13 ms·

UK middle classes 'struggling despite incomes of up to £60k a year'

47 points by BerislavLopac 3y ago

andrewstuart 3y ago
Everything accrues to the rich. Tax breaks, handouts, benefits all for the rich. The people in power are rich therefore they look after the rich. There’s no middle class any more, just people who own houses and the poor. There’s ostensibly two political parties but in fact they both represent the rich. I’m talking Australia here but wouldn’t be surprised if the trend was the same around the world.
- bamboozled 3y ago
  I know right, can't these people just get into robotics, space tech or AI startups? geez \s
  - sparrowInHand 3y ago
    Or at least get a job, writting crude unjust-world-justification blogspam. Obviously they lack noble blood and inflicted this upon themselves. If you measure the noose to cheek ratio, they all fall short of an Elon.
- short_sells_poo 3y ago
  The UK seems to be uniquely hostile to the middle class. It sports a trifecta of: 1. High taxes. The marginal tax rate from 37k onwards is 40%, and that's just the income tax. On top of this there's national insurance (another couple of %). 2. Poor services and infrastructure. The roads are crumbling, massive potholes even in the richets towns and cities. Public transport is falling apart. There have been near constant strikes or disruptions in the past couple of years. 3. High concentration of wealth and a significant "housing as an investment" culture. Unless you are born into wealth or happen to luck your way into finance in London - the only high paying industry and location - you'll earn fairly little money. The government then takes a large portion of this money and gives you very little in return. Both the infrastructure and the living standards of former Eastern Bloc countries are now better than the average in the UK. A friend of mine summed it up neatly: the UK acts as if it was a first world country, whereas in reality it is a developing country. It needs to start thinking like a developing country, the policies it adops need to be that of a developing country. I'm an expat, but I like it here and I really like the people. It breaks my heart how much of a shitshow the country has become and how much each day the hope of a better tomorrow slips away.
  - 15457345234 3y ago
    Without sounding too much like a conspiracy theorist, the UK has always seemed to me like a fairly 'sewn up' place with a lot of sheep and a few wolves. If you show too much enthusiasm for not being a sheep you're gently reminded that the exit is always open: before it was the colonies (either by choice or by transportation!) today it's Australia/NZ or America - the door is always open and it's trivial to get into either one of those countries (by marriage) Thatcher fought the system and tried to free people (please don't laugh) and set a lot of people on an upward trajectory, being able to own their first home which is key to building wealth and a hugely powerful black PR network set about demonising her the moment she left office. She's now utterly reviled despite winning a gigantic share of the vote on several occasions and doing a huge amount to set the working classes free of rentiers. The 'public housing selloff' in the UK wouldn't have been a scandal if new public housing had been built but the idea of building that stuff just to sell it to the 'proles' really didn't go over well with those who hold the purse strings so they basically vetoed any more ever being built from that point on. Now it's even worse, many new housing developments are shared ownership, even with cash you can't buy outright, you have to accept owning only a share and paying rent forever. Also it's virtually impossible to build your own house or even have anything constructed that has any sort of interesting architecture. The difference between UK small towns and French/German small towns is ludicrous - in Europe the architecture has long since adapted to modern living patterns and styles, in the UK the houses still need to be built with a certain 'look' because 'that's the UK look' and it's so tedious. Vested interests in the UK have simply been there too long to accept any challenge to their power. They just point to the door.
    - short_sells_poo 3y ago
      I suspect there's at least a grain of truth to what you write. The housing stock (even newly built) in the UK is atrocious. The quality is really poor, unless you pay a massive premium. And I agree with you: it all looks the same dreary brown. Everything has to be identical baby diarrhea brown and the same design. And somehow nobody seems to be keen to demolish and replace the terrible 60s-70s houses either. Why is that? It costs too much? Or someone, somewhere actually enforces that the design must remain as it is? I have yet to see a new development where I can say: oh this looks nice and positive. I don't know who to blame for this, whether it's some funky conservation societies who wield way too much power, or whether it is self inflicted dreariness that people somehow like.
- cynicalsecurity 3y ago
  Damn those rich. If only we could take their riches and divide it amongst ourselves, then it would have been a paradise on Earth! Wait, comrades, why am I in the gulag, where are you dragging me... Please don't shoooot...
  - andrewstuart 3y ago
    Whenever any concern is shown for the massive wealth inequality, always people like this yell “communism!” There’s no empathy or desire for everyone in society to do well, just unbridled greed.
vegancap 3y ago
