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What is 'Middle Income'?

Ex-Conservative Chancellor of the Exchequer, Norman Lamont was on Newsnight this week and one of the points he made was that the 40% tax bracket which starts at around £42,500 (this is on total yearly income) is harming 'middle-income earners'.

There is a debate to be had about what an appropriate high level of income tax should be, however, what is meant by middle income?

If you get data from the official source, the Office of National Statistics, this is what you find:
  • Gross (total before tax) yearly earnings are just under £27,000 per year on average (average being median - the middle-earner when you line everyone up in order) when you look at all full-time equivalent workers.
  • For women the figure is closer to £24,000 per year.
  • There are differences depending on the region you live in - in the South-West, for example, the average is around £25,000 per year when you look at all full-time equivalent workers.
  • And if you happened to be someone who was in what is called the 75th percentile, that is earning more than the 74% below you but less than the people above you, you would be earning around £38,000 per year.

Therefore, is £42,500 a middle-income.  Short answer, based on the evidence, No.

However, if Lord Lamont has alternative data, do get in touch.