Most people know their annual salary but rarely think about what that translates to per hour. That number matters more than you might think. It tells you whether a side project is worth your time, whether a job offer is genuinely better than your current role, whether overtime is actually worthwhile, and whether your freelance rate makes sense compared to employment.
This guide walks through the conversion formula, explains why gross versus net matters, and covers the specific situations where knowing your hourly equivalent gives you a genuine advantage.
The Basic Formula
Converting an annual salary to an hourly rate is straightforward:
Hourly rate = Annual salary / 52 weeks / hours per week
For a salary of £36,000 working 37.5 hours per week:
£36,000 / 52 / 37.5 = £18.46 per hour (gross)
For the same salary at 40 hours per week:
£36,000 / 52 / 40 = £17.31 per hour (gross)
The number looks simple, but there are several factors that change the real picture. Use the Salary to Hourly Calculator to run these numbers quickly with your own figures.
Standard Working Hours in the UK
The UK does not have a single universal standard working week, but 37.5 hours and 40 hours are the most common contracted hours. Public sector roles are often 37 hours. Some professional services firms expect 40 or more.
Your contracted hours are the right number to use for this calculation, not the hours you actually work. If you are contracted for 37.5 hours but routinely work 45, your real hourly rate is considerably lower than the calculation suggests.
To get an honest picture, divide your annual salary by your actual hours worked per year, not just your contracted hours. If you work 45 hours for 48 weeks of the year (accounting for holiday), that is 2,160 hours. A £36,000 salary over 2,160 hours works out to £16.67 per hour, not £18.46.
Gross vs Net: The Number That Actually Matters
The formula above gives you a gross hourly rate, meaning the figure before tax and National Insurance. The number that hits your bank account is lower.
For 2024/25, a UK employee on a standard tax code pays:
- No income tax on the first £12,570 (personal allowance)
- 20% income tax between £12,570 and £50,270
- Employee National Insurance at 8% between £12,570 and £50,270
- Employee National Insurance at 2% above £50,270
A salary of £36,000 produces roughly £28,000 take-home after tax and NI. That works out to approximately £14.36 per hour net, assuming 37.5 contracted hours.
The difference between gross and net is substantial. When you are comparing a salaried role to freelance income, always compare on the same basis: both gross, or both net. Mixing them up leads to the wrong conclusion.
Holiday Pay and How It Skews the Numbers
One factor that complicates the calculation is holiday entitlement. As an employee in the UK, you are entitled to at least 28 days of paid holiday per year (including bank holidays). That means you are being paid for weeks when you are not working.
If you work a standard 37.5-hour week with 28 days of holiday, your actual working weeks per year are approximately 46.5 (52 minus 5.6 weeks of holiday). Some people adjust the formula to use 46 or 46.5 weeks rather than 52, which gives a higher hourly equivalent.
Neither approach is wrong. Using 52 weeks gives you the cost to your employer per hour of contracted time. Using 46.5 weeks gives you the cost per hour of time you actually work. Both are useful depending on what you are trying to figure out.
For the purpose of comparing with a freelance rate, use the 46.5-week version. Freelancers do not get paid for holidays, so the comparison needs to reflect that.
Part-Time Salary Calculations
If you work part-time, the formula still applies. The key is to use your actual contracted hours, not a full-time equivalent.
A part-time salary of £18,000 for 20 hours per week:
£18,000 / 52 / 20 = £17.31 per hour gross
This is often a useful check when a part-time role is being offered. Employers sometimes use the full-time equivalent salary figure in job listings without making it obvious. If someone advertises a role as "£36,000 FTE, 20 hours per week," the actual salary is £18,000. The hourly rate is the same, but the total income is half.
Overtime Rate Calculations
If you are asked to work overtime and want to know whether it is financially worthwhile, you need to know your base hourly rate and the overtime rate you will receive.
Overtime is commonly paid at:
- Time and a quarter (1.25x)
- Time and a half (1.5x)
- Double time (2x)
On a base hourly rate of £18.46, time and a half gives you £27.69 per hour for overtime. Whether that is worth it depends on your tax position. If the additional income pushes you into the higher-rate tax band (above £50,270), you will pay 40% income tax on the excess, and your effective hourly rate after tax will be lower than it appears.
Run the numbers before agreeing to substantial overtime. The pre-tax headline rate is not what you take home.
Contractor and Freelancer Premium: Why Hourly Rates Look High
If you have ever seen a contractor or freelancer quote an hourly rate that seems much higher than an employee's equivalent, there is a reason for that. The contractor is paying costs that an employer would normally cover.
As a contractor or freelancer, you are responsible for:
- Your own holiday pay (none is paid unless you build it into your rate)
- Sick pay (none unless you take out income protection insurance)
- Employer National Insurance (currently 13.8% on earnings above £9,100, saved by the company hiring you)
- Pension contributions (no employer matching)
- Equipment, software, and professional development
- Business insurance
- Periods between contracts when you earn nothing
A standard rule of thumb is that a contractor needs to earn roughly 1.5 to 1.7 times an equivalent employee's gross hourly rate just to break even on all those costs. A salaried employee earning £18.46 per hour would need to charge approximately £28 to £31 as a freelancer to match their actual employment income after all costs.
This is why comparing contractor day rates directly to salary figures is misleading. The contractor rate is gross, has no employment benefits, and includes all business costs.
Using This to Compare Job Offers
When you receive two job offers with different salaries, hours, or structures, converting to a net hourly equivalent makes comparison much easier.
Say you have two offers:
Offer A: £40,000 per year, 40 hours per week, standard benefits Offer B: £37,000 per year, 35 hours per week, standard benefits
Offer A gross hourly: £40,000 / 52 / 40 = £19.23 Offer B gross hourly: £37,000 / 52 / 35 = £20.33
Despite the lower salary, Offer B pays more per hour. If you value your time and the roles are otherwise comparable, that difference matters.
You can extend this comparison to include commute time and cost, pension contribution rates, and bonus potential. The salary number alone rarely tells the full story.
Using This When Setting Freelance Rates
If you are transitioning from employment to freelancing, or taking on freelance work alongside employment, knowing your hourly equivalent salary is a useful anchor point.
If you currently earn £18.46 per hour as an employee, charging £20 per hour as a freelancer is almost certainly underpricing yourself when you account for the contractor premium described above. A rate of £28 to £35 is more realistic to achieve equivalent real income.
The Freelance Rate Calculator works through this in more detail, factoring in your target income, expenses, and non-billable time to give you a day rate that makes sense.
Quick Reference: Common Salary Benchmarks
To give you a sense of the numbers at common salary levels, here are rough gross hourly equivalents assuming 37.5 hours per week:
- £25,000 per year: approximately £12.82 per hour
- £30,000 per year: approximately £15.38 per hour
- £35,000 per year: approximately £17.95 per hour
- £40,000 per year: approximately £20.51 per hour
- £50,000 per year: approximately £25.64 per hour
- £60,000 per year: approximately £30.77 per hour
These are gross figures. Net take-home will be lower once income tax and National Insurance are applied.
Run Your Numbers
The formula is simple enough to do manually, but if you want to factor in tax, NI, holiday entitlement, and the contractor premium all at once, the Salary to Hourly Calculator handles it in one place.
Understanding your real hourly equivalent is one of those calculations that takes two minutes and can change how you think about a job offer, an overtime decision, or a freelance rate. It is worth running whenever the situation changes.