Yep. I'm on decent senior engineer London wages, living with my partners parents to save up for a house deposit, and even on good money and almost no expenses, it feels futile at times. So much of what I earn's gone on tax, then what's left quickly gets eaten away by bills, contributing to food shopping and the odd meal out. Just crazy. I don't know how most the population are surviving if London tech wages are getting squeezed this much. Really feels completely broken at the minute. If you're hard-working and a skilled worker, it barely pays off these days. I pay more taxes as a percentage than people with vast amounts of inherited wealth living off the interest. It really feels like hard work is actually punished in this country at the minute. I don't really see an end in sight, either. The two main parties are virtually identical at this point, bar some minor differences in rhetoric on none issues like 'woke stuff'. There doesn't seem to be any competent leadership in our politics anymore, no big ideas, no big plans. It all seems to boil down to making half-arsed memes about how bad the other party is, or completely meaningless slogans. Just maintaining the current status quo with a few tweaks here and there to little effect. Sorry for the rant, but this article resonates so much and I'm really angry at how things are here at the moment.
- gonzo41 3y ago
  Have you heard of the trash future podcast. You might find it a laugh.
  - vegancap 3y ago
    Nope, but I'll check it out, thanks!
- kubb 3y ago
  You’ve had one party in power for almost 14 years, and you’re trying as hard as you can to spread the responsibility evenly? Do you recall what was happening when Jeremy Corbyn was the leader of Labor? The guy was getting bombarded by the press and the media. Could it be that his policies were actually going to change the status quo?
  - vegancap 3y ago
doix 3y ago
The problem with the UK is that tax is pretty much setup to destroy the "middle class". Anyone that is a PAYE (pay as you earn) employee gets taxed significantly more than anyone outside the system. The common thing to do is to start your own company, pay yourself minimum wage and take the rest as dividends which get taxed at 20%. Then you also get to expense certain things and reduce your tax liability further. It also screws over single earners significantly. A household where a single person makes 60k is _significantly_ worse-off than a household where two people make 30k each. Having your own company allows you to hire your SO and thus get double the tax free allowance even if only one of you is working. It creates a tragedy of the commons situation. Anyone not doing the above gets absolutely shafted by the tax man. Anyone doing that, is taking advantage of everyone else paying full tax. As more and more people do that, less people are paying tax, so the government raises taxes further squeezing the middle class. Edit: some people in the comments are saying this is not true, so it may not be. I don't do this, so I wouldn't know. Friends say they do this and have been trying to convince me that it's worth it. I don't know the exact details and I'm starting to doubt myself. Further edit: Had to check, but indeed the tax on dividends is lower. So between £12,571 to £50,270 your income is taxed at 20%, but as dividends it's 8.75%. Then regular income over 50k is taxed at 40% whereas dividends are taxed at 33.75%. You also don't pay national insurance on your dividend earnings, which further lowers tax. I'm guessing the 20% figure I was told is what it averaged out as. Sources: https://www.gov.uk/tax-on-dividends https://www.gov.uk/tax-on-dividends https://www.gov.uk/income-tax-rates https://www.gov.uk/income-tax-rates
- holoduke 3y ago
  Thats not true. Divident income is added to your normal income and taxed. There is a band and some free allowance and different buckets. But all in all it does not really matter if personal income comes from divident or work. Best would be to register yourself outside of the UK and live as a non domicile in the UK.
  - doix 3y ago
    So all the comments made me start second guessing myself, so I went and checked. The difference is pretty staggering to me. You also don't pay national insurance on your dividend income, which helps. But you are right, you add the income from dividends to your regular income to figure out your tax bracket, but the rates are much lower: https://www.gov.uk/tax-on-dividends https://www.gov.uk/tax-on-dividends https://www.gov.uk/income-tax-rates https://www.gov.uk/income-tax-rates
blue_cookeh 3y ago
I can't help but feel the only way to achieve a middle class lifestyle in the UK at this point is to be a couple (alongside realistic expectations around housing location, too many people are hell bent on London for some reason). As a single person, getting on the property ladder and keeping your head above water on £60k would be difficult, yet as a childless dual income (DINK) couple it's a comfortable life in the Midlands or North of the country. If you add children to the mix, suddenly it's very difficult again. The tax burden is insane nowadays. The 40% bracket is frozen at an insanely low level until at least 2028 AFAIK - it's hugely demoralising to know that anything I earn outside of my day job is taxed at 40% unless I want to squirrel the money away into a pension or buy shit I don't need to reduce my tax bill.
- contextnavidad 3y ago
  Midlands is the way to go honestly, great transport links to the whole country, great nature, very cheap living.
- robertlagrant 3y ago
  This is a great summary of my feelings as well. We're trying to be a single-earner family, and it's punishingly difficult due to the tax rules. My spouse basically needs to get a job just to take advantage of the tax rules, as her getting £20k/year job is the same as me getting a £45k/yr pay rise.
niallsaccount 3y ago
