What is a rich household?

Blossoming

I do pay tax and I’m far from rich.

Me too!

It’s the ‘fiscal drag’ effect. My state pension has gone up but my person allowance has been frozen … so I (and many of us) now pay tax.

My husband pays tax on his state pension so I guess that puts us in a higher bracket than some.

If we have to pay more for power to subsidise others after the WFA was scrapped and the energy companies are making vast profits then we will go and live in Portugal or Italy.

The median household income in the UK is £34,500 a year, so the middle income earning household will be those earning roughly between £25,000- £50,000

Some details:
In 2022-23, 61% of pensioners paid income tax, according to HMRC. From 2027, the full new state pension will exceed the personal allowance, meaning it will become taxable for the first time for all recipients.
By 2032, 76% of pensioners are expected to pay tax on their retirement income.
This is all assuming that the personal allowance is not raised in the interim.

M0nica

The median household income in the UK is £34,500 a year, so the middle income earning household will be those earning roughly between £25,000- £50,000

That may well be true (although it seems low as a combined income between two adults), but I genuinely don't understand what seems to be a desire to drag everyone down to that.

Means-testing means that a couple who has reached the dizzy heights of £27k each (not talking pensioners here, but earners) will have to pay more for various things, and/or be denied benefits and discounts that those who earn less will be given, even when they are not paying for childcare and commuting charges.

It seems to me that this is a huge disincentive to work, at a time when we have an ageing population as well as a significant number of working-age people simply opting out of contributing to the society that supports them, by giving them free healthcare, education and so on, whether or not they claim benefits.

I would rather see incentives to work and pay tax - free transport, cheaper entry to venues or something - rather than penalties in the form of higher charges. That could apply to pensioners who have made more than X number of contributions, too. I wouldn't like it to be tied to income, but to those who work day in and day out, and keep the country afloat, regardless of how much they earn.

M0nica

The median household income in the UK is £34,500 a year, so the middle income earning household will be those earning roughly between £25,000- £50,000

The income quoted previouslywas to understand the Financial Times use of the description "middle-class".

Casdon

Some details:
In 2022-23, 61% of pensioners paid income tax, according to HMRC. From 2027, the full new state pension will exceed the personal allowance, meaning it will become taxable for the first time for all recipients.
By 2032, 76% of pensioners are expected to pay tax on their retirement income.
This is all assuming that the personal allowance is not raised in the interim.

Good luck to anyone who thinks they can predict our economy in 2032!

I don’t pay tax - my income is mostly from my Ex (alimony), I guess tax is paid before it comes to me.

I think the figure quoted by M0nica is the median household disposable income - so after tax and deductions.

£34,500 per annum, or £2,875 per month.

Middle income or middle class?

An income of £25k is not much above a living wage working families buying a house don’t have spare cash. I would put middle income at £35-50k at that level they should have discretionary spending unless they live in London.

Any extra taxation has to be raised from the over “median” income group, increasing to 30% income tax over £35k would increase revenue substantially, I would also means test a range of public services for those of higher wealth.

“Class” doesn’t come into it these days

The poor always pay more as a proportion of income for everything. The 'rich' always know how to pay less, which is why they are rich and the poor pay for them.

I have met some truly rich in my lifetime, a lady so and so, some landowners. I don`t know if rich in money but certainly rich in inherited wealth, some from slavery. They owned land, had government subsidies etc. All nice people, private school educated. Large old houses, all of them

Money is not needed to be truly rich, assets are needed. They should not pay more for day to day expenses but the subsidies should be looked at and also council tax

keepingquiet

The poor always pay more as a proportion of income for everything. The 'rich' always know how to pay less, which is why they are rich and the poor pay for them.

Nonsense!
We have both worked hard and paid tax via PAYE.
Why should we pay more for power?

keepingquiet and your definition if rich is what? On income, an income in excess of£50,000

David49

Middle income or middle class?

An income of £25k is not much above a living wage working families buying a house don’t have spare cash. I would put middle income at £35-50k at that level they should have discretionary spending unless they live in London.

Any extra taxation has to be raised from the over “median” income group, increasing to 30% income tax over £35k would increase revenue substantially, I would also means test a range of public services for those of higher wealth.

“Class” doesn’t come into it these days

"Middle class" is a term that The Times chose to use. You may or may not like it, I may or may not like it but it is a fact that they used it. That is why I look for the explanation of what it means to the Times.

