Freelance Day Rate to Salary Converter
Turn your day rate into an equivalent annual salary, or work out what day rate you need to hit a target income. Compare UK IR35 take-home or US self-employment tax side by side. Nothing uploaded.
Direction
Your numbers
Tax region
Inside vs outside IR35
Inside IR35
Employer NI:
Income tax:
Employee NI:
Outside IR35 (Ltd Co)
Salary:
Corporation tax:
Dividend tax:
Outside IR35 assumes a £12,570 director's salary and the rest paid as dividends after corporation tax - the standard small-Ltd-company structure.
Self-employed vs W-2 equivalent
Self-employed
Self-employment tax:
Federal income tax:
W-2 equivalent
FICA (employee share):
Federal income tax:
W-2 equivalent compares the same gross pay as a salaried employee, who only pays half of FICA - the other half is paid separately by the employer.
Freelance rate calculation and tax comparison
Understanding billable days and annual rate conversion
A freelancer's annual income depends on three factors: day rate, billable days per week, and weeks worked per year. If you charge USD 500 per day and work 5 days a week for 46 weeks, your annual gross is USD 115,000. However, most freelancers don't bill 52 weeks annually - you lose weeks to holidays, sick leave, contract gaps, and vacation. The realistic number is 46-48 weeks for busy freelancers, fewer if you take extended breaks or work part-time. This calculator converts both directions: from a day rate to equivalent salary, or from a desired take-home salary back to the day rate you need to charge.
Overhead deduction and net income calculation
Gross day rate × billable days does not equal take-home income. Business overhead (insurance, software, accounting, equipment, space) typically consumes 5-20% of revenue before you ever pay taxes. A 10% overhead on USD 115,000 gross leaves USD 103,500 net revenue. Then income tax, payroll taxes (if applicable), and self-employment taxes further reduce this. The calculator subtracts your overhead percentage first, then applies tax calculations, so you see realistic net income figures. For comparison, inside IR35 (taxed as an employee) is usually cheaper than outside IR35 for lower earners but more expensive for higher earners - consult a local accountant for your situation." }
FAQ
How is annual billable days calculated?
Annual billable days = days per week × billable weeks per year. If you work 5 days a week for 46 weeks (typical for UK freelancers after holidays and buffer), you have 230 billable days per year. This excludes weekends, public holidays, sick leave, unpaid time off, and gaps between contracts. Most busy freelancers bill 46-48 weeks; those with longer breaks or part-time work use lower numbers.
What does business overhead mean in this calculator?
Overhead is the percentage of your gross revenue spent on business costs before you take personal income: insurance, software subscriptions, accounting, equipment, co-working space, professional fees, and operating costs. A 10% overhead is typical for freelancers with minimal expenses; 20%+ is common if you have dedicated space, employees, or significant equipment costs. This calculator subtracts overhead from gross revenue to show your actual take-home before taxes.
What's the difference between inside and outside IR35?
Inside IR35: HMRC treats you as an employee for tax purposes - you pay employer NI, employee NI, and income tax on your gross fee. Outside IR35: You operate through a limited company, pay yourself a small salary (usually GBP 12,570 to use the personal allowance) and take the rest as dividend income after corporation tax. Outside IR35 is usually more tax-efficient but has more accounting requirements and compliance burden. Always consult a UK accountant - IR35 rules change and misclassification has penalties.