What is a rich household?

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.

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.

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

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.

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.

Blossoming

I do pay tax and I’m far from rich.

Me too!

I think it's harder to spread payments for your energy with a prepayment meter as you are paying for what you use at the time instead of building up credits at periods in the year when you are using less energy.. People can qualify for warm home discounts if they receive certain benefits but I think energy companies are trying to move poorer people from social tariffs to smart meters if they can.

foxie48

Funnily enough no one seems to be bothered that the poorest people usually pay more for their gas and electric! The standing charge is a higher proportion of your overall bill if you use less and those who have struggled to pay their bills and have been put on meters pay a higher charge.

I understood that had changed in July 2023 when unfair charges on pre-payment meters were scrapped.

I do understand that the standing charge is the same for all, but how could that be changed without intrusive questions into people's incomes?

Aveline

Gosh. $250,000! Looks likeI'm poor then

I don't earn any dollars at all

In fact I don't 'earn' anything, it just arrives in my bank account courtesy of HM Government.

PoliticsNerd

For "middle class, the caveats still apply, but the suggested figures in the UK typically fall within the range of £25,000 to £75,000 annually.

Above £75,000 annual income are rich? People could pay more for the same electricity - because of perceived household wealth?

Daft thoughts.

I think the cost of smart meters and ‘other policy measures’ should be absorbed by the energy companies. Who would have paid, say, £200 for a smart meter or thinks they’re really worth having?

Offwatt should monitor very carefully what can be added to the standing charge, and it shouldn’t include advertising

For "middle class, the caveats still apply, but the suggested figures in the UK typically fall within the range of £25,000 to £75,000 annually.

"The Financial Times typically refers to "middle class" as individuals or households with moderate income levels that allow for a comfortable standard of living, which may include home ownership, education, and discretionary spending. While definitions of what constitutes middle class can vary significantly depending on the country and region, a common benchmark in the United States is often considered to be households earning between $50,000 and $150,000 annually."

I’m pretty sure that, a good many years ago, when I think I was with Co-op energy, there was no standing charge but an extra amount linked to the number if units used.

It was very simple to administer. Rich people with bigger houses, who could afford to heat them and run lots of appliances therefore paid more.

But it disadvantaged large low income families and some disabled people, so it was stopped.

I’m not sure how a mechanism for linking payment for infrastructure to income could work given that energy companies are privately owned and shouldn’t have access to tax data.

Or is it that that extra tax would be taken and then passed on to private companies. That doesn’t seem right either.

Given the enormous profits they make, how about energy companies using some of those to lower the standing charge overall for customers instead of passing on more thousands to share holders and management?

What would be the point of someone saving or working towards promotion, or working overtime to get more money if everything then costs more?

Means-testing is just a way of keeping people in their place. If you are genuinely rich (agreed that this is subjective at best) a few extra pounds on the energy bill (or the loss of a State Pension, or rights to free NHS treatment) won't matter, but it will to someone who only has a little over the threshold.

PoliticsNerd

The Financial Times defines a "rich household" as one that earns at least $250,000 annually. This threshold is often used in discussions about income levels, wealth distribution, and economic status. However, definitions can vary based on geographical context and other factors

Luckily rich households aren't working class.

Real numbers matter. Perhaps changing income taxes?

Funnily enough no one seems to be bothered that the poorest people usually pay more for their gas and electric! The standing charge is a higher proportion of your overall bill if you use less and those who have struggled to pay their bills and have been put on meters pay a higher charge.

I don’t see the logic in the argument. People with very high incomes tend to live in big houses, which cost more in terms of electricity use anyway. It would very much be ‘big brother is watching you’ if energy companies were privy to household incomes.

I do pay tax and I’m far from rich.

If we un-linked gas prices from electricity then electricity would if course be much cheaper.

Doesn't solve the infrastructure issue though!

Georgesgran

But David49 by being careful, most here on GN have more income than expenditure, but most of us wouldn’t describe ourselves as rich.

Quite correct but if you have no money at the end of the month you are unable to pay tax,

If it’s true the FT define rich as those who earn $250k (£200k), that’s probably 0.25% of the population or less, you are never going to collect enough tax off so few to make any difference.
To collect enough taxation all those above average income have to pay more

I read that and couldn't believe, why on earth should rich households ( and I'm not from a rich household ) pay any more for the energy they use than anyone else, what someone works for and earns is nobody's business

But David49 by being careful, most here on GN have more income than expenditure, but most of us wouldn’t describe ourselves as rich.

First of all the word rich in the title here is misleading and that isn’t even what the Telegraph says. It says: Middle class could face higher energy bills than poor to fund net zero.

Ofgen is considering ways to reform the standing charge.

This from the Guardian which doesn’t hide behind a paywall:

www.theguardian.com/money/2025/apr/15/increased-bills-for-higher-earners-could-fund-uk-energy-upgrade-ofgem-says

The energy regulator, Ofgem, is expected to consult the industry on the proposals as part of a root-and-branch review into how the costs of upgrading Britain’s energy networks can be recovered through home energy bills in a way that is fairer.

Jonathan Brearley, the chief executive of Ofgem, told an industry briefing the “wide-ranging examination” of how to allocate the energy industry’s costs would “raise the question of whether there is a more progressive way to pay”.

He told reporters this would include investigating whether there were ways to attach the final cost that households pay to their household income.

“It’s a question that we need to answer as we go through this transition and as we think hard about getting to a place we want to get to,” he said.

Under the current system, the cost of maintaining the wires and cables that deliver the gas and electricity to homes and businesses is recouped through standing charges on home energy bills. These fixed daily charges, which also include the cost of fitting smart meters and other policy costs, are applied to energy bills whether you use any energy or not.

This means cash-strapped households who are unable to heat their homes still bear the full brunt of covering energy network costs. Vulnerable consumers who are often high users of energy – for medical or health needs – also end up paying above the odds to maintain the grid.

I would have no issue with profligate users of energy paying more, the household equivalent of driving a big gas-guzzling car. Administering is wouldn’t be costly at all if there was a graduated scale of use ... the first x kWh charged at one rate, the next y kWh charged at the next and so on.

If we can make more of an effort to control what we use so that we are not subjected to marginal wholesale pricing, then costs would come down for everyone.

Gosh. $250,000! Looks likeI'm poor then