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

The problem with the UK is that tax is pretty much setup to destroy the &quot;middle class&quot;. Anyone that is a PAYE (pay as you earn) employee gets taxed significantly more than anyone outside the system.<p>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.<p>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.<p>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.<p>Edit: some people in the comments are saying this is not true, so it may not be. I don&#x27;t do this, so I wouldn&#x27;t know. Friends say they do this and have been trying to convince me that it&#x27;s worth it. I don&#x27;t know the exact details and I&#x27;m starting to doubt myself.<p>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&#x27;s 8.75%. Then regular income over 50k is taxed at 40% whereas dividends are taxed at 33.75%. You also don&#x27;t pay national insurance on your dividend earnings, which further lowers tax. I&#x27;m guessing the 20% figure I was told is what it averaged out as. Sources:<p><a href="https:&#x2F;&#x2F;www.gov.uk&#x2F;tax-on-dividends" rel="nofollow">https:&#x2F;&#x2F;www.gov.uk&#x2F;tax-on-dividends</a><p><a href="https:&#x2F;&#x2F;www.gov.uk&#x2F;income-tax-rates" rel="nofollow">https:&#x2F;&#x2F;www.gov.uk&#x2F;income-tax-rates</a>

Most people in most countries don&#x27;t see the value in tax - if you read any forum, people want to pay less tax and have better public services, which isn&#x27;t really very achievable.<p>Some people would prefer to follow a US kind of model of cuts to public services and low tax.<p>Other people (including me) would rather be taxed higher in a more European model and have well-funded public services.<p>The current UK government seems to have found a fourth option - high taxes and dreadful public services.

Germany is similar. Housing costs are a part of this. As are rising food prices.<p>But the main thing people don‘t mention is that taxes are <i>insane</i> 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 <i>after</i> 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 <i>still</i> say it‘s not enough.<p>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.<p>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.

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&#x27;s being held back by his peers and unfortunately it&#x27;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&#x27;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&#x27;s approach. Taxes aren&#x27;t going to get lowered through efficient use of funds. It&#x27;s going to happen by producing something of value for the rest of the world.

I can&#x27;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&#x27;s a comfortable life in the Midlands or North of the country. If you add children to the mix, suddenly it&#x27;s very difficult again.<p>The tax burden is insane nowadays. The 40% bracket is frozen at an insanely low level until at least 2028 AFAIK - it&#x27;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&#x27;t need to reduce my tax bill.

Housing costs - pure and simple.<p>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.<p>In my view that&#x27;s a combination of letting the banks create too much money, leading to &#x27;investment&#x27; in housing, and limited housing supply versus demand.

&#x27;Up to 60k a year&#x27; is middle class?<p>Does that make plumbers middle class, as they earn above that?<p>Personally I think middle class would be around £80-150k. (I know its not all based on salary.)<p>According to the BOE calculator[1] 50k in 2000 is 90k nowadays.<p>I think this country has a Freddo issue on wages and what certain demographic grew up with seems to be what society accepts.<p>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).<p>[1]: <a href="https:&#x2F;&#x2F;www.bankofengland.co.uk&#x2F;monetary-policy&#x2F;inflation&#x2F;inflation-calculator" rel="nofollow">https:&#x2F;&#x2F;www.bankofengland.co.uk&#x2F;monetary-policy&#x2F;inflation&#x2F;in...</a>

Yep. I&#x27;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&#x27;s gone on tax, then what&#x27;s left quickly gets eaten away by bills, contributing to food shopping and the odd meal out. Just crazy. I don&#x27;t know how most the population are surviving if London tech wages are getting squeezed this much. Really feels completely broken at the minute.<p>If you&#x27;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&#x27;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 &#x27;woke stuff&#x27;.<p>There doesn&#x27;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&#x27;m really angry at how things are here at the moment.

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.<p>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.

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.<p>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 &#x27;bonkers&#x27; projects that might otherwise go unfunded)

In case anyone is unsure how is &quot;middle class&quot; defined in the UK, here is a short primer: <a href="https:&#x2F;&#x2F;www.quora.com&#x2F;Whats-the-line-between-middle-class-upper-middle-class-and-upper-class-in-Britain&#x2F;answer&#x2F;Jake-Williams-65" rel="nofollow">https:&#x2F;&#x2F;www.quora.com&#x2F;Whats-the-line-between-middle-class-up...</a>

Everything accrues to the rich.<p>Tax breaks, handouts, benefits all for the rich.<p>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.<p>There’s ostensibly two political parties but in fact they both represent the rich.<p>I’m talking Australia here but wouldn’t be surprised if the trend was the same around the world.

Yes, because £60k isn’t really a middle class income anymore.<p>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.

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

This isn&#x27;t middle class. It&#x27;s less than average for dual earners. Single earners it&#x27;s worse because of tax.

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

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.