UK employer planning

UK salary vs contractor or temp worker calculator

Compare the annual cost of employing someone on salary with either a direct contractor or an agency temp worker.

Contractors are usually hired directly and charge for billable time. Include own-tools assumptions, software, insurance, gaps between contracts and any other direct costs.

This compares a direct contractor against a salaried employee.

Salary route annual employer cost

£52,350.00

£43,250.00 less than the contractor option

Gross salary
£45,000.00
Employer National Insurance
£6,000.00
Employer pension
£1,350.00
Contractor spend
£95,600.00

This is a planning comparison, not a legal employment-status test. IR35, VAT, employment rights, agency terms, holiday pay and contract length can change the real cost.

When this is useful

Use this when deciding between a permanent hire, a fixed-term contractor or an agency temp worker. It gives you a simple cost comparison before you get into contract wording.

Why the two options differ

Direct contractors are usually hired directly for a specific job, charge for billable days and bring their own tools. Temp workers are usually supplied through an agency, tend to be placed for months or more and often suit office cover or short-term staffing needs.

Important limits

This comparison does not decide employment status or tax treatment. IR35, VAT, holiday, notice periods, employment rights and agency terms can all change the answer materially.

For employer cost on the salary side, see HMRC's 2026/27 employer rates and thresholds and Employment Allowance guidance.