Reviewed 24 August 2026
The quick answer
Convert a contractor rate by multiplying or dividing it by the billable time in the target period. For example, £50 per hour over eight billable hours is £400 per day. Extending that £400 day rate across five days and 46 working weeks gives £92,000 gross annual revenue.
Do not automatically use 52 weeks. Holidays, illness, gaps between contracts, training, administration and business development may all reduce billable time.
Rate, revenue and take-home pay are different
- Contractor rate
- The amount agreed for one billable hour or day.
- Gross revenue
- The total invoiced before business costs, tax and personal deductions.
- Take-home pay
- What remains after the relevant company, tax, pension and expense treatment.
- Salary equivalent
- A broader employment comparison that may include paid leave, pension, benefits and employer costs—not just a rate conversion.
A four-step conversion method
- Start with a gross rate. VAT should remain separate; VAT collected for HMRC is not contractor income.
- Choose billable time. Use hours and days that a client will pay for, excluding unpaid breaks and non-billable administration.
- Use a realistic working year. Reduce working weeks for planned leave, public holidays, illness, training and expected gaps between contracts.
- Keep the output labelled correctly. A gross revenue estimate is not a promise of work, a salary comparison or a take-home-pay calculation.
Worked example: a £500 day rate
Five days for 46 weeks
£500 × 5 × 46 = £115,000 estimated gross annual revenue.
Four days for 44 weeks
£500 × 4 × 44 = £88,000 estimated gross annual revenue.
The £27,000 difference does not come from a different rate. It comes entirely from the assumed number of billable days. This is why Contractor Calculator exposes working-pattern inputs instead of hiding them behind a fixed annual multiplier.
To express the same £500 day rate as an hourly rate, divide by billable hours. An eight-hour day is £62.50 per hour; a seven-and-a-half-hour day is about £66.67 per hour.
Use the planner from any starting point
- Start with an hourly rate to compare a proposed hourly amount with daily and annual equivalents.
- Start with a day rate to plan gross annual billing under different working-year assumptions.
- Start with monthly revenue to test the effective rate of a recurring retainer.
- Start with an annual target to work backwards to the required hourly and day rates.
The contractor planning hub explains the available modes and related guidance.
Common questions
Should VAT be included in the rate?
Enter the contractor rate before VAT. VAT charged on an invoice is normally collected on behalf of HMRC and should not be treated as gross contractor revenue.
How many working weeks should be used?
The expected working pattern should begin with 52 weeks, then subtract planned leave, relevant public holidays, training and a realistic allowance for sickness or gaps between contracts.
Is annual contractor revenue comparable with salary?
Not directly. Employment can include paid leave, pension contributions, sick pay, insurance, equipment and other benefits. Contractor revenue may need to fund those items as well as business costs and tax.
Why does the calculator show gross revenue?
Tax and take-home pay depend on legal structure, expenses, pension choices and personal circumstances. Keeping the calculator to a transparent gross conversion avoids presenting a generic tax estimate as personal advice.