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    Freelance Rate Calculator

    Calculate your ideal freelance hourly and day rate based on target income, expenses, tax, holidays, and billable hours.

    Free to use. Runs in your browser.

    Enter your desired annual income, business expenses, and time off to calculate the freelance rate you need to charge.

    Enter your target income as the take-home figure you want after tax, and set billable hours per day to the time you can actually charge for (typically 5 to 6 of an 8-hour day), not your full working hours.

    General information only. This calculator and the guidance below are not financial, tax, or accounting advice. Your actual tax and National Insurance depend on your trading structure, allowances, and jurisdiction. Before setting rates or making tax decisions, consult HMRC, a qualified accountant, or an independent financial adviser regulated by the FCA.

    Methodology and sources

    Formula or method

    Calculates the gross annual revenue needed by working backwards from the user's target net income: Gross Needed = (Target Income + Annual Expenses) / (1 - Effective Tax Rate). Billable days are derived by subtracting holiday days and sick days from a fixed 260 working days per year. Billable hours are billable days multiplied by the user-supplied billable hours per day. The hourly rate is Gross Needed divided by total billable hours. The day rate is the hourly rate multiplied by billable hours per day. Weekly rate is the day rate multiplied by 5. Monthly rate is Gross Needed divided by 12.

    Basis and assumptions

    • A fixed 260 working days per year is assumed (52 weeks x 5 days), which is the standard UK Monday-to-Friday working year with no allowance for public bank holidays.
    • The effective tax rate input is user-supplied and is applied as a flat gross-up divisor, not a stepped marginal-rate model. The default is 20%, which approximates the effective rate for a UK sole trader at modest profit levels, but actual liability depends on trading structure, National Insurance class, allowances, and jurisdiction.
    • Business expenses are added to the income target before tax is grossed up, on the assumption that they are allowable deductions that must still be funded from revenue before any tax calculation.
    • Non-billable admin, pitch, and marketing time within each working day is handled solely through the user-controlled 'billable hours per day' input; the tool does not model a separate non-billable overhead factor.
    • Rates are displayed in the user-selected currency (GBP, USD, CAD, AUD, EUR) using the same numeric figures; no exchange-rate conversion is applied.
    • No distinction is made between sole-trader, limited-company, or umbrella-company structures. Tax obligations, National Insurance treatment, and IR35 status differ materially between these.

    Key handling decisions

    • Default effective tax rate is 20%, reflecting approximate UK basic-rate Income Tax for a sole trader; users outside the UK or with higher profit levels must override this figure manually.
    • Default holidays are 25 days and sick days 5 days, giving a baseline of 230 billable days before applying billable hours per day.
    • Default billable hours per day is 6, reflecting the common practical ceiling for client-facing work in a full working day.
    • Weekly rate is computed as day rate multiplied by 5 (a fixed five-day week), regardless of the user's actual working pattern.
    • Monthly rate is Gross Needed divided by 12, i.e. an equal monthly average, not a per-working-day monthly figure.

    What this tool does not decide

    • Your actual tax and National Insurance liability. Tax obligations for self-employed people depend on trading structure, allowable deductions, personal allowances, dividend treatment, and jurisdiction. Consult HMRC guidance (hmrc.gov.uk) or a qualified accountant.
    • Whether you are inside or outside IR35. IR35 status fundamentally changes take-home pay for UK contractors and must be assessed by a specialist IR35 adviser or solicitor familiar with employment status law.
    • Whether voluntary VAT registration is appropriate for your business. This depends on your turnover, client base, and sector. Consult HMRC or a qualified accountant.
    • The appropriate pension contribution level for your circumstances. An independent financial adviser regulated by the FCA can help you set a retirement saving target.
    • Whether a sole-trader, limited company, or umbrella structure is most tax-efficient for your situation. A qualified accountant or tax adviser should assess your individual position.

    Sources

    Last checked: 2026-06-17

    Why Freelancers Must Charge More Than Employees

    If a salaried employee earns £25/hour, a freelancer doing the same work needs to charge £35-45/hour to match their total compensation. The gap covers everything an employer provides "for free": holiday pay, sick pay, pension, employer NI, equipment, training, and office space.

    The biggest hidden cost is non-billable time. A freelancer typically bills 5-6 hours per 8-hour day. The rest goes to admin, invoicing, marketing, pitching, learning, and managing the business itself. If you price based on 8 billable hours, you're working for less than you think.

    UK Freelance Rates by Profession

    ProfessionHourly (Junior)Hourly (Mid)Hourly (Senior)
    Web developer£25 to 40£40 to 65£65 to 100
    Graphic designer£20 to 30£30 to 50£50 to 80
    Copywriter£20 to 35£35 to 55£55 to 90
    Photographer£25 to 40£40 to 75£75 to 150
    Management consultant£50 to 80£80 to 150£150 to 300

    What this means for you: London rates are typically 15-25% higher. Direct client rates are higher than platform rates (Fiverr, Upwork). Your rate should reflect your experience, specialisation, and the value you deliver, not just what others charge.

    The Hidden Costs of Freelancing

    Employees don't see these costs because their employer absorbs them. As a freelancer, they come straight out of your rate:

    CostTypical AnnualNotes
    Holiday (28 days)£4,000 to 8,000Lost billable days
    Sick days (5 days avg)£700 to 1,500No statutory sick pay for self-employed
    Pension contributions£2,000 to 6,000No employer match, it's all on you
    Accountant + software£500 to 2,000Tax returns, VAT, bookkeeping
    Insurance (PI + PL)£300 to 1,200Professional indemnity, public liability
    Equipment + software£500 to 3,000Laptop, licences, subscriptions

    Add these up and you're looking at £8,000 to 22,000 per year in costs that employees never see. That's why a £50/hour freelancer and a £50,000/year employee aren't earning the same thing, the freelancer might actually be earning less after overheads.

