A rate that covers tax, costs and unpaid time
Dividing a desired take-home by working days misses two important costs: personal tax and the parts of your working year clients do not pay for. Insurance, software, equipment running costs and accountancy need revenue too. A sole trader does not receive paid holiday from an employer, so the charge for paid work needs to support the whole year's plan.
This calculator answers the narrow question “what revenue and charge rates support this annual business take-home under these assumptions?” It does not price your expertise or predict demand. Experienced specialists may charge more; a market may support less. If the calculated minimum is not commercially achievable, revisit costs, utilisation or the target rather than assuming every available hour will sell.
How we work backwards through tax
- Take an annual business take-home target and actual allowable expenses.
- Try annual turnover, subtract expenses to find taxable business profit, and run the same tested engine as the self-employed tax calculator.
- Calculate Income Tax attributable to that profit and Class 4 NI. Business take-home is profit minus those deductions.
- Use bounded numerical search in pounds and pence until the target is reached. The solver checks nearby pennies around allowance-taper steps; it does not assume a flat percentage tax rate.
- Divide required turnover by billable days or billable hours. Charge rates and monthly revenue targets round upwards to the next penny, so rounding does not reduce required revenue.
Revenue = allowable expenses + required profit. Take-home = profit − business Income Tax − self-employed NI. The annual turnover result is a planning minimum; a monthly target is one twelfth of it, not a forecast of equal monthly sales. No losses or trading allowance are used: this model explicitly deducts actual allowable expenses.
Work out realistic billable days and hours
We use 52 × working days per week, then subtract separate holiday, bank holiday and sick days. This is an editable planning year, not a calendar that counts every weekday. Fractional days can represent part-time work. Only count bank holidays that remove a day you would otherwise work; they vary by country and year.
Next subtract training, admin, marketing and other non-billable work. Choose a day count or a percentage of the days remaining after time off. The default example uses five working days per week, 25 holiday days, eight bank holidays, five sick days and 40 non-billable days; these are illustrative choices, not official rules. Billable hours = billable days × chargeable hours per day.
Do not subtract admin twice: if a billable day's hours are already reduced to exclude admin, only enter additional whole non-billable days. Downtime belongs in sick/downtime days or non-billable time, not both. Usable billable days and hours round down to two decimals before calculating rates, so displayed capacity and rounded-up rates still cover the revenue requirement. There is no hidden contingency markup. For additional resilience, reserve more downtime or deliberately quote above the minimum.
Worked freelance pricing examples
2026/27, England/Wales/NI, no other income, pensions, loan repayments or voluntary Class 2. Every result is computed by the same tested solver at render time. All examples use the working pattern above, except the row with more uncharged time.
| Plan / target / costs | Turnover / tax & NI | Billable days | Day rate | Hourly rate |
|---|---|---|---|---|
| Lower take-home target £25,000.00 / £3,000.00 | £32,367.30 / £4,367.30 | 182 | £177.85 | £23.72 |
| Full-time freelance plan £35,000.00 / £5,000.00 | £47,880.81 / £7,880.81 | 182 | £263.09 | £35.08 |
| More uncharged time £35,000.00 / £5,000.00 | £47,880.81 / £7,880.81 | 162 | £295.57 | £39.41 |
| Higher take-home target £60,000.00 / £8,000.00 | £91,945.86 / £23,945.86 | 182 | £505.20 | £67.36 |
The two middle examples need the same revenue for the same take-home and costs. More unpaid time increases both minimum charge rates, but it does not itself change annual tax. Charging both an hourly and a daily rate for the same work would double-count revenue; they are alternative pricing units.
Income Tax, Scotland and National Insurance
The selected tax year supplies the Personal Allowance, taper and regional bands. For 2026/27, the standard Personal Allowance is £12,570.00, reduced above £100,000.00. Scotland has separate non-savings Income Tax bands; Class 4 NI remains UK-wide. Check Income Tax and Scottish rates.
Class 4 NI is 6% above profit of £12,570.00 up to £50,270.00, then 2% above that. At profit of £7,105.00 or more, Class 2 is treated as paid without a charge. Below that it is not automatically credited; eligible voluntary payments of £3.65 a week are excluded from the target. Check your NI record and HMRC's NI guidance. Selecting 2025/26 uses that year's own thresholds.
Expenses, other income and payment timing
Enter allowable business costs, not personal living costs or drawings. Split mixed personal/business costs appropriately. Tax treatment is not decided here, and the tool assumes expenses are deductible in the selected year. HMRC explains allowable expenses. Recoverable VAT is not a business cost in this model; irrecoverable VAT can be included where appropriate.
