Question 1

What tax rate should UK freelancers use?

Accepted Answer

For a sole trader earning £70-£90K, expect a combined effective rate of around 30-35% once income tax and Class 4 NI are in. For a limited company paying salary + dividends, it's usually 25-30%, but remember you also pay Corporation Tax at 25% on company profits before distributions. Inside IR35 the calculation is closer to an employee's PAYE rate. Use last year's self-assessment effective rate if you have it.

Question 2

How many billable days should I assume?

Accepted Answer

Most UK freelancers genuinely bill 160-180 days a year, not 260. That accounts for statutory holiday equivalent (28 days), bank holidays, pitching, admin, CPD, and some sick days. If you're heavily retainered with one or two long clients, you might push to 200. If you do short projects with lots of sales motion, expect closer to 150.

Question 3

Should I quote day rate or hourly?

Accepted Answer

UK contracting culture defaults to day rate — for any engagement longer than a few hours, day rate is the norm and is what agencies, procurement teams, and IR35 frameworks expect. For sub-day scopes (e.g. a two-hour advisory call), quote an hourly equivalent at your day rate ÷ 7.5. The tool shows both so you can translate.

Question 4

Why is this lower than what agencies charge?

Accepted Answer

Agencies typically mark up 2-3x on top of the freelancer's rate to cover account management, sales, bench time between projects, office overhead, insurance, and margin. Your rate as an independent contractor is the rate the agency would pay a freelancer — not the rate they bill the client. If you're comparing, knock 50-70% off the agency day rate to get the solo-freelance equivalent.

Question 5

What's the difference between the floor rate and the target rate?

Accepted Answer

The floor rate is the break-even number — charge below this and you're subsidising your clients. The target rate is what you should actually pitch: floor plus a buffer (default 20%) for slow months, unexpected expenses, and retirement savings. If you always quote your floor, you're one bad quarter away from a cash-flow problem. Quote the target rate and negotiate down from there if needed — not up.

Question 6

Is this tool free to use?

Accepted Answer

Yes — completely free, no sign-up, no account. TimeIsMoney.tools is supported by minimal, non-intrusive advertising. Nothing you enter leaves your browser.

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