First the calculator grosses up your take-home income for tax, then adds your business costs. That is what you need to bill in a year. It then divides by your billable hours: the weeks you work times the hours a week you can charge for.
Be honest about billable hours
Most people overestimate them. Travel between jobs, quoting, picking up parts, paperwork and chasing payments all eat into the week. Track a few normal weeks to see how many hours you really bill, and use that number.
Check your rate against the market
If your number is far above what others charge locally, look at your costs and hours. If it is far below, you may be undercharging — a common problem when starting out.
An estimate, not financial or tax advice. Your real tax depends on where you live and your situation.
Common questions
What are billable hours?
The hours you can actually charge a customer for. Travel, quoting, buying materials, admin and chasing payments all take time but usually are not billed, so billable hours are almost always fewer than the hours you work.
Should my rate include tax?
If you are self-employed, nobody takes tax out of your pay for you. Setting part of each payment aside for income tax and national insurance or self-employment tax means the rate you charge has to cover it.
What is a day rate?
Your hourly rate multiplied by the hours in a working day. The calculator uses an 8-hour day; many trades quote day rates for longer jobs.