Optional other non-savings income means salary, taxable pension or property profit after allowable costs, not interest or dividends. It occupies allowance and bands. Business Income Tax is tax on all entered income minus tax on that other income alone. Its standalone tax is outside this business target and must be settled separately: no PAYE collection is verified or silently credited to a household result.
Actual PAYE tax-paid credits and CIS withholding can change a Self Assessment balance, not the earnings required before credits. That is why they do not reduce this rate target. Construction subcontractors can use the CIS refund calculator for an annual credits reconciliation.
Payments on account affect when cash is needed, not annual tax for the target year. Allow for that separately when planning your first bill: see the tax set-aside guide. Pensions, loan repayments and savings goals need additional planning outside these results.
VAT and Making Tax Digital depend on revenue
Planned annual turnover above £90,000.00 triggers a warning, not an automatic registration verdict. The ordinary UK VAT rules examine taxable turnover over a rolling 12 months and a separate next-30-day test. Exempt and out-of-scope sales can change the taxable-turnover basis. VAT collected is not money you keep personally. Use the VAT registration checker rather than adding VAT to your net-income goal.
Making Tax Digital for Income Tax also looks at gross qualifying income rather than take-home or profit, including relevant property income. Check your history and start date with the MTD Income Tax checker.
Scope and cases needing review
This is a straightforward full-year UK sole-trader pricing model, not a complete tax return, an incorporation recommendation or a day-rate-to-employee-salary conversion. It excludes partnerships, limited companies, IR35/umbrella/PAYE contracting, employee NI and combined NI annual limits, part-year/age-related NI, losses, savings/dividends, pensions, student loans, benefits charges, unusual reliefs, property finance-cost reductions and detailed capital allowances. For companies, use the sole trader versus limited company comparison within its own scope.
The target supports personal money after modelled deductions, not a guarantee of turnover, utilisation or collection. Bad debts, late-paying clients and uneven demand can require a higher quote or additional cash reserves. Review assumptions as your business changes.
Frequently asked questions
How much should I charge per hour if I am self-employed?
Start with the annual take-home you need, then allow for business expenses and tax. Divide the revenue required by realistic billable hours after time off and non-billable work. This calculator solves the tax step first; its minimum is a financial planning figure, not a market-rate recommendation.
Is annual take-home the same as a salary?
No. The target here is money left from your business after allowable expenses, Income Tax attributable to the business and self-employed NI. A gross employee salary has not yet had personal deductions taken off, and employment benefits and employer costs are different.
Can I use this as a contractor day rate calculator?
Yes, for straightforward UK sole-trader work taxed as self-employment. It is not an umbrella, PAYE, IR35 or limited-company calculator. A day-rate-to-salary comparison also needs pensions, employment benefits and employment tax; this tool does not claim the two are equivalent.
How is non-billable percentage calculated?
It is applied to the working days remaining after holiday, bank holiday and sick days. Non-billable days cover admin, marketing and training; do not count the same time twice. The planning year is 52 weeks, not an exact calendar of weekdays.
Does the calculator include VAT?
No. Required revenue and charge rates exclude VAT. A warning appears when planned annual turnover is more than £90,000.00, but registration requires the separate taxable-turnover tests. VAT collected is not personal income; use the VAT checker for rolling turnover and forward-test dates.
Does other employment income affect the rate?
Yes. Other non-savings taxable income uses your Personal Allowance and tax bands, so the additional Income Tax on business profit may be higher. Its own tax is treated separately. PAYE tax-paid credits affect the eventual tax-account balance, not the annual business earnings target, so there is no tax-paid input.
Are holidays and bank holidays automatic entitlements?
No. These are editable planning assumptions for your own business. Only subtract days you would otherwise work, and adjust the bank-holiday count to your country and working pattern. Fewer paid days require a higher rate for the same annual take-home.
Are pensions, student loans or voluntary Class 2 included?
No. The model includes Income Tax and Class 4 NI from the shared tax engine. Class 2 is treated as paid at or above the selected year's small profits threshold; below it, voluntary contributions may be possible but are not included. Pension contributions, loan repayments and specialist reliefs need separate planning.
Official sources and review
Prepared by SoloCalc using the site's shared tested tax engine. Rules last checked 23 October 2026 against the official pages below. This is a source-based review, not accountant certification or HMRC approval. Tax rules and individual circumstances can change; check the selected year's sources before making decisions.
- Income Tax rates and Personal Allowance
- Current and past Income Tax rates
- Scottish Income Tax
- Scottish rates for 2025/26
- Scottish rates for 2026/27
- Self-employed National Insurance
- Current and past National Insurance rates
- Allowable self-employed expenses
- Register for VAT: when to register
- VAT thresholds
- Check what registering for VAT may mean for your business
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