Why earning £100k no longer makes you rich

Tax burden shouldered by ‘wealthy’ Britons is already outsized – and is set to get worse

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No longer a vaunted goal of the elites, earning £100,000 is increasingly common.
For the first time this year, HM Revenue and Customs (HMRC) is set to record over a million taxpayers with incomes beyond that threshold – roughly double the number from six years ago, in 2018/19. 
That’s a lot of high-earners to push outside of Labour’s definition of “working people”, as care minister Stephen Kinnock appeared to do early this week. The party’s manifesto ruled out income tax, VAT and National Insurance hikes for that group only. 
This shifting definition is bad news for high-earners who have seen their living standards slip for years.
Inflation has had a large hand in this. Its cumulative effects mean a pay cheque worth £100,000 at the turn of the millennium is now worth little over half as much – or £53,600 in September 2024, according to the Office for National Statistics (ONS). 
This also means that the middle class is closing in on this number fast. Median gross annual earnings were £18,848 in 2000, or less than a fifth of those of someone on £100,000. 
By last year this figure had swelled to £34,963 – more than a third. 
A similar popularisation is underway at the top of the scale. The 2000/01 financial year was the first time the income threshold of the top 1pc crossed £100,000.
A quarter-century later and such a once-elite salary would now barely put you into the top 5pc, the latest HMRC data shows.
Labour’s manifesto pledged that the party would not increase “National Insurance, the basic, higher, or additional rates of Income Tax, or VAT”.
But the burden shouldered by high-earners is already outsized, even if this promise were not to be broken.
This tax year, those making £100,000 or more are set to contribute almost half of all income tax revenues the Treasury will collect – to the tune of roughly £150bn. The top 1pc for their part already pay just under 30pc of all such liabilities.
The tax system’s design is especially punitive to those only just making six-figures, characterised by the highest marginal tax rate going, 62pc, as the personal allowance is withdrawn.
Many of the comforts and essentials once easily within their grasp have also slipped out of reach. 
Average house prices in England breached the £300,000 mark for the first time in mid-2022, and look primed to do the same UK-wide in the very near future.
The first quarter of the new millennium was the last time such figures came in below £100,000 (£97,000). 
The relationship between earnings and house prices, known as affordability, is key. For someone on £100,000 today, a home is three times less affordable than for a peer 25 years ago.
Sending the children to private school in such circumstances now verges on the impossible. 
Day fees came in at just under £20,000 a year on average for the current academic year (£19,177), according to the Independent Schools Council (ISC). 
This alone takes up almost a fifth of a £100,000 income, before tax, the comparable share back in 2000/01 being lower than 6pc. 
Boarding school fees have more than doubled during this time, hitting £45,000 this year – meaning a brood of two would take up nearly the entirety of annual income.But it doesn’t stop there. New cars to ferry your children around in are 54pc more expensive than they were back then, with the top-of-the-range increasingly unaffordable. 
Emblem of the well-off, prices for a Mercedes S-class in 2000 started around £50,000. The 2025 saloon model has a recommended retail price range £93,955 to £247,245.
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