⚠ Estimates only. Based on 2026/27 HMRC rates. Contractor figures assume Outside IR35 with optimal salary + dividend unless toggled. Perm benefits are shown at face value. Not financial advice — consult an accountant for your specific situation.
Quick Answer
What day rate is equivalent to a £70,000 salary?
A £70,000 permanent salary with 5% employer pension has a total package value of around £73,500. To match this as a contractor outside IR35, you typically need a day rate of £400–£450/day (assuming 212 billable days and £3,000 in expenses). Inside IR35, you would need approximately £500–£550/day due to higher tax. Use the calculator above to see your exact figures.
When contracting wins vs when perm wins
Contracting is usually better when…
You are outside IR35
Your day rate is £450+ per day
You have in-demand skills with low bench risk
You are comfortable without employment protections
You can claim legitimate business expenses
Your spouse can hold shares for dividend splitting
With 5% employer pension and 212 billable days, you need roughly £400–£450/day outside IR35 to match a £70k perm package. Inside IR35, you need approximately £500–£550/day. This calculator shows your exact break-even rate.
How many billable days should I assume?
Most UK contractors bill 200–220 days per year. Start with 252 working days, subtract 25 for holidays and 10–15 for bench time (gaps between contracts). New contractors should allow more bench time initially.
Is contracting worth it compared to permanent?
Outside IR35 at day rates of £500+, most contractors earn 20–40% more take-home than equivalent permanent employees. Inside IR35, the advantage is much smaller — often only 5–10%. The key is your day rate, IR35 status, and how many days you can bill.
What benefits do I lose when I leave permanent?
Key losses: employer pension (typically 3–8%), paid holiday (25+ days), sick pay, life insurance, private health cover, bonus, and employment protections like redundancy pay. This calculator lets you value each one so you see the true comparison.
Ready to make the switch?
Get a personalised tax strategy showing exactly how much you would take home as a contractor — from AccTek's qualified UK accountants.
AccTek is a member firm of the Institute of Certified Practising Accountants (ICPA). Our accountants have a wide range of qualifications and accreditations from trusted professional bodies such as the AAT, ICPA, and ACCA.
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