What should you charge as a freelancer?

Work out the hourly and day rate you need to hit your target take-home pay, after tax, costs, holidays and unpaid admin time.

£
£
weeks
hours
%
Optional: other income, pension, student loan
£
£
£0
per hour, minimum to hit your target
£0per 7.5-hour day
0billable hours a year
Take-home pay£0
Plus income tax£0
Plus Class 4 National Insurance£0
Plus student loan£0
Plus pension contributions£0
Plus business costs£0
Revenue you need to invoice£0

An estimate, not tax advice. Rates exclude VAT. Add a buffer if you want a safety net or to save for slow months.

What if you changed your working year?

The hourly rate you would need at different levels of time off and billable hours, using your other numbers above.

How to work out your freelance hourly rate

Many new freelancers take the salary they earned as an employee and divide it by the hours in a year. That figure is too low. As a freelancer you pay your own tax, buy your own equipment, take unpaid holidays and spend a lot of time on work nobody pays you for.

The calculation works backwards from what you want to take home:

  1. Start with your target take-home pay for the year.
  2. Add the tax and National Insurance you need to set aside, so you know the profit you must make before tax.
  3. Add your business costs, such as software, insurance, equipment and accountancy fees. This gives the revenue you must invoice.
  4. Work out your billable hours: weeks worked, multiplied by hours per week, multiplied by the share you can actually bill.
  5. Divide revenue by billable hours.

In short: rate = (take-home / (1 - tax rate) + costs) / billable hours.

Why is a freelance rate higher than an employee's hourly pay?

An employee is paid for holidays, sick days, training and admin time, and an employer covers pension, equipment and part of the tax bill. A freelancer pays for all of that out of their rates. A rate that looks high next to a salary is often just covering those costs.

What is a realistic billable percentage?

Most freelancers can bill between 50% and 75% of their working week. The rest goes on finding clients, sending quotes and invoices, replying to emails and doing accounts. Use the what-if table above to see how much your rate changes if you bill less or more.

How much should I set aside for tax?

It depends on your profit, your other income and where you live. This calculator works it out from the UK income tax bands (with separate Scottish bands), Class 4 National Insurance, and optional pension contributions, other income and student loan repayments, so the percentage rises as you earn more. Always check the result with an accountant or HMRC guidance.

What is a good day rate?

A day rate is your hourly rate multiplied by the hours in a working day. This calculator uses 7.5 hours. Rates also depend on your field, experience and the value you deliver, so use the result as the minimum you need and not as the price you must charge.

Does this include VAT?

No. The rates shown are before VAT. If you are VAT registered, add VAT on top of your invoices and keep it separate from your own income.