'Up to 60k a year' is middle class? Does that make plumbers middle class, as they earn above that? Personally I think middle class would be around £80-150k. (I know its not all based on salary.) According to the BOE calculator[1] 50k in 2000 is 90k nowadays. I think this country has a Freddo issue on wages and what certain demographic grew up with seems to be what society accepts. Minimum wage is 23k, with an average UK wage of 28k. In ~10 years most people are going to be on minimum. Even some of the middle class according to this article (30k). [1]: https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator https://www.bankofengland.co.uk/monetary-policy/inflation/in...
- retrac98 3y ago
  "Freddo issue" is such a perfect description.
- betaby 3y ago
  Middle class by modern definition in the middle 1/3 band of the income distribution, no?
  - niallsaccount 3y ago
    Nah, not for me. Working class is the majority of people, maybe something like 3/5ths. Then middle and uppers are pretty tiny (not many royals/lords). But there's lots of markers of middle class not just money.
    - betaby 3y ago
      Perhaps. But than that means what working class of 80s were able to afford homes/flats and now does not.
- contextnavidad 3y ago
  You're a little off on the average UK wage. It's around £34k now.
  - 3y ago
retrac98 3y ago
Yes, because £60k isn’t really a middle class income anymore. After income tax it leaves about £3,400 a month. Rent or a mortgage, council tax, energy and food will take the vast majority of that, making it very hard to build wealth and get ahead - even without kids in the mix.
- gmac 3y ago
  And yet a £60K household income (two adults, no kids) still makes you better off than 88% of the population. [1] I think a lot of people on comfortable incomes have absolutely no idea how privileged they are. I also know people who complain about their financial situation in the same breath that they contemplate spending £15K/year or more per child on private education, in spite of having good state schools available. [1] https://ifs.org.uk/tools_and_resources/where_do_you_fit_in https://ifs.org.uk/tools_and_resources/where_do_you_fit_in
  - retrac98 3y ago
    This “others have it worse so I'll keep quiet” attitude is part of what’s gotten the UK into the mess it’s in.
    - gmac 3y ago
      That really isn't what I said or meant.
  - MagnumOpus 3y ago
    > a £60K household income (two adults, no kids) still makes you better off than 88% of the population That is before taxes and redistribution though. People without income or with _de minimis_ income would get their housing cost paid (which costs £20k-£30k per year in London, i.e. 25-40k of pre-tax salary), their council tax bill paid, their TV licence fee waived, prescription and dentistry fees waived, childcare subsidised, and would get £400 of spending money per person on top for bills, food etc. Which is why people on zero income in London can afford to have 2-3 kids, but two people on £50k combined income cannot.
betaby 3y ago
Same in Canada on 100K cad a year. Middle class is gone mostly everywhere in the so called developed countries.
deleted 3y ago
[deleted]
somewhereoutth 3y ago
While wealth is not zero sum, neither is it infinite sum, and indeed some components (e.g. living space in desirable locations) are very much zero sum. Wealth also has a tendency to agglomerate. We need wealth taxes now. Anything above say 2MM belongs to the People (remember them?) anyway, perhaps we continue to license some proportion of that back to the rich for entertainment value (and to provide a funding mechanism for potentially valuable but 'bonkers' projects that might otherwise go unfunded)
deleted 3y ago
[deleted]
lifestyleguru 3y ago
The accumulated inflation around Europe since Covid is in range 20-50% or higher. The real estate prices increase exceeded inflation. Tax free allowances are now below poverty, highest tax brackets kick in for salaries barely supporting a couple with one child. Welcome to precarious Europe.
selfmodruntime 3y ago
Germany is similar. Housing costs are a part of this. As are rising food prices. But the main thing people don‘t mention is that taxes are insane right now. In Germany at least, the tax brackets are not coupled to inflation. I earn close to the money in the headline and I‘m at the highest tax break. As per OECD, I‘ve paid 50% of my wage as income taxes. This is after my employer paid the same amount of tax for employing me as well. We pay the highest price on energy in Europe. I pay 20% VAT on everything I buy. My Government was close to earning a trillion dollars this year and they still say it‘s not enough. Meanwhile we‘ve been getting report after report in the news that a family of four experiences no net income difference between 3K EUR and 5K EUR because the government decreases social financial support payments depending on supplemental income after the 3K Euro mark. Through the governments policy, they are directly subsidizing rent and increasing landlord wealth by paying out rent support in cities. High tax and lax policies keep wages artificially down.
- lifestyleguru 3y ago
  42% income tax kicks in at income of mere 67k. Why work at all?
  - selfmodruntime 3y ago
    The thing is, due to social policies and supplemental payments, there is close to no difference in net income when working part time as opposed to working full time. We have a part time epidemic in Germany, and economists have already begun rattling swords to decrease part time work possibilities in the future.
- cynicalsecurity 3y ago
  You have nothing to complain about. The higher education is completely free, the healthcare is mostly free of the highest quality, the infrastructure is top notch and the salaries are amongst the highest in the world.
  - selfmodruntime 3y ago
carlsborg 3y ago
Pre 2008 crisis, that amount was equivalent to almost 120k USD and then just prior to Brexit it was about 90k in USD and today its about 75k US. So it used to be comfortable number. Despite that, the UK is a fine country i will add. Things just work, cities are functional and livable, schools are free, and the NHS carries its weight - it is overloaded but if they introduce a small fee for GP visits and keep the big things like surgical interventions and cancer treatment free, it would maybe balance out its budget.
