Question 1

What is a good day rate for freelancers in London?

Accepted Answer

London freelance day rates range from £300–£800+ depending on speciality. Tech contractors often command £500–£900/day. As a rule of thumb: divide your desired salary by 200 (days worked per year) then multiply by 2–2.5 to account for taxes, holidays, and downtime.

Question 2

Should London freelancers operate as a Ltd company or sole trader?

Accepted Answer

Most London contractors earning over £30,000/year benefit from a limited company due to lower effective tax rates through salary+dividends. Below that threshold, sole trader is simpler. IR35 legislation affects contractors working through an intermediary — consult an accountant.

Question 3

Why is my freelance rate so much higher than my salary?

Accepted Answer

As a freelancer, you pay self-employment tax (15.3%), your own health insurance ($3K-15K/year), business expenses, and don't get paid vacation. A $100K salary converts to roughly $75-90/hr freelance to maintain the same take-home.

Question 4

How many hours per year are actually billable?

Accepted Answer

Realistically, 50-65% of your working time is billable. The rest goes to sales, admin, marketing, professional development, and unbilled project management. At 40 hrs/week, expect 20-26 billable hours per week (1,000-1,300/year).

Question 5

How do I raise my rates with existing clients?

Accepted Answer

Give 30-60 days notice, frame it as keeping up with market rates, offer to lock in current rates for a longer-term contract, and have the conversation before starting a new project. Raise rates annually (3-10%) to avoid large jumps later.

Freelance Day Rate Calculator for London

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