What a tradesperson really costs per working hour
Pay is only part of it. See what an employee costs for every hour you can actually charge, and the rate that covers it with a margin.
Your answer
Enter their pay and contracted hours to see what they cost per chargeable hour.
About this calculator
For builders and trade businesses that employ people on the tools and want to price jobs on the real cost of labour, not just the hourly pay.
You pay for every contracted hour, but you can only charge customers for the hours spent on their jobs. Holiday, sick days, training and travel all come out of those hours, so the cost of each chargeable hour is much higher than the pay rate.
What happens to your answers
We don’t keep them. Your answers go to our server to do the sums and aren’t stored or logged. If you copy a link to your answers, they’re in the link itself, so only share it with people you trust.
How it’s worked out
We add up the year's cost: pay, employer's National Insurance (15% on pay over £5,000, less any share of the Employment Allowance), your workplace pension on pay between £6,240 and £50,270, the van and tools, and other overheads.
We take the contracted hours over 52 weeks, less holiday, sick and training days and the daily travel and yard time, to get the hours you can charge. The cost per chargeable hour is the year's cost divided by those hours. The charge-out rate is that cost divided by (1 − your margin), so the margin is a share of the price, not a mark-up on cost.
Worked example
This employee costs you about £33.39 for every hour you can charge a customer, so charge £41.74 an hour for a 20% margin.
2026/27 tax year · 40 hours over 5 days a week · 3% employer pension · no Employment Allowance
| Yearly pay | £35,000 |
|---|---|
| Employer's National Insurance: 15% on pay over £5,000 | + £4,500 |
| Workplace pension: 3% of £28,760 qualifying earnings (pay between £6,240 and £50,270) | + £863 |
| Van and tools | + £9,000 |
| Other overheads for this person | + £3,000 |
| What they cost you a year | £52,363 |
| Paid hours a year (40 hours × 52 weeks) | 2,080 hours |
| Less paid time off: 5.6 weeks' holiday, 5 days sick and 3 days training, at 8 hours a day | − 288 hours |
| Less travel and yard time: 60 minutes on each of 224 working days | − 224 hours |
| Hours you can charge a customer for | 1,568 hours |
| Cost per chargeable hour (£52,363 ÷ 1,568 hours) | £33.39 |
| Charge-out rate for a 20% margin (£33.39 ÷ (1 − 20%)) | £41.74 |
Worked out using HMRC's employer rates and the workplace pension limits for the 2026/27 tax year (6 April 2026 to 5 April 2027), on a yearly basis.
Questions people ask
What's the difference between margin and mark-up?
Margin is the share of the price you keep; mark-up is what you add to cost. A £30 cost with a 20% margin is charged at £37.50 (you keep £7.50 of £37.50). A 20% mark-up would be £36, which is only a 16.7% margin.
How much pension do I have to pay?
For staff you must enrol, at least 3% of their qualifying earnings: pay between £6,240 and £50,270 a year in 2026/27. Staff earning over £10,000 a year aged 22 to State Pension age must be enrolled automatically.
Can I claim the Employment Allowance?
Most employers can, for up to £10,500 off their employer's National Insurance bill each year. You can't claim it if your only employee is a director paid above the threshold. It covers your whole payroll, not each employee.
More free calculators
Talk to us about your tax.
A free call with the team. We’ll contact you within 24 hours.