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    Hourly Rate Calculator

    Convert between annual salary and hourly rate for UK workers, freelancers, and contractors. Includes UK statutory holiday (5.6 weeks), IR35 contractor mode, and benchmarks against the UK National Living Wage.

    Free to use. Runs in your browser.

    Enter your annual salary to see your hourly rate, or vice versa. Based on a standard 37.5-hour UK working week and 5.6 weeks statutory holiday, or enter your own figures.

    Enter salary to find hourly rate

    Show day rate & client cost

    £

    Standard: 37.5-40 hours

    UK minimum: 5.6 weeks

    General information only. Rate and salary figures are estimates based on the hours and inputs you enter, shown before income tax and National Insurance, and are not financial or tax advice. For your take-home position or IR35 status, consult HMRC, a qualified accountant, or an FCA-regulated independent financial adviser.

    Methodology and sources

    Formula or method

    Two-direction conversion between annual salary and hourly rate. Salary to hourly: Hourly Rate = Annual Salary divided by ((52 minus Holiday Weeks) multiplied by Weekly Hours). Hourly to salary: Annual Salary = Hourly Rate multiplied by the same total working hours per year. Daily rate = Hourly Rate multiplied by (Weekly Hours divided by 5). Weekly rate = Hourly Rate multiplied by Weekly Hours. Monthly rate = Annual Salary divided by 12. In contractor mode, a suggested day rate is calculated as 1.5 times the employee-equivalent daily rate, and the employer National Insurance equivalent is calculated as 15% of the annual salary above the £5,000 secondary threshold, which is then added to the salary to show the true cost to the client.

    Basis and assumptions

    • Holiday entitlement defaults to 5.6 weeks, the UK statutory minimum under the Working Time Regulations 1998; the user may override this figure.
    • Weekly hours default to 40; the user may override to reflect their actual contracted hours.
    • Monthly rate is derived by dividing the annual salary by 12, not by counting calendar working days, so it does not account for variation in working days per month.
    • The contractor day-rate markup is a fixed 1.5x multiplier, representing the industry rule of thumb; actual markup requirements vary by contract type, IR35 status, and individual cost base.
    • Employer National Insurance is calculated at 15% on pay above the £5,000 secondary threshold, reflecting the rate and threshold effective from April 2025 under the Autumn Budget 2024 changes.
    • Benchmark comparison figures are hardcoded: UK average hourly rate £16.50, UK National Living Wage £12.71, London average hourly rate £22.00; these do not update automatically and may lag published figures.
    • All figures are gross (before income tax and employee National Insurance). Net take-home is not computed here.

    Key handling decisions

    • Default currency is GBP; AED, USD, and EUR are also available, but the benchmark comparison bar chart caption explicitly labels the reference figures as GBP and does not adjust them for other currencies.
    • The contractor employer NI calculation uses the April 2025 secondary threshold (£5,000) and rate (15%); if the user selects a non-GBP currency, the threshold still reads as a GBP figure and the output will be misleading.
    • Division by zero is prevented: if weeklyHours or holidayWeeks parse to zero, the fallback values (40 hours, 5.6 weeks) are substituted via the logical-OR pattern in the parse statements.

    What this tool does not decide

    • Whether a given rate is commercially appropriate for your skills, market, or sector; consult an accountant or specialist freelance adviser for rate-setting strategy.
    • Your IR35 employment status; check your contract using HMRC's Check Employment Status for Tax (CEST) tool at https://www.gov.uk/guidance/check-employment-status-for-tax and, where uncertain, seek advice from a qualified accountant or tax adviser.
    • Your actual income tax or employee National Insurance liability; use a dedicated take-home pay calculator or consult HMRC or a qualified accountant.
    • Whether an umbrella company, limited company, or employed arrangement is most tax-efficient for your circumstances; consult a qualified accountant or an FCA-regulated independent financial adviser.
    • The appropriate benchmark rate for non-GBP markets; the comparison figures are UK-specific and should not be used for salary benchmarking in the US, UAE, or Eurozone.

    Sources

    Last checked: 2026-06-17

    Why Your Hourly Rate Matters More Than Your Salary

    Your salary is a headline number, but your hourly rate tells the real story. Two people earning £40,000 a year could have wildly different hourly rates if one works 37.5 hours with 28 days holiday and the other works 45 hours with 20 days off. The first earns roughly £20.50/hour. The second earns about £16.60/hour.

    This distinction matters even more for freelancers and contractors. An employed person's £40,000 salary comes with sick pay, pension contributions, employer NI, and holiday pay baked in. A contractor needs to charge significantly more per hour to match the same total compensation.

    The industry rule of thumb: multiply the equivalent hourly employee rate by 1.3 to 1.5x to get a fair contractor rate. That accounts for the lack of benefits, admin time, business insurance, equipment, and the risk of gaps between contracts.