dave1999x 3y ago
This isn't middle class. It's less than average for dual earners. Single earners it's worse because of tax.
DrScientist 3y ago
Housing costs - pure and simple. In the UK - 60,000 a year is more than enough to live on - except if you have a significant mortgage ( or are paying somebody elses via rent ) - with average interests rates in the region of 4.5 % if you have a 90% mortgage on the average UK house price ( 362,000 ) then your available income after mortgage and tax is more in the 15-20K range. In my view that's a combination of letting the banks create too much money, leading to 'investment' in housing, and limited housing supply versus demand.
- dukeyukey 3y ago
  Worth remembering that only about 15% of Brits rent. Most (~65%) own their home, and most of the rest get subsidised social housing.
chimprich 3y ago
Most people in most countries don't see the value in tax - if you read any forum, people want to pay less tax and have better public services, which isn't really very achievable. Some people would prefer to follow a US kind of model of cuts to public services and low tax. Other people (including me) would rather be taxed higher in a more European model and have well-funded public services. The current UK government seems to have found a fourth option - high taxes and dreadful public services.
- dukeyukey 3y ago
  I wouldn't say "high" taxes. People like to say we've got European taxes and American services, but the UK tax burden is significantly lower than places like France, Sweden, and Germany. It's harder to compare services cos I've not lived anywhere else long enough to require public services.
  - chimprich 3y ago
    I agree generally, though it's not simple to compare countries. It's easier to compare UK history. It seems clear that we're paying more tax for significantly worse services compared to a decade ago.
  - tharmas 3y ago
    Fun fact: if you disaggregate London GDP from the UK GDP, the rest of the UK is as poor as the state of Mississippi.
    - dukeyukey 3y ago
      To be fair so does France. Worse, actually. If you melon-scoop the most productive 15% of the population out of any country the productivity of the rest goes down quite a bit.
- c0wb0yc0d3r 3y ago
  I've always wondered if there's a way to more efficiently tax more aspects of the "business world." By "business world" I mean business operations and interactions between businesses. I realize that to some extent these taxes would ultimately be passed onto consumers. However, I think there is an upper limit to which that can happen. For example, I feel like there can be an added or increased tax on mergers and acquisitions. I'm thinking more "sales tax." Another thought I've had is implementing a tax on advertisement viewership. I don't really know how that'd be implemented so I haven't put much thought into it.
asim 3y ago
The tax system is broken, the economy is tanking, the people are indifferent. The reality is this has been a slow decay of the British empire for many decades. All the money was being made via colonisation, nothing is made at home. Foreign money now enters to subsume many of the assets the Brits cannot maintain. The UK at this point is a shell corporation. I thought a business minded Rishi was going to do something but he's being held back by his peers and unfortunately it's too far gone to recover. We need a way for the country to make money, we need to be making a profit and that means we need to be investing significantly in producing next generation infrastructure on all levels. We don't do that. Countries in the middle east are reinventing themselves. Look at Qatar moving from pearls to oil and gas and then diversifying those investments further much of which is coming here to the UK. The country has rethink it's approach. Taxes aren't going to get lowered through efficient use of funds. It's going to happen by producing something of value for the rest of the world.
- lifestyleguru 3y ago
  Yeah sure that's all valid points, but will Harry reunite with his family?
  - DrScientist 3y ago
    Joking aside - telling stories, entertainment, sport etc is something the UK is actually good at. Higher education is another world leading sector.
    - dukeyukey 3y ago
      Compared to it's European peers, the UK is ridiculously good at: * Basically anything creative (especially literature but also film/tv, and not bad at games) * Tech (not American levels but still better than all it's neighbours) * Education * High-end aerospace and automotive
- ghusto 3y ago
  I agree that the UK has had a paper economy for a long time now, but to a lesser extent, so do other EU countries. Not that I don't think this is a mistake, only that it should show that this is not the issue. The issue is pessimism, something the British excel at. Economic investment and stock markets obviously don't do well with that. Unpopular opinion, but Brexit didn't _need_ to be a disaster. It was made so by the negativity surrounding it. A large part of the shit-show was investors getting spooked and moving abroad, because of all the doom-and-gloom it became a self fulfilling prophecy.
BerislavLopac 3y ago
In case anyone is unsure how is "middle class" defined in the UK, here is a short primer: https://www.quora.com/Whats-the-line-between-middle-class-upper-middle-class-and-upper-class-in-Britain/answer/Jake-Williams-65 https://www.quora.com/Whats-the-line-between-middle-class-up...
nojvek 3y ago
I really love US - married, filing jointly option if only one person is working. The standard deductible is a neat idea, a lot less paperwork to file.
farukmanon12 3y ago
[dead]

