Why your day rate is not your wage

A £300 day rate does not mean £300 in your pocket. Before you see any of it, that money has to cover:

• Business costs — van finance, fuel, insurance, tools, phone, accountant, software, certification, waste disposal. For most sole traders this runs £10,000 to £18,000 a year.

• Income Tax and Class 4 National Insurance on what is left.

• The days you are not on site — holidays, bank holidays, illness, and every hour spent quoting, chasing invoices and buying materials.

Work through it and a £300 day rate at five days a week, on typical costs, comes out around £38,000 take-home. That is a decent living. But the same rate at four days a week is not four-fifths of that — because your business costs do not drop when your days do.

The days you can actually charge for

There are 260 weekdays in a year. Almost nobody bills 260.

Take four weeks off, the eight bank holidays and five days of illness, and you are at 227. Take off half a day a week for quoting, paperwork and merchant runs, and you are at roughly 203 chargeable days. That is the number your rate has to be built on — and it is 22% lower than the one most people use in their head.

If you are pricing off 250 days when you actually bill 203, you are 19% short before you start.

How much you need to charge

The calculator works it out in four steps:

1. Start with your take-home target. Not turnover. The money you want in your account.

2. Gross it up through tax. On the 2026/27 basis that means a £12,570 Personal Allowance, Income Tax at 20% up to £50,270 and 40% above, and Class 4 National Insurance at 6% between £12,570 and £50,270 then 2%.

3. Add your business costs. These come out of turnover, so they have to be earned on top.

4. Divide by your chargeable days. Not weekdays — chargeable days.

The result is the minimum you need to charge to hit your number. Anything above it is margin for the year that goes wrong.

Charging by the hour instead

The calculator shows an hourly equivalent on an eight-hour day. Two things to watch:

• Hourly pricing punishes you for being quick. Get faster and you earn less for the same job. If you are experienced, price by the job or the day.

• Minimum call-out charges exist for a reason. A twenty-minute job that takes forty minutes of driving is not a twenty-minute job.

What the day rate does not cover

Three things sit outside the calculation and all three catch people out.

Payments on account. In your first year of self-employment, the bill due on 31 January is not just last year’s tax — HMRC also asks for half of next year’s up front, and another half on 31 July. On £49,945 of profit that turns a £9,718 tax bill into roughly £14,576 in January and £4,859 in July. The calculator flags this once your tax bill goes over £1,000, which is the threshold at which payments on account kick in. Budget for it in year one or it will hurt.

Student loan. Repaid through Self Assessment, on top of Income Tax and National Insurance. Plan 2 takes 9% of everything above £29,385; Plan 1 above £26,065; Plan 5 above £25,000; postgraduate loans another 6% above £21,000, and they stack. On £49,945 of profit a Plan 2 borrower repays about £1,850 a year. Set the plan in the calculator and it is built into your rate.

Pension. A personal pension contribution is not a business expense. It does not reduce your trading profit, and it never reduces Class 4 National Insurance — you get basic-rate relief at source from the provider, and higher-rate relief by extending your basic rate band on the return. So pension money comes out of your take-home, which is why the calculator asks you to include it in your target rather than entering it separately.

Common questions

What is a good day rate for a UK tradesperson?

It depends far more on your costs and your chargeable days than on your trade. Rather than copy someone else’s number, put your own costs and days into the calculator — two electricians in the same town can need rates £80 apart and both be right.

Should I charge VAT on top of my day rate?

Only if you are VAT registered. You must register once your rolling 12-month turnover goes over £90,000. Below that it is a choice, and it depends on whether your customers can reclaim it.

How do I put my rate up with existing customers?

Give notice, do it on a date rather than a job, and say it once without apologising. Most customers expect it annually. The ones who leave over a 5% increase were usually the difficult ones.

Should I include a pension?

Yes, if you can. There is no employer paying into one for you. Put the figure into the calculator and it will be built into the rate rather than being something you find money for at the end of the year.

Does this cover Scotland?

Not yet. Scotland sets its own Income Tax bands, so the tax figures here apply to England, Wales and Northern Ireland.

Related guides

• How much should you charge? Day rates and pricing for UK trades

• How to price a job and make a profit

• How much should you set aside for tax as a sole trader?

Written and reviewed by the TradePilot team. Last reviewed 2 August 2026. Figures on this page use the 2026/27 tax year for England, Wales and Northern Ireland, and are reviewed every April. We are not accountants — this is general information, not advice.