(The Times is based in London, owned by a Japanese holding company, Nikkei, with core editorial offices across Britain, the United States and continental Europe.)

karmalady

I have met some truly rich in my lifetime, a lady so and so, some landowners. I don`t know if rich in money but certainly rich in inherited wealth, some from slavery. They owned land, had government subsidies etc. All nice people, private school educated. Large old houses, all of them

Money is not needed to be truly rich, assets are needed. They should not pay more for day to day expenses but the subsidies should be looked at and also council tax

The “idle” rich with large estates but not generating much income have largely been taxed out of existence, since WW1 Estate Duty or IHT has done that. Now the large estates or very rich (over £10m) run their lives as businesses and socialize around the business rules. All their social group are doing the same, they may or may not take much active part but direct the business for their personal and family benefit.

The government is highly unlikely to get significantly more from that group, because company taxation rules allow them to do that.

I wish it were true that the idle rich have been taxed out of existence but that is completely untrue. The Duke of Westminster's late father left an estate worth £9 billion, it was inherited by his son virtually intact. The judicious use of trusts, passing on wealth during lifetime and there having been no IHT on agricultural land all assist the estates of the very wealthy to avoid being taxed on their death.
For most of us "death and taxes" are inevitable but for the wealthy only death is an absolute.

They could achieve the result by doing away with the standing charge, which puts proportionately more on the lower power bill of someone in a modest home than a rich person in a large mansion. That would of course then be added to the unit charge for power, but would put up the rich man's bill more than the poor man's.

foxie48

I wish it were true that the idle rich have been taxed out of existence but that is completely untrue. The Duke of Westminster's late father left an estate worth £9 billion, it was inherited by his son virtually intact. The judicious use of trusts, passing on wealth during lifetime and there having been no IHT on agricultural land all assist the estates of the very wealthy to avoid being taxed on their death.
For most of us "death and taxes" are inevitable but for the wealthy only death is an absolute.

That’s exactly the point The Duke of Westminster runs his estates as a business and can direct it whatever way he wants within the rules.
Exactly the same for Jim Ratcliffe or James Dyson the only difference is inherited or earned wealth, new money or old, their money will be passed on in exactly the same way.

Elegran

They could achieve the result by doing away with the standing charge, which puts proportionately more on the lower power bill of someone in a modest home than a rich person in a large mansion. That would of course then be added to the unit charge for power, but would put up the rich man's bill more than the poor man's.

It's been much discussed hasn't it Elegran. While I agree - no one should have to pay when they are not using the energy - little or nothing seems to have happened.

David49

karmalady

I have met some truly rich in my lifetime, a lady so and so, some landowners. I don`t know if rich in money but certainly rich in inherited wealth, some from slavery. They owned land, had government subsidies etc. All nice people, private school educated. Large old houses, all of them

Money is not needed to be truly rich, assets are needed. They should not pay more for day to day expenses but the subsidies should be looked at and also council tax

The “idle” rich with large estates but not generating much income have largely been taxed out of existence, since WW1 Estate Duty or IHT has done that. Now the large estates or very rich (over £10m) run their lives as businesses and socialize around the business rules. All their social group are doing the same, they may or may not take much active part but direct the business for their personal and family benefit.

The government is highly unlikely to get significantly more from that group, because company taxation rules allow them to do that.

Their homes may have changed from large estates and a house in London for the 'season', but those living off low tax passive income have grown and multiplied.

Elegran, I agree, standing charges are unfair to those who use the least.
David I think if you look further into the wealth of the Dukes of Westminster you will find that if they wished they could live the life of the idle rich because of the way the various trusts from which they benefit have been set up. Without the benefit of these trusts it is estimated that on his father's death, the present IHT would have been £3.4 billion leaving a paltry £6 . billion for the family to live on! I doubt they would have to have tightened their belts much though!
www.theguardian.com/news/2023/apr/25/duke-of-westminster-hugh-grosvenor-profile

Anyone can set up a trust the rules are there to be used, Blair didnt change them there is no sign of Starmer doing so either. Whatever you do there is a way to avoid it if you have the money. Gifting is another way to transfer wealth, no sign of changes there either but a tax on gifting would raise a lot of revenue, maybe at the next budget

I don't care if people have millions in the bank or consider it immoral. Many people who have this sort of money have done well through sport, music and entertainment, or have worked very hard to build up a business from nothing. The old chestnut about taxing them more will only lead to tax exile and evasion and achieved nothing when we had really high tax rates in the seventies.
I think the main problem isn't so much the rich, but the tax system that hasn't been reformed since the last decade. I would support raising the tax threshold to 20k a year, which would improve the living standards of millions of the poorest workers, and bringing in a new tax rate of 30% for people earning 50 to 80k a year, which would remove the huge jump from 20% to 40% we have now in this tax bracket.