47 points by BerislavLopac 3y ago

Everything accrues to the rich. Tax breaks, handouts, benefits all for the rich. The people in power are rich therefore they look after the rich. There’s no middle class any more, just people who own houses and the poor. There’s ostensibly two political parties but in fact they both represent the rich. I’m talking Australia here but wouldn’t be surprised if the trend was the same around the world.

bamboozled 3y ago
I know right, can't these people just get into robotics, space tech or AI startups? geez \s
- sparrowInHand 3y ago
  Or at least get a job, writting crude unjust-world-justification blogspam. Obviously they lack noble blood and inflicted this upon themselves. If you measure the noose to cheek ratio, they all fall short of an Elon.
short_sells_poo 3y ago
The UK seems to be uniquely hostile to the middle class. It sports a trifecta of: 1. High taxes. The marginal tax rate from 37k onwards is 40%, and that's just the income tax. On top of this there's national insurance (another couple of %). 2. Poor services and infrastructure. The roads are crumbling, massive potholes even in the richets towns and cities. Public transport is falling apart. There have been near constant strikes or disruptions in the past couple of years. 3. High concentration of wealth and a significant "housing as an investment" culture. Unless you are born into wealth or happen to luck your way into finance in London - the only high paying industry and location - you'll earn fairly little money. The government then takes a large portion of this money and gives you very little in return. Both the infrastructure and the living standards of former Eastern Bloc countries are now better than the average in the UK. A friend of mine summed it up neatly: the UK acts as if it was a first world country, whereas in reality it is a developing country. It needs to start thinking like a developing country, the policies it adops need to be that of a developing country. I'm an expat, but I like it here and I really like the people. It breaks my heart how much of a shitshow the country has become and how much each day the hope of a better tomorrow slips away.
- 15457345234 3y ago
  Without sounding too much like a conspiracy theorist, the UK has always seemed to me like a fairly 'sewn up' place with a lot of sheep and a few wolves. If you show too much enthusiasm for not being a sheep you're gently reminded that the exit is always open: before it was the colonies (either by choice or by transportation!) today it's Australia/NZ or America - the door is always open and it's trivial to get into either one of those countries (by marriage) Thatcher fought the system and tried to free people (please don't laugh) and set a lot of people on an upward trajectory, being able to own their first home which is key to building wealth and a hugely powerful black PR network set about demonising her the moment she left office. She's now utterly reviled despite winning a gigantic share of the vote on several occasions and doing a huge amount to set the working classes free of rentiers. The 'public housing selloff' in the UK wouldn't have been a scandal if new public housing had been built but the idea of building that stuff just to sell it to the 'proles' really didn't go over well with those who hold the purse strings so they basically vetoed any more ever being built from that point on. Now it's even worse, many new housing developments are shared ownership, even with cash you can't buy outright, you have to accept owning only a share and paying rent forever. Also it's virtually impossible to build your own house or even have anything constructed that has any sort of interesting architecture. The difference between UK small towns and French/German small towns is ludicrous - in Europe the architecture has long since adapted to modern living patterns and styles, in the UK the houses still need to be built with a certain 'look' because 'that's the UK look' and it's so tedious. Vested interests in the UK have simply been there too long to accept any challenge to their power. They just point to the door.
  - short_sells_poo 3y ago
    I suspect there's at least a grain of truth to what you write. The housing stock (even newly built) in the UK is atrocious. The quality is really poor, unless you pay a massive premium. And I agree with you: it all looks the same dreary brown. Everything has to be identical baby diarrhea brown and the same design. And somehow nobody seems to be keen to demolish and replace the terrible 60s-70s houses either. Why is that? It costs too much? Or someone, somewhere actually enforces that the design must remain as it is? I have yet to see a new development where I can say: oh this looks nice and positive. I don't know who to blame for this, whether it's some funky conservation societies who wield way too much power, or whether it is self inflicted dreariness that people somehow like.
cynicalsecurity 3y ago
Damn those rich. If only we could take their riches and divide it amongst ourselves, then it would have been a paradise on Earth! Wait, comrades, why am I in the gulag, where are you dragging me... Please don't shoooot...
- andrewstuart 3y ago
  Whenever any concern is shown for the massive wealth inequality, always people like this yell “communism!” There’s no empathy or desire for everyone in society to do well, just unbridled greed.

