What's a Day Rate Contractor?
A Day Rate Contractor is an individual who provides their expertise to a client for an agreed daily rate, rather than as a salary. They can be self-employed, operate by a limited company or use an umbrella company.
As part of our Fresh Criteria, we now provide a better deal for Day Rate Contractors across all our products.
Submitting income for Day Rate Contractors
We look at income based on the Day Rate Contractor's daily rate, whether they're self-employed, operate by a limited company, or use an umbrella company. To submit income for a Day Rate Contractor:
- Log in to our application portal
- Use the lower of the following to calculate income:
i. 12-month average day rate x 5 (ie. days) x 46 (ie. weeks)
ii. Current day rate x 5 (ie. days) x 46 (ie. weeks)
- Submit the calculated income under 'earned income' or 'year-end income'
|12 months' average rate||Current day rate|
For the last 7 months, Beatrice has been earning £350 a day. In the previous 5 months, she was on a contract for £250 a day.
Average rate = ( (350 x 7) + (250 x 5) ) / 12 = £308.33
As Beatrice's average rate is lower than her current rate, her income figure to use is:
£308.33 x 5 x 46 = £70,915.90
For the last 6 months, Bill's day rate has been £250, but his previous day rate was £300.
Average rate = ( (250 x 6) + (300 x 6) ) / 12 = £275
As Bill's current rate is lower than his average rate for the last 12 months, his income figure to use is:
£250 x 5 x 46 = £57,500
Note: The examples above are used for illustration purposes only
Eligibility and documents to evidence income
In addition to our normal document requirements (which are outlined in our criteria), we will also need the following:
- Evidence that the applicant has a current day rate contract in place, with a minimum of three months remaining on their current contract
- Evidence of contracts covering the past twelve months' work as a Day Rate Contractor (doesn't need to be in the same line of business)
- Average or current day rate to be minimum of £200 per day
- Three months' bank statements
Got a question?
If you want to find out more about submitting a case for a Day Rate Contractor, contact your Regional Development Manager who will be happy to help.