A day rate is not a salary. Multiply it by the wrong number of days and you will overstate your income by tens of thousands of pounds. This guide shows the 220-day conversion UK contractors actually use, a full worked example at £500 a day for 2026/27, and how to adjust for the benefits a salary carries that a day rate does not.
Search intent: you want one reliable number, what your day rate is worth as an annual salary, and a method you can reuse in a negotiation. You get both in the first sections below. Rates last reviewed: October 2026, for the 2026/27 tax year (6 April 2026 to 5 April 2027), England, Wales and Northern Ireland unless stated.
How do you convert a day rate to an annual salary?
Multiply your day rate by your billable days, usually 220, to get your gross annual equivalent. A £500 day rate at 220 billable days gives £110,000 of gross annual billings. That is turnover, not take-home pay and not yet a true salary equivalent, because a salary also carries employer costs and paid benefits that your day rate must fund itself.
The basic formula is simple:
Day rate × billable days = gross annual equivalent
Everything in this guide hangs on the second number. Pick 260 days and you assume you bill every weekday of the year, with no holiday, no illness, no training and no gap between contracts. Pick 365 and the number is meaningless. The sections below show where 220 comes from, and how to adjust it for your own pattern.
Once you have the gross figure, sense-check the monthly view with the monthly rate calculator. £110,000 a year is £9,167 a month before tax, which is the number to compare against a monthly salary offer, not the £10,000-plus a 260-day assumption would suggest.
Why do UK contractors use 220 billable days?
Start with the calendar and subtract honestly. A year has 52 weeks, so 260 weekdays. Almost all workers are legally entitled to 5.6 weeks of paid holiday a year, which is 28 days on a five-day week, and an employer can count bank holidays inside that 28 (GOV.UK, holiday entitlement). Take the full entitlement and 232 weekdays remain.
From those 232, subtract the days you will not bill even in a good year:
| Step | Days | Running total |
|---|---|---|
| Weekdays in a year (52 × 5) | 260 | 260 |
| Statutory holiday, 5.6 weeks (can include bank holidays) | −28 | 232 |
| Sick days, training and professional development | −5 | 227 |
| Admin, accounts, marketing and bench time between contracts | −7 | 220 |
That is the origin of the 220-day convention you will see across UK contractor calculators and forums. It is not a law. It is a realistic planning assumption for a contractor who takes their holiday and has short gaps. If your contracts run back to back and you bill five days a week almost every week, 230 may fit you better. If you work part-year or take long breaks, 190 to 200 is more honest. The sensitivity table later in this guide shows what each assumption does to the same day rate.
Tip: Write the billable-day assumption into any quote or negotiation. “£500 a day at an assumed 220 billable days” answers the client’s objection before they raise it, and stops anyone comparing your rate against a 365-day fantasy number.
Worked example: what is £500 a day as a salary in 2026/27?
Assumptions, stated up front: day rate £500, 220 billable days, England, tax year 2026/27, no other income, and the comparison is made before your own pension contributions and business costs. Three steps.
Step 1: gross annual equivalent. £500 × 220 = £110,000. This is the figure most people quote, and it is the least useful of the three numbers in this guide, because no employee costs £110,000 to employ on a £110,000 salary, and no contractor keeps £110,000.
Step 2: the package-equivalent salary. An employer pays more than the salary. For 2026/27 the employer National Insurance rate is 15 percent on earnings above the £5,000-a-year secondary threshold (HMRC, National Insurance rates and allowances). The statutory minimum employer pension contribution is 3 percent of qualifying earnings, with a total minimum of 8 percent (The Pensions Regulator), and many employers pay more than the minimum. For this scenario, assume an employer pension of 5 percent of salary, a common above-minimum offer, stated here as an assumption rather than a rule.
Employer cost of a salary S = S + 15% × (S − £5,000) + 5% × S = 1.20 × S − £750.
Set that equal to your £110,000 of billings: S = (£110,000 + £750) ÷ 1.20 = £92,292.
