How to work out your day rate: a UK trades guide

Your day rate is your take-home target plus your business costs plus tax and National Insurance, divided by the days you can actually bill. Say you want to take home £35,000 a year, your costs come to £12,000 and you can bill 200 days. As a sole trader in England in 2026/27, you need about £275 a day, before materials and VAT.

Day-rate calculators for office contractors often use a rule of thumb from interim management: (annual basic salary + 30%) ÷ 220 days (Ellwood Atfield's day rate calculator). The 30% stands in for lost benefits such as holiday pay and pension, not for a van, tools or insurance. And its 220 days aren't built from the time you lose to quoting, driving between jobs or bad weather. For a tradesperson, those costs and unpaid days decide whether a rate pays.

Work through the four numbers below in order, fill in the worksheet, check the result against what UK trades charge, then turn it into a quote. Tax rates, bank holidays and market rates were checked on 29 October 2026.

Key Takeaways

• Day rate = (take-home target + business costs + tax and National Insurance) ÷ billable days.
• A sole trader in England who wants £35,000 take-home with £12,000 of costs needs about £275 a day over 200 billable days in 2026/27.
• Count the costs a salary-based formula leaves out: van, tools, insurance, scheme fees and lead fees.
• Plan on nearer 200 billable days than 260. Dividing by 260 instead gives £211 a day and leaves the year £12,665 short.
• Your day rate is a floor, not the price: the quote adds materials, other costs and VAT if you're registered.

The day rate formula

Day rate = (take-home target + business costs + tax and National Insurance) ÷ billable days

The top half of the formula is the turnover the business needs in a year. Billable days are the days a customer pays for, not every day you work.

A worked example

These are assumed figures for a sole trader in England, at 2026/27 tax rates:

1. Take-home target: £35,000.
2. Business costs: £12,000 a year, broken down in Step 2.
3. Profit needed: £42,881. Income tax (£6,062) and Class 4 National Insurance (£1,819) take £7,881 of it, which leaves £35,000. Step 3 shows the working.
4. Turnover needed: £35,000 + £12,000 + £7,881 = £54,881.
5. Day rate: £54,881 ÷ 200 billable days = £274.40. Call it £275.
6. Hourly equivalent: £274.40 ÷ 8 billable hours = £34.30.

Two shortcuts that can mislead you

Dividing by 260 days (52 weeks of five days). £54,881 ÷ 260 = £211.08, or £211 a day. But you won't bill 260 days. At 200 real billable days, £211.08 a day brings in £42,216, leaving the year £12,665 short of the £54,881 it needs. The van and the insurance still get paid, so the shortfall comes out of your pay.

The office-contractor rule. (Annual basic salary + 30%) ÷ 220 days starts from a gross salary, not take-home pay, and its 30% uplift is there for lost benefits such as holiday pay and pension. It has no line for the £12,000 your van, tools and insurance cost, so if it lands near your number, that's luck: change your costs and its answer doesn't move. Its 220 days are also 20 more than the worked example can bill, so a rate set over 220 days earns about 9% less across 200 real ones.

Step 1: decide what you want to take home

Your take-home target is the money you want to keep for the year after business costs, tax and National Insurance. Start from your household budget, or from your current pay after tax if you're leaving a job: Step 3 adds the tax back on.

Remember what an employer used to cover: paid holiday, sick pay and perhaps pension contributions. Step 4 leaves holiday and sickness out of your billable days. If you want to save into a pension, add the yearly amount to your target.

For a floor, the National Living Wage is £12.71 an hour from 1 April 2026 for workers aged 21 and over (GOV.UK's minimum wage rates). Spread your target over every hour you'll work, including quoting, travel and paperwork. If it comes to less than that, the target is too low.

Step 2: add up your business costs

Business costs are everything the business spends in a year that you don't charge to a particular customer. They're easy to under-count, because many are small or paid once a year, so work from the last twelve months of bank statements. For a tradesperson, the list covers:

• Van: finance or lease, fuel, insurance, servicing, tyres, road tax and parking.
• Tools and consumables: new kit, repairs, blades, bits, fixings and sealant.
• Insurance: public liability and any other cover you hold.
• Certification and scheme fees: Gas Safe, NICEIC or NAPIT, CSCS cards and renewals.
• Office costs: accountant, phone, data and software.
• Advertising and lead fees: your website, directory listings and pay-per-lead sites.
• Workwear and training.

The worked example uses these illustrative figures, not averages for any trade. Replace every line with your own.

For a quick check on the van, HMRC's 2026/27 flat rate for cars and goods vehicles is 55p a mile for the first 10,000 business miles (45p before 6 April 2026), then 25p (simplified expenses for vehicles on GOV.UK). That's £5,500 at 10,000 miles: a sense check, not a substitute for your real costs.

Leave out materials you buy for a particular job and charge to that customer. They go on the quote with your margin, so counting them here would charge for them twice.

Step 3: allow for tax and National Insurance

Price on profit after tax. Your rate has to earn enough profit to leave your take-home target once income tax and National Insurance are paid.

