Taxation has become a key political issue recently, so how much do you have to earn to be considered wealthy in the UK?
Roughly 60% of our youth believe that wealth is accomplished when earning £80,000 a year, but only 35% of those aged 65 and over would agree. Overall, 44% of UK workers consider that a person earning £80,000 is wealthy.
However, after research concerning ‘Britain Thinks’ and ‘Indeed’, it has been found that in reality the sum of wealth is considered to be £134,170 a year. This figure is nearly five times the national average wage of £28,000. But that average conceals huge generational and regional differences, with younger people likely to believe that wealth starts at lower pay levels.
As previously mentioned, there are regional variations. In Wales, the average person considers the sum of wealth to begin at an annual salary of £91,681. Whereas in south east England, you’d have to be earning £162,844 to be seen as typically rich, which is 78% more than in Wales.
An economist at ‘Indeed’ can be quoted saying, “The labour market is creating jobs at a steady rate and unemployment is at its lowest level for more than four decades.” Unfortunately, they also mentioned that our wages are deteriorating, to the point where the British output per worker has dropped below international trends, far behind many other European countries. “The gap between earning the UK average wage of £28,000 and earning £80,000 will feel hard to bridge for many.”
A record number of people are paying the highest rate of income tax, but remain a fraction of total taxpayer numbers.
Figures from HM Revenue and Customs (HMRC) show that an estimated 364,000 people were paying the 45p rate of tax on income over £150,000, up from 311,000 in 2013-14. These people represent 1.2% of income tax payers in the UK, and the number of people paying at the basic (20%) and higher (40%) rates of tax has fallen slightly.
Recent estimates show that 25.1 million, which is roughly 81.8% of taxpayers, were paying tax at the basic rate. In addition, a further 4.2 million individuals, 13.7% of taxpayers, pay tax at the higher 40% rate. These numbers are likely to have been relatively static, which is partly responsible for the increase in the threshold at which these rates of income tax are paid.
In 2010, the amount you were able to earn before paying any income tax (income tax personal allowance) – was £6,475. This year it rose to £11,500, which is considerably faster than inflation.
However, the threshold of £150,000 is currently frozen. In simpler terms, this basically means that the numbers paying the highest rate of tax may increase, even if pay rises no faster than the cost of living. There have also been changes to pension rules for the most well-off.
Paul Bain, a financial advisor at Gale and Phillipson, said: “Many more low earners are being taken out of the tax system altogether. Basic-rate taxpayers are paying a lower overall average rate of tax, while the top earners’ share of income is declining, their contribution to the income tax system is increasing.”
To be in the richest 1% of UK earners you would need to take home an annual salary of £162,000 (before tax) and you can make it into the richest 0.1% with under £1 million at £990,000 a year. Although the UK still has its share of billionaires with recognisable figures such as Roman Obramovich, Sir James Dyson and Sir Richard Branson all making the UK top 25 rich list for 2017.
The figures also show that the top 1% of taxpayers had a 12% share of total income, and were liable for 27.7% of all income tax. It is estimated that 15,000 UK taxpayers have incomes above £1m, of which 4,000 have incomes above £2m, the figures show. In total, there are now an estimated 30.3 million taxpayers in the UK.
At what salary do you think someone becomes wealthy? With such varied opinions across the UK it is uncertain what makes someone wealthy and with added variables such as cost of living it may never be possible to put an exact number on it. Even many of the top 1% admit not feeling wealthy with their £162,000 plus salaries as they touch shoulders with the 0.1% who are earning millions annually.
Written by Mitchel Baker