Check: employer National Insurance is (£92,292 − £5,000) × 15% = £13,094. Pension at 5% is £4,615. Total employer cost: £92,292 + £13,094 + £4,615 = £110,001, rounding aside. So on a like-for-like cost basis, £500 a day at 220 days matches a salary of about £92,300, not £110,000.
Step 3: the employee take-home on that salary. Using the 2026/27 bands from GOV.UK, Income Tax rates and Personal Allowances (Personal Allowance £12,570; basic rate 20 percent to £50,270; higher rate 40 percent to £125,140; additional rate 45 percent above), plus employee National Insurance at 8 percent between £12,570 and £50,270 and 2 percent above:
| Item | Calculation | Amount |
|---|---|---|
| Income tax, basic band | £37,700 × 20% | £7,540 |
| Income tax, higher band | (£92,292 − £50,270) × 40% = £42,022 × 40% | £16,809 |
| Employee National Insurance, main rate | £37,700 × 8% | £3,016 |
| Employee National Insurance, upper rate | £42,022 × 2% | £840 |
| Take-home before personal pension contributions | £92,292 − £24,349 − £3,856 | £64,087 |
Run your own salary figure through LancerBill’s UK income tax calculator to test a different offer. The point of step 3 is not that you will be paid this way. It is that £64,087 is the employee take-home your contracting income needs to beat, after your own tax route, costs and pension saving, for the move to pay off in cash terms.
The three-number framework: which salary equivalent should you quote?
Most conversion pages give you one number. That is why negotiations go wrong: each side quietly uses a different one. Use all three, and say which one you mean.
| Number | What it is | Use it for |
|---|---|---|
| Gross equivalent | Day rate × billable days (£110,000) | Comparing turnover, sense-checking a rate rise, monthly budgeting |
| Package-equivalent salary | The salary whose total employer cost equals your billings (£92,292) | Negotiating with a client or employer who compares total cost |
| Take-home benchmark | Employee take-home on that salary (£64,087) | Deciding whether contracting actually leaves you better off |
A client offering you a permanent role will think in package cost. A recruiter may quote the gross equivalent because it sounds bigger. You should decide on the take-home benchmark. Naming all three in a negotiation is the fastest way to find out which comparison the other side is really making.
Sensitivity matters too. The same £500 day rate produces very different years depending on how many days you actually bill:
| Billable days | Gross at £400/day | Gross at £500/day | Gross at £600/day |
|---|---|---|---|
| 180 | £72,000 | £90,000 | £108,000 |
| 200 | £80,000 | £100,000 | £120,000 |
| 220 | £88,000 | £110,000 | £132,000 |
| 240 | £96,000 | £120,000 | £144,000 |
Read that table honestly. Twenty lost days at £500 a day cost £10,000, more than a £45-a-day rate rise earns across a full 220-day year (£9,900). Availability is worth as much as rate.
How do you convert a salary back into a day rate?
Reverse the same steps: add employer costs to the salary to get the total package cost, then divide by your realistic billable days. On the assumptions below, a £70,000 salary converts to a break-even day rate of about £378, before your own business costs and any premium for contract risk.
Worked through: employer National Insurance on £70,000 is (£70,000 − £5,000) × 15% = £9,750, and an employer pension at an assumed 5% is £3,500. Total package cost: £70,000 + £9,750 + £3,500 = £83,250. Then £83,250 ÷ 220 = £378.41, so £378 a day matches the package cost before your business costs, accountancy fees, insurance and any gap risk. Quote below that and the permanent package was worth more on paper. Quote £400 plus and you have a margin for costs, which is where most salary-to-day-rate conversions land once a 20 to 30 percent contractor premium is added by rule of thumb.
If you think in hours rather than days, split the result with the hourly rate calculator, and compare the approach with our guide to converting a salary to an hourly rate, which uses the same billable-days logic in reverse.
