Contractor to Permanent Calculator | Day Rate to Salary
Contractor to Permanent Calculator
Compare your contractor day rate with a permanent salary offer using working weeks, contractor costs, employer pension, bonus, and benefits. The result gives a rough package-value comparison, not personal tax or financial advice.
Contractor Details
Permanent Offer
The Verdict
Your contractor day rate is roughly equal to a permanent salary of £102,095 after the selected costs and benefits are considered.
To match this permanent package, you would need a contractor day rate of about £422.
The adjusted contractor value is higher before personal tax is considered.
Note: You selected Inside IR35. Your real contractor take-home may be lower than the gross value shown because of PAYE deductions, umbrella fees, and other payroll costs. Compare this result with proper tax advice before making a decision.
Value Breakdown
This is a package value comparison. It compares contractor billings after selected costs with the salary, pension, bonus, and benefit value of a permanent offer. Your actual take-home pay can change because of tax code, pension setup, IR35 status, umbrella fees, and limited company arrangements. This is not financial or tax advice.
How this contractor to permanent calculator works
This calculator helps UK professionals compare a permanent salary package with a daily rate contract. It looks beyond the headline salary or day rate and includes employer pension, bonus, benefits, and selected contractor costs. The aim is to give a clearer package-value comparison before you decide whether a permanent offer is worth considering.
Calculator Inputs Explained
| Input Field | What it means | Smart Default |
|---|---|---|
| Weeks / Year | The number of weeks you expect to bill clients. This helps allow for unpaid holidays, bank holidays, sickness, and gaps between contracts. | 46 weeks (a practical starting point) |
| IR35 Status | Shows whether the contract is outside IR35, inside IR35, or uncertain. It does not replace a formal contract or tax review. | Use your contract status |
| Employer Pension | The percentage of salary the permanent employer contributes to your pension. It is part of the total package value. | Use the offer letter |
| Contractor Costs | Monthly or weekly costs needed to work as a contractor, such as accountancy, insurance, software, travel, and umbrella margins. | Enter your real costs |
Contractor day rate vs permanent salary
Comparing a contractor day rate to a permanent salary is not a straightforward calculation. Contractors usually earn a higher day rate because they do not receive paid holiday, sick pay, employer pension contributions, job security, or any employee benefits.
On the other hand, permanent employees may receive a lower base gross salary, but they often get paid holiday, significant pension contributions, sick pay, bonuses, health insurance, and more stability. This tool provides a benefits-adjusted comparison to help you estimate the equivalent salary.
Visual Breakdown: The Financial Stack
Costs contractors often forget (Hidden Costs)
When comparing a contract role with a permanent offer, it is easy to focus on the gross day rate and miss the regular costs of contracting:
- Unpaid time off: 25 days of holiday and 8 bank holidays can mean 33 days of zero income.
- Accountancy fees: Bookkeeping, payroll, tax returns, and company accounts.
- Professional insurance: Professional Indemnity and Public Liability insurance.
- Business costs: Laptops, software licenses, training, and travel.
- Pension gap: You must fund 100% of your own pension without an employer match.
- Gaps between contracts: Bench time where you are searching for the next role.
Permanent employee benefits to include
Do not ignore the hidden value of a permanent package:
- Employer pension contribution: Add the percentage shown in the offer letter so the comparison is closer to the real package value.
- Bonus schemes: Annual performance bonuses can add 5% to 20%+ to your total compensation.
- Paid annual leave: Usually 25+ days, meaning you get paid while resting.
- Sick pay: Peace of mind if you fall ill, compared to zero income for contractors.
- Other perks: Private healthcare, life insurance, company car allowances, gym memberships.
Inside IR35 and outside IR35 considerations
Your IR35 status can make a major difference to your real take-home pay.
Outside IR35
You operate as a genuine business. You can pay yourself a tax-efficient mix of a low salary and dividends, and claim legitimate business expenses before corporation tax.
Inside IR35
You are treated more like an employee for tax purposes. PAYE deductions, National Insurance, umbrella margins, and other payroll costs may reduce the amount you actually keep from the day rate.
When a permanent role may be worth accepting
- You value job security and a guaranteed monthly income.
- You want income that may be easier to explain for a mortgage or rental application.
- The employer offers a strong pension contribution, bonus, or benefit package.
- You require paid sick leave or maternity/paternity pay.
- You want clear career progression and paid training.
When contracting may still be better
- The day rate is significantly higher, even after all taxes and expenses.
- You enjoy the freedom to choose your projects and clients.
- You value flexibility to take extended periods of time off between contracts.
- You operate Outside IR35 and can manage a tax-efficient limited company.
- You prefer avoiding company politics and management responsibilities.
FAQs
It is a tool designed to help UK professionals compare the financial value of a daily contracting rate against an annual permanent salary, factoring in benefits, holidays, and expenses.
You calculate your annual gross contracting income (Rate × Days per week × Weeks per year), subtract your business expenses, and then compare that figure against a permanent package which includes base salary, employer pension contributions, and bonuses.
This depends on your working weeks, contractor costs, pension contribution, bonus, and benefits. The calculator gives an approximate permanent salary equivalent based on the values you enter.
Yes. Employer pension contributions can add meaningful value to a permanent package. Contractors usually need to fund their own pension separately.
Yes. If you are Inside IR35, your effective take-home pay is significantly reduced due to PAYE taxes and employer deductions taken from your day rate. A lower permanent salary might actually yield a better or similar take-home pay compared to an Inside IR35 contract.
Many contractors start with 44 to 46 billing weeks, then adjust the figure for their own holidays, bank holidays, sickness, and time between contracts.
No. This tool provides rough estimates to help inform your career decisions. It is not financial or tax advice. You should always speak to a qualified accountant before making major financial decisions.