A day rate is the headline figure a contractor charges for a day's work. It is the most common way contractor pay is quoted, but on its own it says little about take-home pay, because what reaches the contractor depends heavily on IR35 status and the trading structure used.
Through an outside-IR35 PSC, the day rate flows into the company, which pays corporation tax on its profit, and the contractor then extracts the rest as a tax-efficient mix of salary and dividends, retaining good control over timing and pension contributions. Through an inside-IR35 engagement or an umbrella company, the same day rate has PAYE, employee NIC and employer costs taken from it before take-home.
This is why an umbrella or inside-IR35 assignment rate cannot be compared like-for-like with an outside-IR35 PSC day rate: the inside or umbrella figure has to absorb employer National Insurance at 15%, the Apprenticeship Levy and any umbrella margin before the worker is paid. When comparing offers, contractors should always convert the day rate into an expected take-home figure under the actual status and structure, rather than comparing headline rates.