Freelance Rate Calculator
Find out the minimum hourly and day rate you need to charge to hit your target take-home pay.
What should you charge as a freelancer?
Most people who go freelance pick a day rate by looking at what others charge, adding a bit, and hoping for the best. The problem with that approach is that it starts from the market rather than from what you actually need to earn. This calculator starts from the other end: your target take-home, and works outward to the rate you must charge to reach it.
We start with your target annual take-home pay. We gross that up through Income Tax and Class 4 National Insurance - the self-employed equivalent of employee NI - to find the gross income you need to generate before tax. We add your pension contribution target and any annual business costs, which gives the total revenue your freelance work needs to produce. We then divide by your billable hours to find the minimum rate per hour and per day.
Billable efficiency is the most important input most freelancers underestimate. Not every working hour is billable. Admin, invoicing, chasing payments, marketing, professional development, and non-billable client calls all consume time you cannot charge for. The default of 60% reflects a realistic working pattern - 37.5 hours per week, with around 22 hours per week billable. If you are in a discipline where utilisation is higher, adjust it upward. If you are newer to freelancing and still building a client base, 50% may be more realistic.
The employed salary equivalent is the number most freelancers have never seen clearly stated. It shows what you would need to earn as an employee to match the gross income your freelance work must generate - and it is almost always higher than people expect, because it has to cover the employer's NI, pension contributions, holiday pay, and sick pay that employment provides automatically but freelancing does not.
If you are VAT registered, the calculator shows both the ex-VAT and VAT-inclusive versions of your rate. You charge the VAT-inclusive rate to VAT-registered clients, collect the VAT, and pass it to HMRC. Your income is the ex-VAT figure.
Frequently asked questions
Why is the employed salary equivalent so much higher than my target take-home?
Because as a freelancer you are responsible for costs that employment covers invisibly. Your rate must cover Income Tax and Class 4 NI on your profits, employer-equivalent pension contributions if you want them, business costs such as software, insurance, and equipment, and the fact that you do not get paid for holidays, bank holidays, or sick days. When you add all of those up, the gross income a freelancer needs to match a given employed take-home is typically 40-60% higher than the take-home figure itself.
Should I charge VAT?
You must register for VAT if your annual turnover exceeds £90,000. Below that threshold, registration is optional. Registering voluntarily can make sense if your clients are VAT-registered businesses - they reclaim the VAT you charge, so your rate costs them no more, and you benefit from reclaiming VAT on your own business purchases. If your clients are individuals or small businesses that cannot reclaim VAT, adding 20% to your rate may make you less competitive. The decision depends on your client base.
What is a realistic billable efficiency for a new freelancer?
For someone in their first year of freelancing, 50% is a more realistic starting point than 60%. Building a client pipeline takes time, and gaps between projects are common early on. As your reputation grows and referrals increase, utilisation tends to improve. If you are moving from a contract role with a guaranteed client, 70-75% may be achievable from day one. Use the efficiency slider to model different scenarios and understand how strongly your rate needs to change if utilisation drops.
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