Contracting to Permanent Salary Calculator, 2026/27

How this is calculated

The calculator multiplies your day rate by your typical working pattern and the number of weeks you actually work in a year, after allowing for unpaid weeks between contracts, to arrive at your real annual contracting income. This figure is then used as the starting point for an equivalent permanent salary, since a permanent role would pay you for 52 weeks including holiday.

Net take-home pay as an employee is calculated using the 2026/27 personal allowance and tax bands together with employee NIC, while the employer cost figure adds employer NIC on top to show what a permanent employer would actually need to budget for the role.

Why a straight income match understates fair value

A permanent salary matching your current contracting income does not automatically make you better off, because contracting income already has to cover gaps between contracts, your own pension contributions, insurance and accountancy fees, none of which a permanent employee needs to fund personally. A fair negotiation often starts from this equivalent figure and then adds value for benefits you would lose, such as employer pension contributions and paid holiday.

On the other hand, contracting income is typically extracted more tax-efficiently through a mix of salary and dividends via a limited company, so the equivalent permanent salary needed to match your actual take-home pay is often higher than your gross billed income alone would suggest.

What to check before accepting an offer

Compare the permanent employer's pension contribution rate, which is a genuine addition to total reward beyond salary, against what you were setting aside yourself as a contractor. Also check notice periods, bonus structures and any restrictive covenants, all of which differ significantly from a typical contracting arrangement and affect the real value of an offer.

If you are still deciding between staying as a contractor and going permanent, running the figures through a full contract comparison alongside this conversion gives a more complete picture of the trade-offs involved.

How do I convert a day rate into an annual salary equivalent?

Multiply the day rate by the number of days you typically work per week and the number of weeks you actually bill in a year, after allowing for gaps between contracts, holidays and sick time, to get a realistic annual income figure to compare against a salary offer.

Should I ask for more than my contracting income when going permanent?

It is common to negotiate above your straight contracting income equivalent, since a salary is normally taken home less tax-efficiently than contracting income and does not include the flexibility contracting offers, though employer pension contributions and paid leave help offset this.

What benefits should I value when comparing a permanent offer?

Employer pension contributions, paid holiday, sick pay, private medical insurance, life assurance and any bonus scheme all add real value beyond the headline salary and should be weighed against what you currently fund yourself as a contractor.

Does going permanent always mean paying more tax?

Not necessarily more tax overall, but employment income is taxed through PAYE with employee NIC on the full amount, whereas contracting income through a limited company can be extracted more tax-efficiently via dividends, so take-home pay often falls when moving to an equivalent gross salary.