vegancap 3y ago

Yep. I'm on decent senior engineer London wages, living with my partners parents to save up for a house deposit, and even on good money and almost no expenses, it feels futile at times. So much of what I earn's gone on tax, then what's left quickly gets eaten away by bills, contributing to food shopping and the odd meal out. Just crazy. I don't know how most the population are surviving if London tech wages are getting squeezed this much. Really feels completely broken at the minute. If you're hard-working and a skilled worker, it barely pays off these days. I pay more taxes as a percentage than people with vast amounts of inherited wealth living off the interest. It really feels like hard work is actually punished in this country at the minute. I don't really see an end in sight, either. The two main parties are virtually identical at this point, bar some minor differences in rhetoric on none issues like 'woke stuff'. There doesn't seem to be any competent leadership in our politics anymore, no big ideas, no big plans. It all seems to boil down to making half-arsed memes about how bad the other party is, or completely meaningless slogans. Just maintaining the current status quo with a few tweaks here and there to little effect. Sorry for the rant, but this article resonates so much and I'm really angry at how things are here at the moment.

gonzo41 3y ago
Have you heard of the trash future podcast. You might find it a laugh.
- vegancap 3y ago
  Nope, but I'll check it out, thanks!
kubb 3y ago
You’ve had one party in power for almost 14 years, and you’re trying as hard as you can to spread the responsibility evenly? Do you recall what was happening when Jeremy Corbyn was the leader of Labor? The guy was getting bombarded by the press and the media. Could it be that his policies were actually going to change the status quo?
- vegancap 3y ago

doix 3y ago

The problem with the UK is that tax is pretty much setup to destroy the "middle class". Anyone that is a PAYE (pay as you earn) employee gets taxed significantly more than anyone outside the system. The common thing to do is to start your own company, pay yourself minimum wage and take the rest as dividends which get taxed at 20%. Then you also get to expense certain things and reduce your tax liability further. It also screws over single earners significantly. A household where a single person makes 60k is _significantly_ worse-off than a household where two people make 30k each. Having your own company allows you to hire your SO and thus get double the tax free allowance even if only one of you is working. It creates a tragedy of the commons situation. Anyone not doing the above gets absolutely shafted by the tax man. Anyone doing that, is taking advantage of everyone else paying full tax. As more and more people do that, less people are paying tax, so the government raises taxes further squeezing the middle class. Edit: some people in the comments are saying this is not true, so it may not be. I don't do this, so I wouldn't know. Friends say they do this and have been trying to convince me that it's worth it. I don't know the exact details and I'm starting to doubt myself. Further edit: Had to check, but indeed the tax on dividends is lower. So between £12,571 to £50,270 your income is taxed at 20%, but as dividends it's 8.75%. Then regular income over 50k is taxed at 40% whereas dividends are taxed at 33.75%. You also don't pay national insurance on your dividend earnings, which further lowers tax. I'm guessing the 20% figure I was told is what it averaged out as. Sources: https://www.gov.uk/tax-on-dividends https://www.gov.uk/tax-on-dividends https://www.gov.uk/income-tax-rates https://www.gov.uk/income-tax-rates

holoduke 3y ago
Thats not true. Divident income is added to your normal income and taxed. There is a band and some free allowance and different buckets. But all in all it does not really matter if personal income comes from divident or work. Best would be to register yourself outside of the UK and live as a non domicile in the UK.
- doix 3y ago
  So all the comments made me start second guessing myself, so I went and checked. The difference is pretty staggering to me. You also don't pay national insurance on your dividend income, which helps. But you are right, you add the income from dividends to your regular income to figure out your tax bracket, but the rates are much lower: https://www.gov.uk/tax-on-dividends https://www.gov.uk/tax-on-dividends https://www.gov.uk/income-tax-rates https://www.gov.uk/income-tax-rates

blue_cookeh 3y ago

I can't help but feel the only way to achieve a middle class lifestyle in the UK at this point is to be a couple (alongside realistic expectations around housing location, too many people are hell bent on London for some reason). As a single person, getting on the property ladder and keeping your head above water on £60k would be difficult, yet as a childless dual income (DINK) couple it's a comfortable life in the Midlands or North of the country. If you add children to the mix, suddenly it's very difficult again. The tax burden is insane nowadays. The 40% bracket is frozen at an insanely low level until at least 2028 AFAIK - it's hugely demoralising to know that anything I earn outside of my day job is taxed at 40% unless I want to squirrel the money away into a pension or buy shit I don't need to reduce my tax bill.

contextnavidad 3y ago
Midlands is the way to go honestly, great transport links to the whole country, great nature, very cheap living.
robertlagrant 3y ago
This is a great summary of my feelings as well. We're trying to be a single-earner family, and it's punishingly difficult due to the tax rules. My spouse basically needs to get a job just to take advantage of the tax rules, as her getting £20k/year job is the same as me getting a £45k/yr pay rise.

niallsaccount 3y ago

'Up to 60k a year' is middle class? Does that make plumbers middle class, as they earn above that? Personally I think middle class would be around £80-150k. (I know its not all based on salary.) According to the BOE calculator[1] 50k in 2000 is 90k nowadays. I think this country has a Freddo issue on wages and what certain demographic grew up with seems to be what society accepts. Minimum wage is 23k, with an average UK wage of 28k. In ~10 years most people are going to be on minimum. Even some of the middle class according to this article (30k). [1]: https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator https://www.bankofengland.co.uk/monetary-policy/inflation/in...

