FREE CALCULATOR · NO SIGN-UP
Contractor margin calculator.Know what you keep.
Work out the margin on a contractor, or the charge rate you need for a target margin, after holiday pay, payroll taxes and pension. Built for UK PAYE, US W-2 and limited company contractors.
The contractor
Employer costs
Holiday pay is a cost provision for planning. Workers with regular hours must be paid holiday when they take it; adding 12.07% to each payslip is only allowed for irregular-hours and part-year workers.
Cost of 5.6 weeks’ statutory leave
Above £96 a week
On £120–£967 a week
Insurance, payroll or funding, % of pay
£5.49 gross profit per hour, after £7.51 of employer costs.
| Charge rate | £38.00 |
|---|---|
| Pay rate | £25.00 |
| Holiday pay | £3.02 |
| Employer NI | £3.82 |
| Employer pension | £0.68 |
| Gross profit per hour | £5.49 |
| Markup on pay rate | 52.0% |
| Gross profit per week | £206 |
| Over 26 weeks | £5,349from £37,050 billed |
How the margin is worked out.
Gross profit per hour or day is the charge rate, less the pay rate, less the employer costs you carry on top of that pay. Margin is that profit as a share of the charge rate. When you ask for a charge rate instead, the calculator solves for it: (pay rate + employer costs) ÷ (1 − target margin).
UK PAYE. The holiday pay line is a cost provision of 12.07% of pay for hours worked: the cost of 5.6 weeks’ statutory leave spread over the 46.4 weeks worked. It’s a planning figure, not how holiday pay has to be calculated or paid. Workers with regular hours must be paid holiday when they take it; rolled-up holiday pay is only allowed for irregular-hours and part-year workers. If the pay rate you enter already includes lawful rolled-up holiday pay, set the provision to zero. Employer National Insurance is 15% of weekly earnings above the £96 secondary threshold. Auto-enrolment pension is 3% of earnings between £120 and £967 a week. Both are worked out on pay plus holiday pay, weekly.
US W-2. Employer FICA is 6.2% Social Security on wages up to each calendar year’s wage base ($184,500 in 2026), plus 1.45% Medicare on all wages. The calculator works through the assignment week by week from its start date: the base resets every 1 January, and any wages you’ve already paid the worker this year count towards it. Years after 2026 use the 2026 base until the next one is published. Unemployment and workers’ comp are percentages of pay you can set for your states and job classes.
Supplier invoice. The pay rate is treated as a fully loaded invoice from a limited company, umbrella or self-employed contractor, with no employer costs on top. This doesn’t decide tax responsibility: inside-IR35 engagements make the fee payer liable for employer NI, agencies can be liable for PAYE an umbrella company underpays, and US contractors must be correctly classified.
These are estimates for planning and quoting, not payroll or tax advice. Check rates with your payroll provider or accountant before you sign terms.
What’s the difference between margin and markup?
Markup is how much you add on top of the pay rate, as a share of the pay rate. Margin is the gross profit you keep, as a share of the charge rate. Paying £25 an hour and charging £35 is a 40% markup but, before employer costs, only a 28.6% margin. The calculator shows both, and its margin is after employer costs.
What is a good margin for a contract recruiter?
It depends heavily on the market. High-volume temporary staffing often runs on single-digit to mid-teen margins after employer costs, while specialist IT, engineering and professional contracting commonly sees 15–25%. Volume, payment terms and how much risk you carry all matter as much as the percentage.
Which UK employer costs does the calculator include?
For PAYE workers: a holiday pay provision of 12.07% of pay for hours worked, employer National Insurance at 15% above £96 a week, auto-enrolment pension at 3% of qualifying earnings between £120 and £967 a week, and optionally the 0.5% apprenticeship levy. NI and pension are worked out on pay plus holiday pay. Every rate can be changed, and the thresholds are for the 2026/27 tax year.
Can I roll holiday pay into the hourly rate?
Only for some workers. For leave years starting on or after 1 April 2024, rolled-up holiday pay (adding 12.07% to pay for each hour worked) is allowed for irregular-hours and part-year workers. Workers with regular hours must be paid their holiday when they take it. The calculator’s 12.07% is a cost provision either way: it’s what 5.6 weeks’ leave costs you, not an instruction on how to pay it. See GOV.UK’s holiday pay guidance.
What if my contractor is inside IR35?
If you are the deemed employer (the fee payer) for a limited company contractor working inside IR35, you deduct income tax and employee National Insurance from the deemed payment, and pay employer National Insurance (and the apprenticeship levy, if it applies) on top. Employer NI can’t be deducted from the deemed payment, so it has to come out of your margin or be priced into the charge rate. To approximate the cost, choose UK PAYE and set holiday pay and pension to zero. See HMRC’s off-payroll working guidance and take advice on your own position.
Does “supplier invoice” mean I have no tax responsibility?
No. That mode only assumes the rate you pay is a fully loaded invoice with no employer costs added on top. It doesn’t decide who is liable for tax. Inside-IR35 limited company engagements make the fee payer responsible for employer NI. Since 6 April 2026, a relevant agency can also be liable for PAYE an umbrella company underpays. In the US, 1099 and corp-to-corp arrangements depend on the worker being correctly classified.
Why is US unemployment tax a blended percentage?
Federal (FUTA) and state (SUTA) unemployment taxes only apply to the first part of each worker’s annual wages, up to a wage base that differs by state. Over a full year that works out at a small share of total pay. The 1% default is a rough blend; replace it with your own figure for the states you hire in.
MORE FREE TOOLS
You might also like.
- CalculatorsPlacement fee calculatorWork out a permanent placement fee, the invoice total and the rebate if a hire leaves.Open the calculator
- CalculatorsContingent vs retained calculatorCompare expected fees per job and per hour from contingent and retained work.Open the calculator
- CalculatorsRecruiter KPI calculatorTurn a billing target into the calls, CVs and interviews it takes each week.Open the calculator
- CalculatorsRecruiter commission calculatorModel a commission scheme and see what each desk really makes the business.Open the calculator
YOUR NEXT CHAPTER STARTS HERE
Less admin.
More “you got the job.”
Let’s walk through a better working day for your agency.
Updated