Find out what you should actually charge as a freelancer or contractor. This tool calculates your minimum hourly and day rate after accounting for tax, annual leave, business expenses and the non-billable hours that eat into your working week — figures that most basic rate calculators ignore.
Enter your desired annual take-home income after tax. Add your estimated annual business expenses (software, equipment, professional fees, insurance, travel). Set your expected tax and NI rate as a percentage — 25–30% is typical for many self-employed earners, though this depends on profit level.
Not all your working hours can be billed to clients. Time spent on admin, invoicing, proposals, marketing, networking and professional development is unpaid. Most freelancers estimate 20–30% of their week is non-billable. Ignoring this is the most common reason freelancers undercharge.
The gross income needed = (take-home + expenses) ÷ (1 − tax rate). Billable hours = (52 − holiday weeks) × hours per week × (1 − non-billable%). Hourly rate = gross income ÷ billable hours.
Target take-home £40,000, expenses £3,000, tax 25%, 40 hours/week, 5 weeks holiday, 25% non-billable → gross needed £57,333 → billable hours 1,410 → minimum hourly rate approximately £40.66 → day rate approximately £325.
The freelance rate calculator exists because the instinctive approach to setting a day rate — dividing your desired salary by working days — is systematically wrong. It ignores four things that dramatically reduce your effective earnings: the days you cannot bill (holidays, sick days, gaps between projects), the hours within working days that cannot be billed (admin, proposals, marketing, professional development), the business expenses that must come out of your earnings before you take any home, and the tax and NIC provision that HMRC will require from your profits.
A freelancer who thinks they need £40,000 per year and charges £40,000 ÷ 260 days = £154 per day is almost certainly earning significantly less than £40,000 after accounting for these factors. This calculator is designed to show the minimum rate that actually delivers the target income.
Start with your target take-home income — the amount you want in your bank account after tax, not your gross earnings. Add your realistic annual business expenses: software subscriptions, accountancy fees, equipment, professional indemnity insurance, travel and marketing. These are real costs that must be covered by your billing.
The non-billable time percentage is the most important variable many freelancers overlook. Track your time for two or three weeks to see what percentage is genuinely billable. If you spend two hours of every eight-hour day on admin, pitching and networking, your non-billable rate is 25%. Entering a lower figure will cause you to underestimate the required rate and undercharge clients.
For self-assessment tax registration, deadlines, payment on account requirements and HMRC guidance for the self-employed, gov.uk/self-employed-tax is the primary resource. You should register with HMRC for self-assessment by 5 October following the end of the tax year in which you started self-employment.
For freelancers working through a limited company, the tax position is more complex and typically warrants professional advice from a contractor accountant — structures such as IR35, salary-dividend split and director's National Insurance all affect the optimum approach.
Common questions about this calculator and how to use it.