What changes the conversion?
Your tax route. The gross and package numbers do not change, but your take-home does. Outside IR35 through a limited company, inside IR35, and through an umbrella company all produce different net results from the same £110,000 of billings, because employer National Insurance and PAYE fall in different places. Never compare a day rate to a salary on take-home until you know which route the contract sits on.
If you take the limited-company route, our salary vs dividends guide covers how to extract that income once you have earned it.
Scotland. Scottish income tax has different bands and rates, so step 3 of the worked example does not apply if you are a Scottish taxpayer. The gross and billable-days maths are unchanged.
Benefits beyond pension. Paid sick leave, life cover, private medical insurance, bonuses and redundancy rights all have value that a day rate does not include. If a permanent offer carries a 10 percent bonus and real benefits, add them to the package cost before you divide. Our guide to calculating your freelance hourly rate covers the same benefits loading from the freelancer side, and the comparison in retainer vs hourly vs project pricing helps if the alternative offer is structured work rather than a salary.
Your actual billable pattern. A six-month contract renewed twice is not the same risk as four short contracts with gaps. Adjust the days, not the formula.
Watch out: The two classic errors are multiplying by 365 (or 260) and comparing gross billings to a net salary. The first inflates your equivalent by £20,000 to £72,500 at £500 a day. The second compares turnover with take-home and makes almost any contract look better than it is.
Key takeaways
- Convert with billable days, not calendar days: day rate × 220 is the standard UK planning formula.
- 220 comes from 260 weekdays minus 28 days of statutory holiday, then sick, training, admin and bench time.
- £500 a day at 220 days is £110,000 gross, a package-equivalent salary of about £92,292, and an employee take-home benchmark of £64,087 for 2026/27.
- Reverse it the same way: add employer National Insurance at 15 percent above £5,000 and the employer pension to a salary, then divide by billable days.
- Always state which of the three numbers you are quoting, and adjust the days for your real contract pattern.
Going the other way? If you have a salary and need the equivalent contractor rate, our guide to converting a salary into a day rate itemises the 2026/27 uplift for employer costs, paid leave and non-billable time.
Frequently asked questions
How many working days should I use to convert a day rate to a salary?
Use 220 as the standard UK planning figure. It starts from 260 weekdays, subtracts the 28 days of statutory holiday for a five-day week, then allows for sick days, training, admin and gaps between contracts. Adjust it up if your contracts run back to back, or down to 190 to 200 if you take long breaks or work part-year.
What is £600 a day in salary terms?
At 220 billable days, £600 a day is £132,000 of gross annual billings. On the package-cost method used in this guide, with employer National Insurance at 15 percent above £5,000 and an assumed 5 percent employer pension, that matches a salary of roughly £110,600. Your take-home will depend on your tax route and IR35 status, not on the gross figure.
Why is the salary equivalent lower than the day rate multiplied by 220?
Because a salary is not the employer’s total cost. The employer also pays National Insurance at 15 percent on earnings above £5,000 a year and contributes at least 3 percent of qualifying earnings to a workplace pension. Your day rate has to cover those costs itself, so the salary that costs an employer the same as your billings is lower than your gross billings.
Does IR35 change the day rate to salary conversion?
It does not change the gross conversion or the billable-days formula. It changes your take-home from the same billings. Inside IR35, PAYE tax and National Insurance, including the employer charge, are typically borne within the fee, which reduces net pay compared with an outside-IR35 limited company route. Compare take-home figures only once you know the contract’s status.
Should a contractor day rate be higher than the equivalent salary divided by 220?
Usually yes. The break-even division only matches package cost. It leaves nothing for accountancy, insurance, software, unpaid admin time or the risk of a gap between contracts, and no payment for the flexibility the client gets. A premium of 20 to 30 percent over the break-even rate is a common rule of thumb, adjusted for how scarce your skills are.
Rates last reviewed: October 2026. This guide is for general information only and is not financial, tax or legal advice.