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.
Learn more: from day rate to take-home pay
From day rate to gross revenue
The calculator multiplies your day rate by billable days per week and billable weeks per year. At £500 a day, 5 days a week and 46 weeks, that is 230 days and £115,000 of gross revenue. Overhead, a percentage for costs such as accountancy, insurance and software, comes off before tax in the limited company route.
How the UK routes differ
Inside IR35, the calculator takes employer National Insurance off the fee first, then taxes the rest like a salary. GOV.UK gives the 2026 to 2027 employer rate as 15% above a £5,000 secondary threshold, and employee National Insurance as 8% up to £50,270 and 2% above it. Income tax is then 20%, 40% and 45% on the usual bands, and no business expenses are deducted.
Outside IR35, the calculator assumes a company that pays you a £12,570 salary and takes the rest as profit. Corporation tax is 19% up to £50,000 of profit and 25% from £250,000, with marginal relief between. The rest is paid as dividends, taxed after the £500 allowance at the rates GOV.UK lists for 6 April 2026 to 5 April 2027: 10.75% basic, 35.75% higher and 39.35% additional.
A worked example
On £115,000 with the default 10% overhead, the calculator gives about £68,900 of take-home inside IR35 and £67,500 outside. With no overhead, outside rises to about £73,000. Break-even overhead is about 7.5% at £500 a day, 11% at £400 and 3.7% at £800.
So in this model the limited company route comes out ahead only when overhead is small, and its lead does not grow with the day rate. Dividend tax rates rose in April 2026, and other estimates of the gap that use older rates can be much larger.
The US comparison
For the US the calculator estimates self-employment tax of 12.4% Social Security up to $184,500 plus 2.9% Medicare on 92.35% of net income, with half deducted from income. It then applies the 2026 single-filer standard deduction of $16,100 and brackets that run from 10% up to $12,400 to 37% above $640,600, matching the IRS 2026 inflation adjustments. It ignores state tax, credits and the qualified business income deduction.
FAQ
Does the limited company route always give more take-home pay?
No. In this model it wins only when overhead is below a break-even level, which falls as the day rate rises. Change the overhead field and the day rate to see where your own numbers cross.
Why does the calculator ask for an overhead percentage?
Overhead covers company costs that reduce the revenue available to pay yourself. It only applies to the limited company route, because the inside IR35 route allows no business-expense deduction.
Is IR35 status my choice?
No. It depends on the real working arrangement and is usually assessed by the client or agency. The calculator compares the tax result of each status and does not decide which one applies. These figures are estimates, so speak to an accountant before you rely on them.