Sole Trader vs Employee Calculator: UK Take-Home
Compare sole trader and employee (PAYE) take-home pay on the same gross in the UK. A free estimate by country - not tax advice.
Compare the same gross
Enter an annual gross and a country to estimate what you keep as an employee versus as a self-employed contractor.
Estimate only, not tax advice. Each side uses one average tax-and-social percentage for 2026, not real brackets, and ignores employer costs, VAT, benefits, and deductions. A company form (Limited company) is not modelled because its take-home depends on a salary and dividend split. Confirm with an accountant.
Employee or contractor?
In the UK, employees are taxed through PAYE with income tax and National Insurance, while a sole trader pays income tax and Class 2 and 4 National Insurance on profit. The default is a rough average; a limited company is taxed differently and is not modelled here.
On the same headline pay, an employee and a self-employed contractor rarely keep the same amount. Employees usually have tax and social contributions withheld at source, while the self-employed pay their own, often at different rates, and can deduct business costs. The gap decides how much a day rate really needs to be.
This is a rough, country-level estimate for planning, not a tax return, and it does not cover company structures or your personal deductions. Use it to frame the question, then confirm the numbers with an accountant.
Contractor and employee questions
Sole trader or limited company?
This compares an employee with a sole trader. A limited company is taxed through corporation tax and a salary and dividend split, which is not modelled here - ask an accountant.
Why is a contractor rate higher than an equivalent salary?
Because the two are paid for different things. An employee’s cost includes employer taxes, benefits, paid leave, equipment, and the hours between projects. A contractor bills only the hours worked and carries those costs themselves, which is why the rates cannot be compared directly.
What does a contractor have to cover that an employee does not?
Unpaid time off, sick days, and gaps between contracts, plus the admin, sales, and invoicing nobody pays for. A contractor rate has to cover a year that is shorter than 52 paid weeks.
Does this tell me which arrangement is legal for my role?
No. It compares what the work costs and what reaches your account under each arrangement. Whether a role can legally be a contract one depends on how the work is actually done, and misclassification carries real penalties, so take advice before restructuring anything.
Are the figures before or after tax?
Gross costs and estimated take-home from the figures you enter. Tax treatment differs by country, by structure, and by person, so treat the result as a planning comparison rather than a filing.
Contractor vs employee in other countries
Whichever way you work, track the time
Sandtime.io records billable hours and turns them into reports and invoice-ready totals, for employees and contractors alike. Free for unlimited users, without surveillance.