Permanent vs Contract Calculator

The only accurate comparison is net take-home vs net take-home. Convert your day rate to an annual gross, apply the relevant contractor tax model (sole trader, limited company, or umbrella), then compare the resulting net to the permanent salary net after income tax, USC, and PRSI or UK income tax and National Insurance. The calculator above does this automatically. A gross contract revenue of €110,000 is not comparable to a €110,000 permanent salary — the net figures differ substantially.

The break-even day rate is the minimum daily rate at a given number of billable days that nets the same annual take-home as your permanent salary. Below this rate, contracting pays less. Above it, contracting pays more. For a €90,000 permanent salary in Ireland, the break-even day rate for a sole trader at 220 billable days is roughly €530–€560/day depending on USC and pension assumptions. The calculator shows your specific break-even figure.

The contract net figure is annual cash take-home after all taxes on the contract income: income tax, USC, and PRSI for Ireland; income tax and National Insurance for the UK. It does not include pension contributions (which are set to zero by default), expenses, or professional insurance costs. Sole trader and umbrella director structures exclude accountancy fees. For the most accurate comparison, add those costs to the contract side.

Because cash take-home is not the full picture. Permanent roles include employer pension contributions (typically 5–10%), 20–25 days of paid annual leave, sick pay, health insurance, equipment, and training budgets that contractors must fund themselves. The total cost of employment is 25–40% above gross salary. A contractor earning €5,000 more per year in net cash but funding their own pension and equipment from that amount may be materially worse off in total.

220 days is the standard benchmark for Ireland and the UK. A full working year is roughly 252 days after removing weekends. Deduct public holidays (10 in Ireland, 8 in England), four weeks of personal leave, and an allowance for gaps between contracts (typically 2–4 weeks per year). Contractors who work continuously with minimal gaps can achieve 230 or more billable days; those who take longer breaks or change contracts frequently may bill 200 or fewer.

For most contractors billing above €350/day, sole trader or umbrella director structures retain significantly more than PAYE umbrella. Sole trader offers the most control but requires VAT registration above €37,500 in services revenue and requires a tax return each year. Umbrella director (operating through a personal company) provides limited liability and additional expense flexibility but has higher accountancy costs. PAYE umbrella is simplest with zero compliance overhead but retains the least. The Irish contractor calculator linked below models all three side by side.

Inside IR35, HMRC treats you as a disguised employee. Your client deducts employer and employee National Insurance and income tax before paying you, resulting in a take-home similar to a permanent salary. Outside IR35, you operate through a limited company, paying yourself a low salary and dividends, which is significantly more tax-efficient. The difference at a £500/day rate is roughly £20,000–£30,000 net per year. Use the IR35 calculator linked below for a full breakdown.

No. Two factors cut into the apparent gross advantage: (1) contractor taxes in Ireland and the UK are progressive, so a very high day rate moves into the 40% and 45% bands quickly; (2) the number of billable days matters enormously. A £600/day rate at 180 billable days (£108,000 gross) can net less than a £90,000 permanent salary with full employer benefits. Always model your specific billable day estimate before making a decision.

Contractors must fund their own pension contributions with no employer match. In Ireland, a sole trader or umbrella director can make pension contributions as a business expense, reducing taxable income and claiming relief at their marginal tax rate (up to 40%). The annual contribution limit as a percentage of earnings increases with age: 15% under 30, up to 40% from age 60. In the UK, a limited company can make employer pension contributions directly from company profits before corporation tax. This calculator does not include pension contributions to keep the comparison clear, but they should be modelled separately.

Beyond taxes, contractors typically pay: professional indemnity insurance (€500–€2,000/year), accountancy fees (€1,000–€3,000/year for Ireland, £1,000–£2,500 for UK), public liability insurance, income protection insurance (especially important without sick pay), equipment and home office costs, and the cost of downtime between contracts. Factor these against the net difference to get a true financial comparison. In practice, for the switch to contracting to be clearly worthwhile, the net cash advantage should be at least €10,000–€15,000/year above the permanent role.