Contracting vs a permanent job, in numbers
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The comparison everyone does wrong: they compare a day rate to a salary straight up. Do it properly with total reward.
What a permanent package really contains
- Salary £70,000 + pension 6% employer (~£4,200) + holiday 25 days (~£6,700 value)
- Sick pay, private medical, training budget, income protection: another £3–6k
- Total reward: roughly £85,000 — before job security, which isn't nothing
What the equivalent contract needs to clear
From the 2026/27 tables, £70,000 permanent salary nets ≈ £48,500. An outside-IR35 contractor needs about £375–£400/day (220 days) to net the same through a PSC — before counting the permanent package's extras. To match full £85,000 reward you want £450–£500/day.
The non-financial ledger
| Permanent | Contracting | |
|---|---|---|
| Income between roles | Continuous | You carry the gap risk |
| Rate growth | 3–5%/yr reviews | Market repriced every 6–24 months |
| Skills | Employer-funded training | Self-funded, but market-driven |
| Flexibility | 25 days holiday, approvals | You set the calendar |
Run your own numbers with the calculator, then sanity-check demand in your specialism on the live rate pages.
Revisit the comparison at every renewal: rates move faster than salaries, and the premium compounds over a three-year horizon.
The gap-risk adjustment nobody prices
The honest comparison adds unemployment-style risk: a permanent salary arrives 52 weeks a year; contracting averages 44–46 billing weeks after gaps, holidays and sick days. At £450/day × 44 weeks = £99,000 gross against the salaried £85,000 total reward — the premium is real but thinner than the headline multiple suggests. That's the whole case for our tables using a 46-week year: model the boring year, not the perfect one. If the boring-year numbers still win — and at £500+ they usually do — the decision is robust to a bad quarter. If they don't, you've saved yourself an expensive romance with the idea of contracting.
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