    The Rate-Setting Formula

    Step 1: Target annual income

    What you want to take home after tax and expenses. Be realistic, use your current salary as a baseline if you're transitioning from employment.

    Step 2: Add overhead costs

    Tax, NI, pension, insurance, equipment, accounting. For UK freelancers, add roughly 40-50% on top of your target take-home.

    Step 3: Divide by billable days

    Not 260 working days, more like 180-200 after holiday, sick days, admin, and quiet periods. That's your day rate.

    Step 4: Divide by billable hours

    5-6 billable hours per day, not 8. Divide your day rate by 5.5 for a realistic hourly rate that actually sustains your business.

    Related Money Tools

    Hourly RateSalary to hourly conversionTake-Home PayUK salary after taxProfit MarginCalculate business marginsSalary CalculatorConvert between pay periodsTimesheetTrack hours and earningsVAT CalculatorAdd or remove tax

    Part of a workflow

    UK Freelancer Workflow

    Pricing → Invoicing → VAT → Tax → Take-home. Six steps, every tool free.

    How to use this tool

    1

    Enter your target annual take-home income and annual business expenses

    2

    Set your effective tax rate, holiday and sick days, and billable hours per day

    3

    Click Calculate to see your hourly, daily, weekly, and monthly rates

    Common uses

    • Setting your freelance hourly and day rate
    • Calculating the rate needed to match an employee salary
    • Factoring in tax, expenses, and non-billable time
    • Planning income goals around realistic billable hours
    • Comparing rates across different freelance specialisms

    Share this tool

    Frequently Asked Questions

    Why is the freelance rate higher than an employee hourly rate?
    Freelancers must cover: tax, National Insurance, pension, holidays, sick days, equipment, software, insurance, accounting fees, and admin time. An employer covers all of these for employees. The true cost of an employee to an employer is 1.2-1.4x their gross salary.
    What are billable hours?
    Hours you can actually charge clients for. A typical freelancer bills 5-6 hours of an 8-hour day. The rest goes to admin, invoicing, marketing, pitching, learning, and running the business. Pricing based on 8 billable hours undervalues your time.
    Should I include business expenses?
    Yes, include everything: software subscriptions, equipment depreciation, professional insurance, accounting fees, co-working space, internet, phone, travel, and CPD. These are real costs that eat into your income. Most freelancers underestimate expenses by 20-30%.
    What tax rate should I use?
    Use your effective tax rate, the average across all bands, not your marginal rate. In the UK, a sole trader on £50,000 profit pays approximately 19.5% in total tax and National Insurance (Income Tax at 20% on taxable profit, plus Class 4 NIC at 6%). Class 2 NICs were abolished for most self-employed people from 6 April 2024, so they no longer add to the bill. The 25-30% effective rate applies at roughly £67,000 to £100,000 profit, where the 40% Higher Rate Income Tax band comes into play. If your profit is around £50,000, use 19-20% as your starting estimate and adjust upward as your income grows.
    How many billable days should I plan for?
    Start with 260 working days, subtract holidays (25-30), sick days (5-10), and admin/marketing days (20-30). Realistic billable days: 190-210 per year. New freelancers should plan conservatively (180 days) until they have a reliable pipeline.
    Should I charge hourly or daily?
    Day rates are standard for consulting, development, and design contracts. Hourly rates suit shorter engagements, ad-hoc work, or retainer arrangements. Daily rates are simpler to invoice and reduce the temptation to micro-track time.
    How do I know if my rate is competitive?
    Research rates on freelance platforms (Upwork, PeoplePerHour), job boards (Indeed, Otta), and community surveys (Hacker News 'Who's Hiring'). But platform rates are typically 30-50% lower than direct client rates. Your rate should reflect value delivered, not just market average.
    What about value-based pricing?
    Instead of hourly rates, price based on the value you deliver. A logo that generates £100,000 in brand value is worth more than 10 hours of design time. Value pricing works best for experienced freelancers with clear ROI for clients.
    Should I offer discounts for long-term contracts?
    A 5-10% discount for a 3-6 month commitment can be worthwhile, guaranteed income reduces your risk and marketing costs. But never discount more than 15%, and always define scope clearly. Open-ended discounts with scope creep destroy profitability.
    How do I raise my rates?
    Give existing clients 30-60 days notice. Apply new rates to all new clients immediately. Justify with market data, increased experience, or expanded scope. Most clients expect annual rate reviews. If nobody ever pushes back on your rate, it's probably too low.
    What about IR35 and contractor status?
    IR35 determines whether you're taxed as an employee or self-employed. Inside IR35, the client deducts tax and NI before paying you. Outside IR35, you handle your own tax through your limited company. IR35 status significantly affects your take-home pay.
    Should I register for VAT as a freelancer?
    Mandatory if taxable turnover exceeds £90,000. Voluntary registration below this threshold lets you reclaim VAT on expenses, but means charging clients 20% more (which they can reclaim if VAT-registered). B2B freelancers often benefit; B2C usually don't.

    Results are for general informational purposes only and should be checked before use. They are not professional advice. See our Disclaimer and Terms of Service.