How to work out your real hourly rate after costs

The short answer

Work out your real hourly rate in four sums: mileage cost = miles x your cost per mile; other costs = your hourly costs x hours; net pay = offered pay minus both; real rate = net pay / hours. Use total door-to-door time, waiting included, or the number flatters you. Counting all time and miles usually shows a job pays less per hour than the offer screen suggests.

The pay on the offer screen is not what the job pays. What the job pays is what you keep per hour after your costs. Here is the whole method, plain enough to do on paper. Zippabout does the same sums for you, but you don't need it to check a job.

What you need before you start

Five numbers, and you can get all of them before you accept.

The offered pay, in pounds
The distance, in miles, including the drive to the pickup if you're travelling for the job
The total time in minutes, door to door, including the wait at pickup and at drop-off
Your cost per mile (there's a section on this below)
Your other costs per hour, for things like phone, data and a share of your insurance

The four sums

First, turn your minutes into hours: hours = minutes / 60. Then run these four sums in order.

Step	The sum
1. Mileage cost	miles x cost per mile
2. Other costs	other costs per hour x hours
3. Net pay	offered pay - mileage cost - other costs
4. Real hourly rate	net pay / hours

That last line is the number that matters. Everything before it exists to stop it flattering you.

A worked example

Made-up numbers, only to show the arithmetic. Say the app offers £9.20 for a job that is 8 miles and 45 minutes door to door. Your cost per mile is 55p and your other costs are 40p an hour.

hours = 45 / 60 = 0.75
mileage cost = 8 x 55p = £4.40
other costs = 40p x 0.75 = 30p
net pay = £9.20 - £4.40 - 30p = £4.50
real hourly rate = £4.50 / 0.75 = £6 an hour

The offer said £9.20. The job pays £6 an hour. Nothing about the job changed; you counted the bits the offer leaves out. Whether £6 an hour is worth your time is your call, but now it's an informed one.

Why the time has to be door to door

This is the most common mistake, and the one that flatters the answer most. If you only count the driving, a 45-minute job can look like a 25-minute one, and the hourly rate comes out nearly twice as big. Count from the moment you commit to the job to the moment it's done: the travel to the pickup, the queue at the counter, the wait at the kerb, the knock at the door.

Unpaid time is not a theory. In spring 2023 the Low Pay Commission spoke to people working in food delivery, private hire and parcel delivery, and published what it heard in May 2024. The Commission is clear these were reported experiences, not claimed to be representative of everyone in those sectors.

Across sectors, people reported substantial unpaid time waiting between jobs. Couriers said their pay was counted only from the first parcel scanned to the last delivery, so sorting time went unpaid. Private hire drivers calculated that 10 hours on the app could mean 14 hours once waiting was included, and a union representative said that after fuel and wear and tear, drivers 'would easily fall below' the minimum wage.

So the rule is simple: if the job took the time, the time goes in the sum. Every minute you leave out is a pay rise you gave yourself on paper.

Getting your cost per mile

Two honest ways to get this number. Use whichever you trust more, or work out both and take the higher.

Way one: the HMRC approved mileage rate for your vehicle. For cars and goods vehicles it is 55p a mile for the first 10,000 business miles in the year, then 25p a mile after that. Motorcycles get 24p a mile at any mileage, bicycles 20p. Electric cars and vans use the same rate as petrol and diesel. These rates took effect on 6 April 2026, when the car and van rate rose from 45p, and the same figures apply to self-employed people using HMRC's simplified mileage expenses.

One warning about that rate. It is a tax allowance, a rule of thumb meant to cover fuel plus wear. It is not a measurement of what your particular vehicle costs to run. Treat it as a starting point, not gospel.

Way two: your own fuel maths. The formula is pump price in pence per litre, divided by 100, times 4.54609, divided by your mpg. The 4.54609 is the litres in 1 imperial gallon, which is what UK mpg figures are measured in. The answer is your fuel cost per mile in pounds.

Example, with made-up numbers. Fuel at 140p a litre and a car doing 50 mpg: 140 / 100 = £1.40 a litre. £1.40 x 4.54609 = £6.36 a gallon. £6.36 / 50 = about 12.7p a mile. Do not use 140p in your own sum, because the real pump price moves every week. Check the current average on gov.uk before you work it out.

Fuel is not the whole cost. Tyres, servicing, repairs and the value your vehicle loses all come out of the same pocket. That is why plenty of people use the HMRC figure even though it is a tax rule of thumb: 12.7p of fuel is not 12.7p of cost.

