Freelance Hourly Rate Calculator

What this calculator does

This calculator works backwards from the income you want to the hourly rate that delivers it. Enter your target annual net income, billable hours per week, billable weeks per year, and annual business expenses, and it returns the required hourly rate, the turnover that rate generates, and your effective hourly rate after tax.

The grossing-up is the point. To keep a given amount you must first cover income tax through the bands, Class 4 National Insurance on your profits, and every business cost, all from billable hours alone. Because a freelancer bills only part of the week, the rate needed is far above what dividing a salary by working hours suggests.

When to use it

Use it when setting a rate for the first time, when leaving employment, and each April when reviewing whether your rate has kept up with your costs. It is also the right check before agreeing a fixed project fee: divide the fee by the hours the work will honestly take and compare it against the figure here.

It is just as valuable for declining work. If a client's budget implies a rate below what the calculator produces, accepting it means funding their project from your own pocket. And if the required rate comes out above what your market will bear, that is a clear signal to change your positioning or your cost base rather than to work more hours.

Understanding the inputs

Target annual net income is what you want in hand after tax and business costs, comparable to a salary's take-home pay. Include the pension contributions you intend to make, because no employer is making them for you.

Billable hours per week means invoiced hours, not worked hours. If you work 37.5 and bill 25, enter 25. Billable weeks per year should account for the 5.6 weeks of paid holiday you no longer get, plus illness and gaps between contracts, so 44 to 47 is realistic. Annual business expenses should cover software, equipment, professional indemnity insurance, accountancy, and a proportion of home costs, using HMRC's simplified rates if apportioning is impractical.

How is this calculated?

Your true hourly rate is calculated by taking your target net income, adding back business expenses and estimated taxes, then dividing by your total billable hours.

A worked example

Take a target net income of 55,000 pounds, business expenses of 8,000 pounds, and 25 billable hours across 45 weeks, giving 1,125 billable hours. Using 2026/27 thresholds, netting 55,000 pounds after income tax and Class 4 National Insurance requires profit of roughly 75,350 pounds.

Add back the 8,000 pounds of expenses and required turnover is about 83,350 pounds. Divided by 1,125 hours, the rate is roughly 74 pounds an hour, or around 555 pounds a day at 7.5 hours. For scale, an employee on a 55,000 pound salary takes home about 42,500 pounds after tax and National Insurance, so replacing that take-home as a freelancer means billing over 83,000 pounds. That figure also sits close to the 90,000 pound VAT registration threshold, which becomes the next decision.

Limitations and assumptions

This is an estimate, not tax advice, and HMRC is the authority. It models a sole trader on English, Welsh, or Northern Irish rates with a full personal allowance and no other income. Scottish taxpayers face different bands and need a different rate to reach the same net figure.

It does not model VAT, a limited company structure and its salary and dividend split, pension contributions and the tax relief that comes with them, student loan repayments, capital allowances timing, or the High Income Child Benefit Charge. It assumes you bill every hour you enter, which is the assumption that most often breaks. The result is a break-even rate with no margin for late payment or a quiet quarter, so treat it as a floor and check it against what comparable freelancers in your sector actually charge.