pass it to HMRC. The day rate quoted is normally exclusive of VAT.