This step is for sole traders. If you trade through a limited company, your pay comes as salary and dividends and the company pays corporation tax, so ask your accountant to work out the tax instead.

For a sole trader in England, Wales or Northern Ireland, the 2026/27 rates are:

• Income tax: nothing on the first £12,570 (the personal allowance, tapered away above £100,000), then 20% up to £50,270, 40% up to £125,140 and 45% above that (income tax rates on GOV.UK).
• Class 4 National Insurance: 6% on profits between £12,570 and £50,270, and 2% above that (self-employed National Insurance rates on GOV.UK).
• Class 2 National Insurance: nothing to pay once profits reach £7,105, because it's treated as paid (same GOV.UK National Insurance page).

The tax on the worked example

The worked example's £42,881 profit sits in the 20% band:

• Profit above the personal allowance: £42,881 less £12,570 = £30,311
• Income tax: £30,311 × 20% = £6,062
• Class 4 National Insurance: £30,311 × 6% = £1,819
• Left after tax: £42,881 less £6,062 less £1,819 = £35,000

These sums are an estimate, not tax advice. They ignore student loans, pension tax relief and other income, so ask an accountant to check your figures.

If you live in Scotland

Scotland's income tax is different. The 2026/27 Scottish bands are 19% to £16,537, 20% to £29,526, 21% to £43,662, 42% to £75,000, 45% to £125,140 and 48% above that (Scottish Income Tax on GOV.UK). Class 4 is the same UK-wide, but your profit figure will differ from the example.

Making Tax Digital, CIS and VAT

Making Tax Digital adds admin. Sole traders and landlords with qualifying income over £50,000 have had to use Making Tax Digital for Income Tax since 6 April 2026. The threshold falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028 (GOV.UK's Making Tax Digital eligibility guidance, updated 26 March 2026). It means admin every quarter, so count the time in Step 4.

CIS deductions don't change the rate. If you work for contractors under the Construction Industry Scheme, they deduct 20% from the labour part of your payments (30% if you're not registered, nothing if you have gross payment status). Those deductions count as advance payments towards your tax and National Insurance bill (GOV.UK's guide for CIS subcontractors). VAT and materials you paid for come off before the deduction (GOV.UK's guide for contractors). Work out your rate the same way; CIS changes when you pay the tax, not how much, though it does hold back cash until your tax return.

VAT sits outside the day rate. If you're VAT registered, VAT goes on top of your day rate, on the quote.

Step 4: count the days you can actually bill

Plan on about 200 billable days a year, not 260. In the worked example, 2027's 261 weekdays break down like this, for a sole trader in England or Wales:

• Bank holidays: 8 in England and Wales in 2027, against 9 in Scotland and 10 in Northern Ireland (UK bank holidays on GOV.UK).
• Holiday: 20 days. With the bank holidays that makes 28 days off, the same as an employee's statutory 5.6 weeks on a five-day week, which can include bank holidays (holiday entitlement on GOV.UK).
• Sickness: 5 days.
• Quoting, site visits and admin: 20 days, about half a day a week.
• Travel, weather and gaps between jobs: 8 days.
• Left to bill: 200 days.

The sickness, admin and travel figures are assumptions, not statistics, so replace them with your own. If quotes, site visits and paperwork take a full day a week, double the admin line. If you work outdoors, check how many days the weather cost you last year. In Scotland or Northern Ireland, take off one or two more days for the extra bank holidays.

Every unpaid day you add raises the rate you need. Every one you win back, by quoting faster or grouping jobs to cut travel, lets the same rate earn more.

Work it out yourself: a day rate worksheet

Put your own numbers into the calculator. It opens on the worked example and shows its working.

To do it on paper instead, fill in each blank; the worked example's figures are in brackets for checking.

1. A. Take-home target, plus anything you want to save into a pension: £______ (£35,000)
2. B. Business costs from Step 2, without materials you charge on: £______ (£12,000)
3. C. Tax and National Insurance at the Step 3 rates, for England, Wales or Northern Ireland while your profit stays under £50,270:
   • Profit needed = (A less £3,268) ÷ 0.74 = £______ (£42,881)
   • C = profit needed less A = £______ (£7,881)
4. D. Billable days from Step 4: ______ (200)
5. Day rate = (A + B + C) ÷ D = £______ (£54,881 ÷ 200 = £274.40)
6. Hourly rate = day rate ÷ hours you bill a day = £______ (£274.40 ÷ 8 = £34.30)

The £3,268 is 26% of the £12,570 personal allowance, and 0.74 is what each pound of profit above it leaves after 20% income tax and 6% Class 4. Above £50,270 of profit the shortcut underestimates your tax, because higher rates start there. If C comes out below zero, write 0. For Scottish income tax, use the Scottish bands instead.

Read the result as a floor: the least a day of your labour can sell for and still hit your target, before materials and VAT.

What UK trades charge a day in 2026

The figures below come from Checkatrade, "How much do tradespeople cost in the UK in 2026?". In its table, most trades fall between £240 and £500 a day, with electricians and plumbers at the top and labourers and gardeners at the bottom. The table is marked "Last updated: October 2026", and Checkatrade describes its figures as ballpark averages for homeowners. It says prices are higher in London. These are Checkatrade's figures, not ours.

