by jstalin 12 Replies latest jw friends
I have a few questions for UK residents:
1. What is the average income in the UK? For instance, in the USA the average income is about $32,000 a year. Just wondering how wages compare (figuring in the exchange rate).
2. What is an average price for rent or a mortgage in the UK?
3. What are taxes like in the UK... income, property tax, etc?
As of November last year, average earnings were £457/week, which at current exchange rates is about $47500/annum.
Average house prices are falling in most areas, and vary widely from region to region. The UK average is £218,112. House prices have been outstripping average earnings for years, making it difficult for first time buyers. Owning your own home is embedded in the British psyche - renting is seen as a waste of money. It has been possible to borrow up to100%, or more than 100% of a property value in the past, but the US sub-prime debacle has spilled over into the UK finance market, and mortgage conditions are tightening. My very quick calculation is that on average earnings, you could borrow about £70,000 - that would mean a repayment of about £520/month. But £70,000 doesn't buy much house!
We pay income tax at 20% on earnings between about £5000 and £36000, and a higher rate on earnings over about £36000. Additionally, we pay "National Insurance" at about 10% - this pays for social security benefits, e.g state pensions. We pay about 60% tax on petrol and diesel, and 17.5% Value Added Tax (sales tax) on other fuel (gas and electricity). VAT is added to most goods except most food, books and children's clothes.
We have a system where the poorest pay the biggest proportion of their earnings in tax, and the rich pay the least. Seems fair?!
As of November last year, average earnings were £457/week
A-ha --ha -ha- hahahahahahahahahahahahahahaha!!!!!
Oh to be on averarge earnings lol! It's really an anomalous figure because the top earners (of who there are very few) are factored into the calculation. Never mind...
There's also council tax which is based on your property value and goes to pay for local services such as refuse collection, street lighting, public libraries, police and fire services etc. The amount you pay depends on your local councils budget. My local councils tax for the lowest house valuation range this year is about £880 (for the year) - about $1700
If you should find yourself out of work, the Government has decreed that you can live on £60.50 per week (app $118) - this should buy all your food, clothing, pay travel costs and all your utility bills as well as mortgage and any other loans/credit cards etc if you didn't take out payment protection cover on them. You would get housing rent paid however, as well as most or all of your council tax.
Good points, emo.
I am not sure how the "average" earnings are calculated - mean, mode or median - I expect it is mean, and the super salaries of the top percentage in the city and the boardroom skew the figures considerably.
I also meant to mention the local council tax but forgot to. Another example of taxation with little relation to ability to pay.
We have had a huge uproar recently in the UK because the great left wing government financed an income tax cut by abolishing a low rate tax band. This meant that low earners were automatically paying much higher tax bills. Its all rather stupid because this was announced in last year's budget, and no-one (except Guardian journalists) seemed to realise that low earners would be paying more tax. All the MPs that voted to accept the budget were suddenly saying what a terrible idea it was. In the end, the government increased the personal allowance (amount you can earn before tax, still a pittance) to try to placate the protesters. Net result - medium earners like me have had the double benefit of an income tax rate cut AND an increase in personal allowance; lowest earners are still worse off. Good job, Gordon!! I honestly think he was amazed that anyone gave a shit about people on low earnings. After all, we'd vote for a pig in a frock if it was going to reduce income tax.
The combination of high fuel tax and VAT of 17.5% means that the government rakes it in ... don't forget that you are paying 'value added tax' (what value does it add?!?) on the high tax itself put on the fuel and you pay for it with taxed money.
There are many of these situations in the UK where money you have already paid tax on is taxed again ... and again ... and again.
In the UK as well as paying the tax on fuel you have to pay a car tax each year which can be several hundred pounds. You have to get an MOT (another type of TAX imo) and you pay hidden taxes on mortgage interest and so on (that's one that people don't realise).
The taxes we're paying now in Canada seem much less burdensome and there are fewer extra charges or else they are much cheaper. Also, you see things for your money - the property taxes we pay (on a house twice the size) is about the same we paid in the UK but there are far more services provided. I never could tell exactly what the money was spent on in the UK.
So yes, the average wage is higher in the UK but the cost of living is a lot higher still so overall standard of living is not as good.
Of course, everyone's situation will vary ... you have to compare specifics - it's no good just looking at averages as the super-poor and super-rich distort things too much.
We need to have a high income because the tax is disgusting. I really do appreciate many aspects of British life, but on the whole I'm starting to thing this island is a joke.
It's gone downhill since nu-labour got in.
Blair, Brown and pals have destroyed a lot of the fabric of British society while simultaneously bancrupting the country.
What is there to show for the years of high tax / borrowing / spending? Nothing ... just lots of debt, expense and future liability for a swollen public service.
Home improvements are easy enough once you learn how to re-thatch a roof. Stay away from those drafty old castles... hard to heat and those moats are a real chore to keep clean.
Michigan getting so bad we need to move to GB, jstalin?
Hill
The combination of high fuel tax and VAT of 17.5% means that the government rakes it in ... don't forget that you are paying 'value added tax' (what value does it add?!?) on the high tax itself put on the fuel and you pay for it with taxed money.
