How contractor income is calculated: the 46-week rule
Specialist lenders calculate a contractor’s income as day rate × days worked per week × 46 weeks, then apply an income multiple — usually 4.5×. A £500 day rate becomes £115,000 a year and supports roughly £517,500 of borrowing, before deposit and affordability checks.
It is the single most important number in contractor lending, and the one high-street calculators get wrong. Understand it and you can estimate your own borrowing in seconds — and spot immediately when a lender is undervaluing you.
The formula, visualised
Why 46 weeks, not 52?
No contractor bills every week of the year. Capping the calculation at 46 weeks bakes in a six-week allowance for holidays, illness and the natural gaps between engagements. It is a conservative, sustainable view of your income — which is exactly why lenders trust it and why it holds up at underwriting.
Worked examples at common day rates
| Day rate | Annualised (×5×46) | Borrowing at 4.5× |
|---|---|---|
| £300 | £69,000 | ≈ £310,500 |
| £450 | £103,500 | ≈ £465,750 |
| £500 | £115,000 | ≈ £517,500 |
| £650 | £149,500 | ≈ £672,750 |
Figures are indicative and modelled at a 4.5× multiple. The final amount depends on the lender, your deposit, credit profile and commitments.
- The formula is day rate × days per week × 46 weeks, then × the income multiple.
- 4.5× is the common standard; some lenders reach 5× or more, others sit at 4× for high loan-to-value.
- The 46-week cap is a buffer, not a penalty — it makes your income sustainable on paper.
- It uses your gross rate, so it reflects far more than a tax return would show.
How this beats a self-employed assessment
A standard self-employed assessment uses net profit from your SA302 — after expenses and tax planning — which routinely understates a contractor’s real earnings. The 46-week method sidesteps that entirely by reading your live contract. For more on why the tax return misleads, see our guide on getting a mortgage without an SA302, and if you trade through a company, retained profit mortgages.
Try it with your own rate
The calculator below runs the same formula live.
The 46-week rule, answered
What is the contractor income formula?+
Day rate × days worked per week × 46 weeks. A £500 day rate over five days is £115,000 a year. Lenders then apply an income multiple — usually 4.5× — to set the maximum borrowing.
Why do lenders use 46 weeks instead of 52?+
The six-week reduction is a deliberate buffer for holidays, illness and gaps between contracts. It keeps the assessed income sustainable across a realistic working year rather than assuming you bill every single week.
What if I work four days a week?+
The calculation is pro-rated: a £500 day rate over four days is £500 × 4 × 46 = £92,000. Some lenders will consider a higher day count if your contract genuinely supports it.
Is the day rate taken before or after tax?+
Before. Contract-based assessment uses your gross contract rate, which is the figure that reflects your true earning power — not your take-home after tax and expenses.