The worked example's £275 is below what Checkatrade gives for builders, electricians, kitchen fitters, plasterers, plumbers and roofers, and near the bottom of the range for bricklayers, carpenters, painters and decorators, scaffolders and tilers. If your own result sits low for your trade, you may have room to charge more, or you may have missed a cost or counted too many billable days.

Day rate, hourly rate or a fixed price?

Use your day rate to build the price, but quote most jobs as a fixed price for clearly defined work. A fixed price tells the customer what they'll pay, and the day rate stays behind it as your working.

• Small call-outs: an hourly rate with a minimum charge, so a short visit still covers the travel.
• Multi-day work with a clear scope: a fixed price built from your labour days, your day rate and the materials.
• Work you can't define until you start: a written estimate that says what could change it, then a quote once you can see the job.

A fixed price rewards you when a job goes faster than planned and costs you when you misjudge it, so estimate labour days realistically, not optimistically. For the full process, see how to quote a job once you know your rate.

Turning your day rate into a quote

A quote is labour days × your day rate, plus materials with your margin, plus other costs such as skip hire or subcontractors, plus VAT if you're registered. Here is a bathroom refit priced by the sole trader from the worked example:

• Labour: 7 days × £275 = £1,925
• Materials, at your selling price with margin included: £420
• Skip hire: £300
• Subtotal: £2,645
• VAT: none, as the business isn't VAT registered
• Total: £2,645

The sole trader in the worked example turns over about £54,900 a year, under the £90,000 VAT registration threshold (Register for VAT on GOV.UK), so no VAT is added. If you're VAT registered, add VAT to the subtotal and show net, VAT and total. The free job quote template lays this out in Word, Excel and PDF.

The rate only protects you if the number of days is right. A seven-day job that runs to nine means two days of labour you don't get paid for.

When to put your rate up

Put your rate up when the numbers behind it change or when demand shows it's too low:

• Your costs have moved. If fuel or insurance costs more than when you set the rate, re-run the worksheet with your new business costs (B). Rising material prices go into your quotes instead.
• You're booked weeks ahead. There's more work than days to do it in.
• You win nearly every quote. Price may be the main reason customers say yes.
• You've gained a qualification. It opens up work you couldn't take on before, and its scheme fees belong in B.
• A new tax year starts. The Step 3 figures are for 2026/27, so re-check them each year.

Tell existing customers in writing, with notice of when the new rate starts, and honour quotes already accepted or still within their validity period.

Frequently asked questions

How do I work out my daily rate?

Add your take-home target, your business costs and the tax and National Insurance on your profit, then divide by the days you can bill. With £35,000 take-home and £12,000 of costs over 200 billable days, that's £54,881 ÷ 200 = £274.40 a day in England in 2026/27.

How do I work out tax on my day rate?

Work out the profit you need, then apply income tax and Class 4 National Insurance to it. In 2026/27 in England, Wales and Northern Ireland, profit between £12,570 and £50,270 pays 20% income tax and 6% Class 4 (income tax rates and self-employed National Insurance rates on GOV.UK). Scottish income tax uses different bands. If you're paid under CIS, the deductions are advance payments towards the same bill. Treat the result as an estimate, not tax advice.

Should my day rate include VAT?

No. Set your day rate before VAT. If you're VAT registered, add VAT on top in the quote; if you're not, say on the quote that no VAT applies. The VAT registration threshold is £90,000 (Register for VAT on GOV.UK).

Do day rates include materials?

No. Your day rate covers your labour and the running costs of the business, including everyday consumables. Materials for a specific job go on the quote as their own line, at a price that includes your margin.

Is £300 a day good for a tradesperson?

It depends on your costs and the days you can bill. In the worked example, £300 a day over 200 days brings in £60,000, more than the £54,881 needed; with higher costs or fewer billable days it might not be enough. In Checkatrade's October 2026 table, £300 is the figure for builders and plasterers, inside the range for most other trades, above it for gardeners and labourers, and below it for plumbers.

Your day rate in four numbers

Your day rate comes from four numbers: what you want to take home, what the business costs to run, the tax on your profit and the days you can actually bill. Fill in the worksheet, compare the result with your trade's range, then price most jobs as a fixed quote built from the rate. Re-run the numbers when your costs or the tax year change.

If you'd rather not write every quote from scratch, ChatQuote (made by CodeLeap, who publish this guide) is AI quoting software: an assistant on your website asks each person who enquires the questions you'd ask, and drafts an itemised quote from your own rates, which by default you review before it goes out. It has a 30-day free trial, and no card is needed.

Continue learning

• Best quoting software for UK trades in 2026: how to choose
• Room-by-room quotes for painters and decorators

About this guide

Written by the ChatQuote team at CodeLeap Ltd, the company that makes ChatQuote. More guides to quoting and pricing. Tax rates, bank holidays, mileage rates and Checkatrade's figures were checked on 29 October 2026. Spotted something out of date? Email support@chatquote.app.