Day rate tax calculator
Enter your daily rate, billable days per week and estimated annual expenses. The calculator converts these to taxable profit and shows your estimated tax bill and monthly take-home.
Updated for 2026/27. Uses UK tax bands and HMRC/GOV.UK guidance. Estimates only — not tax advice.
Calculator checked against GOV.UK and HMRC rules on (how we check).
Calculate sole trader tax Read the guidesYour Self Assessment payment timeline
Based on your estimated bill of £8,431.80 for 2026/27, here is when HMRC expects payment — and why your first January bill can feel much bigger than the tax itself. Estimate only — your exact HMRC figures may differ.
ends 5 Apr 31 Jan 31 Jul Next
31 Jan
From day rate to take-home: the full picture
A day rate converts to annual profit through a simple chain: daily rate × billable days = annual turnover, minus business expenses = taxable profit. Tax is calculated on taxable profit, not turnover — so the expenses field is important. Underestimating expenses understates take-home.
The day rate mode is the default on this page. Enter your daily rate, typical billable days per week and estimated annual expenses. Most contractors use 4–4.5 billable days per week as a realistic average.
- Billable days: 200–225 per year is realistic for full-time contract work (5 weeks holiday, some non-billable time).
- Expenses: software, insurance, equipment, training, professional fees and home office costs all reduce taxable profit.
- For limited company contractors, use LimitedCompanyTaxCalculator.co.uk/day-rate-tax-calculator to compare structures.
Rates checked against Budget 2026 Annex A on 30 October 2026. Written and reviewed by James Whitfield against current GOV.UK and HMRC guidance. Estimates for planning only — not tax, accounting or financial advice.
Day rates, billable days and the tax on them
A day rate looks generous next to a salary because it is quoted before the days you are not paid for. Start from 260 weekdays a year. Take off the 8 bank holidays in England and Wales (Scotland and Northern Ireland each have 10 in 2026), 25 days of holiday and some days for illness, training and gaps between contracts, and a full-time contractor typically bills 200 to 225 days, fewer in a year with long gaps between contracts. That number moves your tax bill more than almost anything else you enter.
The day-rate mode above multiplies your rate by billable days a week and weeks worked, takes off your annual expenses and taxes the profit. As a sole trader you pay Income Tax and Class 4 National Insurance on that profit through Self Assessment. Clients pay you gross: there is no PAYE, and nothing is held back unless you work in construction under the Construction Industry Scheme.
If you work through your own limited company, corporation tax and the off-payroll working (IR35) rules apply instead, and this is the wrong calculator. If you work as a sole trader for one client for a long time, check your employment status: it depends on how the work is actually done, such as who controls it and whether you could send a substitute, not on what the contract calls you.
£450 a day with £4,000 of expenses: what billable days do
| Billable days | Turnover | Profit | Tax and Class 4 NI | You keep | Kept per day billed |
|---|---|---|---|---|---|
| 230 days | £103,500 | £99,500 | £30,478.60 | £69,021 | £300.09 |
| 210 days | £94,500 | £90,500 | £26,698.60 | £63,801 | £303.82 |
| 190 days | £85,500 | £81,500 | £22,918.60 | £58,581 | £308.32 |
2026/27, England, Wales or Northern Ireland, no other income.
Losing 40 billable days costs £18,000 of turnover but £10,440 of take-home, because the days you lose come off the top of your income, where it is taxed at 40% plus 2% Class 4. The same rate also puts you on either side of the VAT threshold: 230 days is £103,500 of turnover, over the £90,000 limit; 190 days is £85,500, under it. VAT registration is tested on turnover over any rolling 12 months.
The calculator's starting values (£300 a day, 4 days a week, 46 weeks, £3,000 of expenses) give £52,200 of profit: £8,312 Income Tax and £2,300.60 Class 4 NI, leaving £41,587, or £3,466 a month. That profit is just over the £50,270 higher-rate threshold, so only the top slice is taxed at 40%.
At £600 a day for 200 days with £8,000 of expenses, profit is £112,000. Above £100,000 the Personal Allowance shrinks by £1 for every £2 of income, so here the tax is £34,632 Income Tax plus £3,496.60 Class 4 NI and you keep £73,871. Each extra £1,000 in this range keeps you about 38p in the pound.
Every figure here comes from the calculator above, using 2026/27 rates. Estimates for planning only, not tax advice.
Day-rate pitfalls
- Dividing an old salary by 260 to set a rate. That leaves nothing for holidays, gaps between contracts, pension or equipment.
- Forgetting the first-year payment on account. If your first year's bill is £1,000 or more, the first 31 January can ask for that bill plus half of it again towards the next year.
- Treating travel to a long-running client site as allowable. Travel to a place you work at regularly can count as ordinary commuting; check the travel rules before you claim it.
- Comparing a sole trader day rate with a limited company one without counting corporation tax, dividend tax and accountancy fees.
Day rate tax — questions
How do I convert a day rate to annual profit?
How many billable days should I use?
Should I use this or the limited company day rate calculator?
Where to go next
Official sources for this page
Calculator and worked examples checked against GOV.UK and HMRC rules on 3 November 2026.
Thinking of going limited? Compare first: with 2026/27 rates, a sole trader who takes all the profit out usually keeps more. If you already run a company, the Director's Pay & Tax Pack (£4.99) covers salary versus dividends, the director's loan account and year-end planning for 2026/27.