Contractor vs Employee: London 2026 — Net Income Calculator
See whether going independent actually pays more after tax, social security, and business overheads.
As an Employee
As a Contractor / Freelancer
Enter your rate as if you worked 52 weeks — we'll adjust for time off below.
e.g. 4 weeks off = 4
Going contractor in London puts £13,937 more in your pocket per year.
| Metric | Employee | Contractor |
|---|---|---|
| Annual Revenue / Gross Salary | £50,000 | £80,000 |
| Unbilled Weeks Adjustment | — | £6,154 |
| Actual Gross Income | £50,000 | £73,846 |
| Business Overheads | — | £4,700 |
| Taxable Income | £50,000 | £69,146 |
| Social Security | £4,000 | £5,532 |
| Income Tax | £6,686 | £10,364 |
| Effective Tax Rate | 21.4% | 23.0% |
| Net Annual Income | £39,314 | £53,251 |
| Net Monthly Income | £3,276 | £4,438 |
To match your employee take-home of £39,314/year, you need to invoice at least £47,682/year as a contractor in London.
That's roughly £917/week or £183/day.
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Frequently Asked Questions
Is it worth going contractor in London?
Yes — at a revenue of £80,000/year, a contractor in London takes home £53,251/year (effective rate: 23.0%), compared to £39,314/year as an employee (effective rate: 21.4%).
What contractor rate do I need to match my employee salary in London?
To match an employee take-home of £39,314/year in London, you need to invoice at least £47,682/year as a contractor — roughly £917/week or £183/day.
How this calculator works
This calculator compares the net income of a contractor (B2B / freelance) against an employee earning the same gross amount. It applies each country's corporate and personal tax rules, social security, and estimates the break-even invoicing rate a contractor needs to match an employee's take-home pay.
What's included
- Employee income tax and social security
- Contractor / B2B corporate tax and distributions
- Break-even contractor day rate
- Effective tax rate comparison
What's not included
- IR35 / deemed employment rules (UK-specific)
- VAT registration and reclaim
- Business expenses or deductions
- Employer pension contributions
Data sources: Official tax authority publications for each jurisdiction: HMRC (UK), IRS (US), Autoridade Tributária (PT), KVK/Belastingdienst (NL), IRAS (SG). Updated for 2025/26.