Why getting your day rate right matters
Undercharging is one of the most common mistakes new UK freelancers make. Unlike a salary, your day rate must cover not just your take-home pay, but also Income Tax, National Insurance, holiday time, pension contributions, business costs and periods without work.
Step 1: Start with your desired take-home pay
Begin with the annual take-home salary you want to achieve. For example: £40,000 per year net.
Step 2: Account for tax and NI
As a sole trader, you pay Income Tax and Class 4 National Insurance on your profits. To net £40,000, you typically need gross earnings of around £55,000–£60,000 depending on your exact situation and allowances. Always check with an accountant for your specific circumstances.
Step 3: Add your business costs
Your day rate must also cover annual business expenses such as:
- Software and subscriptions (e.g. invoicing, design tools)
- Professional indemnity insurance
- Accountancy fees
- Equipment and home office costs
- Marketing and website
- CPD and training
Add these up and divide by your billable days to get a per-day cost figure.
Step 4: Calculate your billable days
A typical UK working year has around 260 working days. From this, subtract:
- 25 days annual leave
- 8 bank holidays
- 10–15 days for admin, business development and sick days
- Buffer for periods between contracts (typically 15–20%)
This leaves roughly 180–200 billable days per year for most freelancers.
Step 5: Calculate your day rate
Divide your total annual gross requirement (including tax and costs) by your billable days:
Example: £58,000 total gross requirement ÷ 190 billable days = £305 per day
How does your rate compare?
Average UK freelance day rates by sector (approximate 2025 figures):
- Web / Software development: £350–£600/day
- Graphic / UX design: £250–£450/day
- Marketing / copywriting: £200–£400/day
- Consulting / strategy: £400–£800/day
- Accounting / finance: £300–£500/day
Create invoices for your day rate with invly
Once you know your rate, invly makes it easy to create professional invoices in seconds. Add line items with your day rate and quantity, apply VAT if registered, and send directly to clients. Start free — no card required.