There are many of these situations in the UK where money you have already paid tax on is taxed again ... and again ... and again.
In the UK as well as paying the tax on fuel you have to pay a car tax each year which can be several hundred pounds. You have to get an MOT (another type of TAX imo) and you pay hidden taxes on mortgage interest and so on (that's one that people don't realise).
The taxes we're paying now in Canada seem much less burdensome and there are fewer extra charges or else they are much cheaper. Also, you see things for your money - the property taxes we pay (on a house twice the size) is about the same we paid in the UK but there are far more services provided. I never could tell exactly what the money was spent on in the UK.
So yes, the average wage is higher in the UK but the cost of living is a lot higher still so overall standard of living is not as good.
Of course, everyone's situation will vary ... you have to compare specifics - it's no good just looking at averages as the super-poor and super-rich distort things too much.
No wonder you left for a more livable lower tax enviroment. And apparently you are not alone.
Recently, the UK newspapers have been full of pieces about emigration from the country. This is in sharp contrast to the normal focus on immigration to the UK. Emigration is at its highest level since right after World War II. To quote a recent Telegraph piece on the subject:
We now learn from the Organization for Economic Cooperation and Development (OECD) that we lead the world in exporting talent, with a higher proportion of highly skilled professionals emigrating from this country than from any other (except Mexico). The OECD estimates that 1.1 million highly skilled Britons — more than one in ten of the total — are now living overseas. That 1960s phenomenon, the Brain Drain, is back.
It is estimated that two million UK residents will leave the UK in the next ten years. Add to this the statistic that one in ten British citizens is currently living outside the UK, and an interesting picture begins to emerge. This situation is not so surprising given that the UK is an island nation and its major export has been human capital for many centuries.
What is striking is the number of people that one encounters every day, whether acquaintances or people met in casual situations, for instance in taxis, who readily discuss emigration.
I do understand that my having a North American accent might prompt such discussions. However, I find in chatting with friends that this subject is regularly on everyone’s lips. Of course, there are lots of reasons to emigrate, ranging from romance to the search for new challenges and the desire to be properly compensated for one’s efforts.
There is a significant number of 30- and 40-something educated professionals who increasingly find that their income is not keeping up with their expenses. The official government line is that inflation is 3%, but everyone knows from personal experience that it is closer to 8% if food, transport, fuel, and taxes are included.
For practical purposes, there has been a pay freeze in many sectors of the economy due to negative or flat future growth expectations.
Despite talk of recession in the U.S., even though it has perhaps not occurred yet, most of these individuals are either aiming to move to the U.S., looking into it, or would like to. Because of the favorable exchange rates with the dollar in contrast to weakening economies on the continent, there seems to be little interest in a move to Spain or to France. Of course, Australia gets a look from many.
Referring to my recent piece on new regulations requiring annual payment of $60,000 (£30,000) for each non-domiciliary, the resulting exodus of non-domiciliaries from the UK is hindering financial services growth. Perhaps even more important is that the basic unfairness of this and many other similarly targeted regulations from the current government leads the highly educated and experienced to seek the certainty of a job in another country. After all, if the government is targeting the most productive foreigners, certainly the most productive residents are next on their list. (Indeed the recent change in capital gains taxation hits at productive investment in new companies.)
Companies have gotten the message too. Several large companies have announced headquarters moves to Ireland. This situation is eloquently described by Guido Fox as “taxodus.” He even has a clever logo for it. As Gordon Brown desperately seeks more sources of income in the faltering economy, this company exodus is only set to increase.
This time, with the ease of travel and easy transfer of universal skills, it is possible that the numbers will outdo the previous exodus. UK professionals continue to work for UK-based businesses and individuals while living a much less expensive lifestyle in another part of the world — not a loss of standard of living, but a substantial reduction in costs. The UK is educating people only to have them leave the country and pay taxes somewhere else.
One has to wonder if those who wish to retain the taxes of those emigrating might find more devious ways of making sure that the government continues to benefit from their earning potential by taxing them for the provided education. Some decades ago, the Soviet Union pioneered a method to tax people emigrating.
It will be interesting to see how government handles the increasingly mobile and flexible professional workforce. If past experience — specifically the 1970s — is anything to go by, these efforts may increase the flow rather than stop it. Handled badly it may simply increase the number of people giving up their citizenship for that of a foreign land. And a trickle may become a solid trend.
I used to sell mortgages for a major UK bank and I think Fe203's estimate on borrowing isn't quite accurate.
My very quick calculation is that on average earnings, you could borrow about £70,000 - that would mean a repayment of about £520/month. But £70,000 doesn't buy much house!
If your average earnings are £47000, many lenders will let you borrow 3 x or 4 x your gross income. Some even lend more than that. So at 3 x you could borrow £141,000.
In the North of England right now, its possible to buy a semi-detached, three bedroomed house for approximately £140,000.
Currently I pay about £90 per month to heat and light my home (a small house), I pay nearly £100 per month in council tax for my home and I pay £17 per month for access to fresh water to my home. We have to license our Televisions at about £120 per annum, and pay car tax at £120 per annum (mine is the lower bracket on car tax). Wages are heavily taxed and national insurance is high.
Sirona
