What gaps between contracts do to your day rate
Contractors are only paid while they're on a contract. Every week spent looking for the next role has to be paid for by the days you do work. This table uses your numbers above.
| Weeks between contracts | Billable days / year | Day rate needed |
|---|---|---|
| Enter your numbers above to see this table. | ||
How to use this calculator
- Enter your take-home goal and yearly costs, such as insurance, accountancy fees and equipment.
- Add your tax rate. Use your combined rate for all income taxes. An accountant can confirm it.
- Count your days off. Include vacation, public holidays and a few sick days.
- Be realistic about gaps. Most contractors spend some weeks each year between contracts.
How it's calculated
There are 260 weekdays in a typical year (52 weeks × 5 days). Expenses are added after the tax step because business costs are usually tax-deductible.
Worked example
Priya is an IT contractor in the UK who wants to take home £60,000 a year. She has £5,000 of business costs, estimates 30% total tax, takes 33 days off (25 days of holiday plus 8 bank holidays) and expects 4 weeks between contracts. Her working day is 7.5 hours.
Priya needs at least £438.23 a day. With no gaps between contracts she could charge £399.62, so those 4 weeks add about £39 to every day she works.
Tip: public holidays differ by country. England and Wales have 8 bank holidays a year, and the US has 11 federal holidays. Check your own region and add them to your days off.
Frequently asked questions
What's the difference between a day rate and an hourly rate?
A day rate is a fixed price for a working day, whatever the exact hours. It's common for contractors, especially in the UK. An hourly rate charges for each hour worked. This calculator shows both so you can compare.
How many weeks between contracts should I allow?
It depends on your field and the job market. Many contractors plan for 4 to 8 weeks a year. If you're new to contracting or your market is quiet, allow more.
Does this include IR35 for UK contractors?
No. If a UK contract is "inside IR35", you're taxed much like an employee, which changes your take-home pay. Use HMRC's Check Employment Status for Tax (CEST) tool and speak to an accountant about any contract you're unsure of.
Should my day rate include pension or retirement savings?
Yes, if you want to save for retirement. Add what you plan to save each year to your take-home goal, or to your business expenses if you pay into a pension through your business.