How to Calculate Your Freelance Day Rate
A practical guide to setting your day rate as a freelancer or contractor, including salary equivalence and market benchmarks.
How to set your day rate
Moving from a salaried role to freelancing? Your day rate should cover more than just your old salary — you need to account for the benefits you are giving up and the costs you are taking on.
The basic formula
- Start with your target annual income
- Add employer costs you now cover (pension ~3–5%, employer NI ~13.8%, benefits ~5–10%)
- Divide by your billable days (typically 220–230 per year)
For example, to replace a £50,000 salary: £50,000 + 20% uplift = £60,000 ÷ 230 days = £261/day minimum.
What affects your rate?
| Factor | Impact |
|---|---|
| Specialist skills | Higher demand = higher rate |
| Location | London rates are typically 20–40% higher |
| Contract length | Shorter contracts justify higher rates |
| IR35 status | Inside IR35 = lower take-home, may need higher rate |
| Market conditions | Supply and demand in your niche |
Try the calculator
Use our Day Rate Calculator to convert between salary, hourly rate, and day rate instantly.
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Related guides
- How Holiday Accrual Is Calculated in the UK — Learn how holiday builds up over a leave year and how to check how much you have accrued so far.
- How Holiday Entitlement Works in the UK — A practical guide to understanding your statutory holiday entitlement as a UK worker, covering full-time, part-time, and irregular working patterns.
- How Overtime Pay Works in the UK — Understand your overtime pay rights, how it is taxed, and how different multipliers affect your earnings.
- How Payroll Deductions Work in the UK — Understand what comes out of your pay: income tax, National Insurance, pension, and student loan deductions explained.
- Inside IR35 Explained: What UK Contractors Need to Know — A clear guide to working inside IR35, how it affects your take-home pay, and what it means for your contract.
- Outside IR35 Explained for UK Contractors — What outside IR35 means, how it affects your take-home pay, and the key differences between inside and outside IR35.
Last updated
Last reviewed: 2026-04-12T09:36:51.531Z.