retrac98 3y ago
"Freddo issue" is such a perfect description.
betaby 3y ago
Middle class by modern definition in the middle 1/3 band of the income distribution, no?
- niallsaccount 3y ago
  Nah, not for me. Working class is the majority of people, maybe something like 3/5ths. Then middle and uppers are pretty tiny (not many royals/lords). But there's lots of markers of middle class not just money.
  - betaby 3y ago
    Perhaps. But than that means what working class of 80s were able to afford homes/flats and now does not.
contextnavidad 3y ago
You're a little off on the average UK wage. It's around £34k now.
- 3y ago

retrac98 3y ago

Yes, because £60k isn’t really a middle class income anymore. After income tax it leaves about £3,400 a month. Rent or a mortgage, council tax, energy and food will take the vast majority of that, making it very hard to build wealth and get ahead - even without kids in the mix.

gmac 3y ago
And yet a £60K household income (two adults, no kids) still makes you better off than 88% of the population. [1] I think a lot of people on comfortable incomes have absolutely no idea how privileged they are. I also know people who complain about their financial situation in the same breath that they contemplate spending £15K/year or more per child on private education, in spite of having good state schools available. [1] https://ifs.org.uk/tools_and_resources/where_do_you_fit_in https://ifs.org.uk/tools_and_resources/where_do_you_fit_in
- retrac98 3y ago
  This “others have it worse so I'll keep quiet” attitude is part of what’s gotten the UK into the mess it’s in.
  - gmac 3y ago
    That really isn't what I said or meant.
- MagnumOpus 3y ago
  > a £60K household income (two adults, no kids) still makes you better off than 88% of the population That is before taxes and redistribution though. People without income or with _de minimis_ income would get their housing cost paid (which costs £20k-£30k per year in London, i.e. 25-40k of pre-tax salary), their council tax bill paid, their TV licence fee waived, prescription and dentistry fees waived, childcare subsidised, and would get £400 of spending money per person on top for bills, food etc. Which is why people on zero income in London can afford to have 2-3 kids, but two people on £50k combined income cannot.

betaby 3y ago

Same in Canada on 100K cad a year. Middle class is gone mostly everywhere in the so called developed countries.

deleted 3y ago

[deleted]

somewhereoutth 3y ago

While wealth is not zero sum, neither is it infinite sum, and indeed some components (e.g. living space in desirable locations) are very much zero sum. Wealth also has a tendency to agglomerate. We need wealth taxes now. Anything above say 2MM belongs to the People (remember them?) anyway, perhaps we continue to license some proportion of that back to the rich for entertainment value (and to provide a funding mechanism for potentially valuable but 'bonkers' projects that might otherwise go unfunded)

deleted 3y ago

[deleted]

lifestyleguru 3y ago

The accumulated inflation around Europe since Covid is in range 20-50% or higher. The real estate prices increase exceeded inflation. Tax free allowances are now below poverty, highest tax brackets kick in for salaries barely supporting a couple with one child. Welcome to precarious Europe.

selfmodruntime 3y ago

Germany is similar. Housing costs are a part of this. As are rising food prices. But the main thing people don‘t mention is that taxes are insane right now. In Germany at least, the tax brackets are not coupled to inflation. I earn close to the money in the headline and I‘m at the highest tax break. As per OECD, I‘ve paid 50% of my wage as income taxes. This is after my employer paid the same amount of tax for employing me as well. We pay the highest price on energy in Europe. I pay 20% VAT on everything I buy. My Government was close to earning a trillion dollars this year and they still say it‘s not enough. Meanwhile we‘ve been getting report after report in the news that a family of four experiences no net income difference between 3K EUR and 5K EUR because the government decreases social financial support payments depending on supplemental income after the 3K Euro mark. Through the governments policy, they are directly subsidizing rent and increasing landlord wealth by paying out rent support in cities. High tax and lax policies keep wages artificially down.

lifestyleguru 3y ago
42% income tax kicks in at income of mere 67k. Why work at all?
- selfmodruntime 3y ago
  The thing is, due to social policies and supplemental payments, there is close to no difference in net income when working part time as opposed to working full time. We have a part time epidemic in Germany, and economists have already begun rattling swords to decrease part time work possibilities in the future.
cynicalsecurity 3y ago
You have nothing to complain about. The higher education is completely free, the healthcare is mostly free of the highest quality, the infrastructure is top notch and the salaries are amongst the highest in the world.
- selfmodruntime 3y ago

carlsborg 3y ago

Pre 2008 crisis, that amount was equivalent to almost 120k USD and then just prior to Brexit it was about 90k in USD and today its about 75k US. So it used to be comfortable number. Despite that, the UK is a fine country i will add. Things just work, cities are functional and livable, schools are free, and the NHS carries its weight - it is overloaded but if they introduce a small fee for GP visits and keep the big things like surgical interventions and cancer treatment free, it would maybe balance out its budget.

dave1999x 3y ago

This isn't middle class. It's less than average for dual earners. Single earners it's worse because of tax.

