Contracting to Permanent Salary Calculator, 2026/27

Moving from contracting to a permanent role means translating a day rate into a fair salary comparison. Enter your day rate and typical working pattern to see the equivalent gross salary a permanent employer would need to offer to match it.

The contracting to permanent salary calculator runs on the rates and thresholds HMRC has published for the 2026/27 tax year, so the figures you see reflect the position your company is actually filing on rather than a historic set of bands. Change any input and the result recalculates immediately, with no sign-up and nothing sent anywhere.

If you are a director of a UK limited company, use it as a first look before a decision rather than as the decision itself. Assumes the contractor's annual billed income is the fair starting point for an equivalent permanent gross salary, before adjusting for the value of employee benefits not reflected here. Real company positions bring in other income, reliefs, group structures and prior year adjustments that a single page of inputs cannot see, which is why the workings are written out below under contractor, ir35 & umbrella. Read those, then check the numbers against your own accounts, and speak to us if anything looks materially different from what you expected.

Last reviewed 12 September 2026 for the 2026/27 tax year. Reviewed by Waqas Sagar, Member of ICAEW, Fellow of ACCA, Fellow of AAT.

Contracting to Permanent Salary Calculator

Your figures

Result, 2026/27

Equivalent permanent gross salary

£92,000

Estimated net take-home as an employee

£63,917

Total employer cost including employer NIC

£105,050

Current annual contracting income

£92,000

Illustration only, figures are based on the rates you have selected and the information entered. Please check your own position with us before acting.

Estimates for the 2026/27 tax year using published GOV.UK rates. Switch between 2026/27 and 2025/26 above.

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.

What this means for your company

Treat the result as a planning figure for the 2026/27 tax year. If it changes what you were about to do, take a director's salary, a dividend, a large asset purchase or a filing decision, check it against your own accounts first. We can review the position with you and confirm the tax treatment before you commit.

Frequently asked questions

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.

These calculators are provided for general illustration and do not constitute tax or financial advice. Results depend on the accuracy and completeness of the information entered, and on circumstances this tool cannot capture, including residence, other income, reliefs, group structures and prior-year positions. Rates and thresholds are those published by HMRC for the tax year selected and may change. You should not act, or refrain from acting, on the basis of these figures alone. For advice specific to your company, book a free consultation.

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