Costs that run by the hour, not the mile

Some costs don't care how far you drive. Your phone, your data and a share of your insurance tick away by the hour. To turn a yearly cost into an hourly one, divide it by the hours you expect to work in a year. Example: £240 a year for phone and data over 1,000 working hours is 24p an hour. Add each item up and you have one other-costs-per-hour figure for the sum.

Setting your hourly floor

The floor is the line you compare every job against. The obvious reference point is the National Living Wage: £12.71 an hour from April 2026 for people aged 21 and over, £10.85 for 18 to 20 year olds, £8.00 for under 18s and apprentices. The rates change on 1 April each year.

Two caveats before you borrow that number. If you are self-employed you are not entitled to the minimum wage; the Low Pay Commission states that in plain terms. And an employee on £12.71 also gets paid holiday and a pension, which a self-employed person does not. That is why a lot of people set their floor above £12.71. What you set is your business, and no guide should tell you the figure.

Zippabout's verdict works off whatever floor you choose: 'good' at or above it, 'marginal' within 10% under it, 'below your floor' past that. The tool cannot make a job pay more. It tells you what the job pays before you accept it.

The honest weekly average

At the end of the week, divide the total money you kept by the total hours you worked. That blended rate is the honest average. Do not average your per-job rates instead: that gives a 20-minute job the same weight as a 3-hour one, so a long, badly paid shift barely dents the figure. Total kept divided by total hours weights every job by the time it actually took, which is why Zippabout's weekly summary works that way.

Zippabout itself is free, with no account and no ads. Your figures are stored on your own device and you can export them as a JSON file. They are estimates, not a wage slip and not tax advice.

The whole method is only as good as your time estimate. Guess 30 minutes for a job that really took 45 and every answer flatters you. Time your jobs honestly for a week or two and the numbers start to mean something.

Common questions

What should my cost per mile be?

Two honest options. One is the HMRC approved mileage rate for your vehicle: 55p a mile for the first 10,000 business miles in the year for cars and goods vehicles, then 25p, with 24p for motorcycles and 20p for bicycles. It is a tax rule of thumb for fuel plus wear, not a measurement of your costs. The other is to work out fuel cost per mile from the pump price and your mpg, then accept the true figure is higher once tyres, servicing, repairs and lost value come out of the same pocket.

Should I count the drive to the pickup?

Yes, if you travelled for that job. The miles cost fuel and wear, and the time is yours, so both belong in the minutes and miles you enter. Leaving them out makes the hourly figure look better than it is. When the Low Pay Commission spoke to gig workers in spring 2023, substantial unpaid time waiting between jobs came up across every sector.

What hourly rate should I aim for?

That is your call, and no tool can make it for you. The reference point most people use is the National Living Wage: £12.71 an hour from April 2026 if you are 21 or over. But a self-employed person is not entitled to it, and an employee on £12.71 also gets paid holiday and a pension, which you do not. That is why a lot of couriers set their floor above it.

Do I include tax in this?

No. This works out what you keep from a job before tax, and it is an estimate, not a wage slip and not tax advice. The trading allowance is £1,000 a year, and if your gross trading income for a tax year is more than £1,000 you must register for Self Assessment by 5 October in the following tax year. The detail is on gov.uk.

Is 45p still the mileage rate?

No. The rate for cars and goods vehicles rose from 45p to 55p a mile on 6 April 2026, for the first 10,000 business miles in the year, then 25p above that. It applies retrospectively for the 2026 to 2027 tax year, and self-employed people using HMRC's simplified mileage expenses get the same rates. Motorcycles are 24p a mile and bicycles 20p at any mileage.

Why is my real rate so much lower than the offered pay?

Because the offer ignores your miles and your waiting. A £9.20 offer for 8 miles and 45 minutes door to door works out at £6 an hour once you take off 55p a mile and a small hourly cost. Workers who spoke to the Low Pay Commission in spring 2023 said pay had grown harder to predict, with rates changing from hour to hour. Doing the sum on each job is how you see through it.

How should I work out my weekly average?

Divide the total money you kept in the week by the total hours you worked. Do not average the per-job rates, because that treats a 20-minute job the same as a 3-hour one. The blended figure weights everything by time, so the long, badly paid jobs pull it down exactly as much as they should.

Does an electric car or van use a different mileage rate?

No. HMRC's approved mileage rate for electric cars and vans is the same as for petrol and diesel: 55p a mile for the first 10,000 business miles in the year, then 25p. Your actual running cost per mile may differ, so it is still worth doing your own fuel and wear maths.

Sources

Every figure on this page traces to one of these. Rates change, usually each April, so the date below is when they were last checked against the source.

Figures checked 29 July 2026. If one of them is out of date, that is a real bug in this page: tell me and it gets fixed.