DrScientist 3y ago

Housing costs - pure and simple. In the UK - 60,000 a year is more than enough to live on - except if you have a significant mortgage ( or are paying somebody elses via rent ) - with average interests rates in the region of 4.5 % if you have a 90% mortgage on the average UK house price ( 362,000 ) then your available income after mortgage and tax is more in the 15-20K range. In my view that's a combination of letting the banks create too much money, leading to 'investment' in housing, and limited housing supply versus demand.

dukeyukey 3y ago
Worth remembering that only about 15% of Brits rent. Most (~65%) own their home, and most of the rest get subsidised social housing.

chimprich 3y ago

Most people in most countries don't see the value in tax - if you read any forum, people want to pay less tax and have better public services, which isn't really very achievable. Some people would prefer to follow a US kind of model of cuts to public services and low tax. Other people (including me) would rather be taxed higher in a more European model and have well-funded public services. The current UK government seems to have found a fourth option - high taxes and dreadful public services.

dukeyukey 3y ago
I wouldn't say "high" taxes. People like to say we've got European taxes and American services, but the UK tax burden is significantly lower than places like France, Sweden, and Germany. It's harder to compare services cos I've not lived anywhere else long enough to require public services.
- chimprich 3y ago
  I agree generally, though it's not simple to compare countries. It's easier to compare UK history. It seems clear that we're paying more tax for significantly worse services compared to a decade ago.
- tharmas 3y ago
  Fun fact: if you disaggregate London GDP from the UK GDP, the rest of the UK is as poor as the state of Mississippi.
  - dukeyukey 3y ago
    To be fair so does France. Worse, actually. If you melon-scoop the most productive 15% of the population out of any country the productivity of the rest goes down quite a bit.
c0wb0yc0d3r 3y ago
I've always wondered if there's a way to more efficiently tax more aspects of the "business world." By "business world" I mean business operations and interactions between businesses. I realize that to some extent these taxes would ultimately be passed onto consumers. However, I think there is an upper limit to which that can happen. For example, I feel like there can be an added or increased tax on mergers and acquisitions. I'm thinking more "sales tax." Another thought I've had is implementing a tax on advertisement viewership. I don't really know how that'd be implemented so I haven't put much thought into it.

asim 3y ago

The tax system is broken, the economy is tanking, the people are indifferent. The reality is this has been a slow decay of the British empire for many decades. All the money was being made via colonisation, nothing is made at home. Foreign money now enters to subsume many of the assets the Brits cannot maintain. The UK at this point is a shell corporation. I thought a business minded Rishi was going to do something but he's being held back by his peers and unfortunately it's too far gone to recover. We need a way for the country to make money, we need to be making a profit and that means we need to be investing significantly in producing next generation infrastructure on all levels. We don't do that. Countries in the middle east are reinventing themselves. Look at Qatar moving from pearls to oil and gas and then diversifying those investments further much of which is coming here to the UK. The country has rethink it's approach. Taxes aren't going to get lowered through efficient use of funds. It's going to happen by producing something of value for the rest of the world.

lifestyleguru 3y ago
Yeah sure that's all valid points, but will Harry reunite with his family?
- DrScientist 3y ago
  Joking aside - telling stories, entertainment, sport etc is something the UK is actually good at. Higher education is another world leading sector.
  - dukeyukey 3y ago
    Compared to it's European peers, the UK is ridiculously good at: * Basically anything creative (especially literature but also film/tv, and not bad at games) * Tech (not American levels but still better than all it's neighbours) * Education * High-end aerospace and automotive
ghusto 3y ago
I agree that the UK has had a paper economy for a long time now, but to a lesser extent, so do other EU countries. Not that I don't think this is a mistake, only that it should show that this is not the issue. The issue is pessimism, something the British excel at. Economic investment and stock markets obviously don't do well with that. Unpopular opinion, but Brexit didn't _need_ to be a disaster. It was made so by the negativity surrounding it. A large part of the shit-show was investors getting spooked and moving abroad, because of all the doom-and-gloom it became a self fulfilling prophecy.

BerislavLopac 3y ago

In case anyone is unsure how is "middle class" defined in the UK, here is a short primer: https://www.quora.com/Whats-the-line-between-middle-class-upper-middle-class-and-upper-class-in-Britain/answer/Jake-Williams-65 https://www.quora.com/Whats-the-line-between-middle-class-up...

nojvek 3y ago

I really love US - married, filing jointly option if only one person is working. The standard deductible is a neat idea, a lot less paperwork to file.

farukmanon12 3y ago

[dead]