Most day-rate calculators just divide a salary by 220. This one works backward through real income tax, Class 4 NI, your actual billable days and business costs.
The common shortcut — take your old salary, divide by roughly 220 working days — ignores three things that matter enormously: you don't bill every working day (admin, marketing, gaps between contracts), you pay tax and National Insurance differently as self-employed, and you now carry business costs your employer used to absorb. This calculator works backward from what you actually want to take home, through real 2026/27 tax rules, to a day rate that accounts for all of it.
Self-employed profits are taxed through the same income tax bands as employment income (including the Scotland-specific bands if you're based there). National Insurance works differently though: you pay Class 4 NI at 6% on profits between £12,570 and £50,270, and 2% above that. Class 2 NI was abolished as a mandatory flat-rate payment from April 2024 — if your profits are above the £7,105 Small Profits Threshold, you get State Pension qualifying years automatically credited with nothing to pay.
Targeting £40,000 take-home, with £3,000/year in business costs, 6 weeks off, and 4 billable days out of 5 working days each week: that's 184 billable days/year. To net £40,000 after tax and NI, you need roughly £49,638 in profit — plus the £3,000 costs — for £52,638 in total revenue needed. Divided across 184 billable days, that's a day rate of £286 (£38/hour on a 7.5-hour day).