Day rate calculator.

How to set your day rate as a UK tradesperson

Setting a day rate isn’t dividing your annual income target by 365. A sole trader is typically on the books for around 220 billable days a year once you strip out weekends, bank holidays, two weeks of holiday, and a week of being ill or weather-stopped. From there, add a profit margin — most tradespeople aim for 20–30% above the actual cost of their day, not below it. Then layer in the costs that don’t show up in your hourly thinking: pension contributions, your accountant, public liability insurance, van depreciation, and the tools you replace every year. A “good” day rate looks high on paper until you back-calculate what’s left after a rainy week, a missed payment, and the January tax bill.

How VAT changes your day rate calculation

Once you cross the VAT threshold (currently £90,000 of taxable turnover in a rolling 12 months), your day rate has to deal with 20% VAT — and which scheme you’re on changes the maths materially. On standard accounting you add 20% on top of your rate, claim back VAT on materials and overheads, and pay HMRC the difference quarterly. On the Flat Rate Scheme you still charge the customer 20% but hand HMRC a fixed percentage of your gross (9.5% for general builders, varies by trade) without reclaiming input VAT — which sometimes pays better, sometimes worse depending on how much you spend on materials. The decision matters most when you’re invoicing other VAT-registered businesses (who reclaim your VAT in full) versus end consumers (who absorb it as a real cost).

Day rate vs hourly rate — which should you quote?

Day rates work when the customer understands roughly what they’re buying and you can scope the work into whole-day chunks — extensions, rewires, multi-day installs, bathroom refits. The customer commits to a price, you commit to a day’s focus, and neither side argues over whether you took an hour for lunch. Hourly rates work when the scope is genuinely uncertain (callouts, emergency work, fault-finding) and both sides need the bill to reflect actual time on the job. The common mistake is quoting hourly for a job that’s clearly a full day’s work — you end up underbilling because you don’t track your real start-to-finish time, only the “hands-on” bits. Default to day rates for known scope; reserve hourly billing for open-ended work.