    UK Salary to Hourly Rate Quick Reference

    Annual SalaryHourly (37.5h)Hourly (40h)Day Rate
    £25,000£14.35£13.45£107.60
    £30,000£17.22£16.15£129.12
    £40,000£22.96£21.53£172.16
    £50,000£28.70£26.91£215.20
    £60,000£34.44£32.30£258.24
    £75,000£43.05£40.37£322.80
    £100,000£57.40£53.83£430.40

    What this means for you: These figures assume 46.4 working weeks per year (52 weeks minus 5.6 weeks UK statutory holiday). Your actual rate depends on your specific working hours and holiday entitlement. The calculator above lets you adjust both.

    Contractor Day Rates by Sector

    SectorJunior Day RateMid Day RateSenior Day Rate
    Software Development£300 to 400£450 to 600£600 to 900
    Data / Analytics£350 to 450£500 to 650£650 to 850
    Project Management£300 to 400£400 to 550£550 to 750
    Design (UX/UI)£250 to 350£350 to 500£500 to 700
    Finance / Accounting£300 to 400£400 to 600£600 to 900

    What this means for you: London rates are typically 10 to 20% higher. IR35 inside contracts command lower day rates (roughly 60 to 80% of outside-IR35 equivalents) because the client handles tax and NI obligations.

    Employee vs Contractor: The Hidden Cost Gap

    What Employees Get "Free"

    Employer pension contributions (3%+), employer NI (15% above the £5,000 secondary threshold), paid holiday (5.6 weeks), sick pay, maternity/paternity pay, training budget, equipment, and employment rights. The true cost to an employer is typically 1.2 to 1.4x the gross salary.

    What Contractors Must Cover

    Professional indemnity insurance, public liability, accountant fees, business banking, equipment, software licences, pension contributions, holiday fund, and gaps between contracts. These typically add 20 to 40% to your base rate.

    Related Money Tools

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    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 annual salary or hourly rate

    2

    Adjust weekly hours and holiday entitlement

    3

    View your rate breakdown across all time periods

    Common uses

    • Converting annual salary to hourly rate for job comparisons
    • Working out your contractor or freelance day rate
    • Comparing part-time vs full-time compensation
    • Calculating the impact of unpaid overtime on your real hourly rate
    • Benchmarking your rate against industry averages

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    Frequently Asked Questions

    How do I convert salary to hourly rate?
    Divide your annual salary by the number of working hours per year. With 40 hours/week and 5.6 weeks holiday: 46.4 working weeks x 40 hours = 1,856 hours. A £40,000 salary / 1,856 = £21.55/hour.
    How many working hours are in a year?
    With a standard 40-hour week and 5.6 weeks UK statutory holiday, there are 1,856 working hours. With 37.5 hours/week, it's 1,740 hours. The exact number depends on your contract hours and holiday entitlement.
    What is the UK national living wage?
    From April 2026, the UK National Living Wage is £12.71/hour for workers aged 21 and over. This is the statutory minimum adult rate published on GOV.UK and is separate from the voluntary Real Living Wage set by the Living Wage Foundation.
    How do I work out my contractor day rate?
    The industry standard is 1.3-1.5x the equivalent employee hourly rate, multiplied by your working hours per day. A £40,000 employee equivalent earns roughly £21.55/hour, so a contractor would charge £28-32/hour, or £224-258/day.
    Why should contractors charge more than employees?
    Contractors must cover: no paid holiday, no sick pay, no employer pension, no employer NI savings, accountant fees, business insurance, equipment, software, and gaps between contracts. These add 30-50% to the base rate needed to match employee compensation.
    What is a good hourly rate in the UK?
    The UK median hourly rate is approximately £16.50. London averages £22/hour. 'Good' depends on your industry and experience, a junior developer might earn £18-22/hour while a senior consultant commands £50-100/hour.
    How does IR35 affect contractor rates?
    IR35 inside contracts typically pay 60-80% of outside-IR35 equivalents. Inside IR35, the end client handles tax and NI, so the contractor receives less but has employment-like tax treatment. Check your contract status with HMRC's CEST tool.
    How do I factor in holiday when calculating hourly rate?
    UK employees get a minimum 5.6 weeks (28 days) paid holiday. This means you're paid for 52 weeks but only work 46.4. When calculating hourly rate from salary, divide by actual working hours, not total calendar hours.
    What's the difference between gross and net hourly rate?
    Gross hourly rate is before tax and deductions. Net is what hits your bank account. On a £40,000 salary, your gross is ~£21.55/hour but your net (after tax and NI) is roughly £16.50/hour. Use our Take-Home Pay calculator for exact figures.
    Should I include overtime in my hourly calculation?
    Regular unpaid overtime dramatically reduces your effective hourly rate. If you earn £40,000 on a 37.5-hour contract but routinely work 50 hours, your real hourly rate drops from £22.96 to £17.22. Track actual hours to know your true rate.
    How do part-time hours affect the calculation?
    Part-time employees earn the same hourly rate as full-time equivalents, their annual salary is simply lower. A 20-hour/week role paying £20,000 has the same hourly rate as a 40-hour role paying £40,000. Adjust weekly hours in the calculator above.
    What's the average freelance rate in the UK?
    UK freelance rates vary enormously: writers £20-50/hour, graphic designers £25-60/hour, web developers £35-80/hour, management consultants £75-200/hour. London rates are 15-25% higher. Platform rates (Fiverr, Upwork) tend to be significantly lower than direct client rates.

    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.