Contractor vs Permanent
Compare a contractor day rate to a permanent salary. See the real take-home difference after holidays, pension, NI, and IR35 costs.
Take-home difference
+£1,713/mo contracting
Contractor
Ltd company — taxed as PAYE for simplicity
Permanent
Monthly take-home difference
+£1,713/mo contracting
+£20,554/yr
Contracting pays 40.18% more
You'd need a £104,800 permanent salary to match
Contractor take-home
£5,976/mo
£71,711/yr
Permanent take-home
£4,263/mo
£51,157/yr
Equivalent perm salary
£104,800
Your £500/day ≈ this permanent salary
Equivalent day rate
£334/day
To match £70,000 + benefits
Annual comparison
| Contractor | Permanent | |
|---|---|---|
| Annual gross | £110,000 | £70,000 |
| Business costs | −£1,700 | −£0 |
| Income tax | −£32,412 | −£15,432 |
| Employee NI | −£4,177 | −£3,411 |
| Take-home | £71,711 | £51,157 |
| Monthly | £5,976 | £4,263 |
| Effective daily | £326/day | £225/day |
What permanent includes (that contractors must self-fund)
Outside IR35 (simplified)
This calculation uses PAYE tax rates on the full gross for simplicity. Ltd company contractors typically take a low salary (e.g. £12,570) and the rest as dividends, which are taxed at lower rates — your actual take-home would likely be higher.