What Is a Good Salary in London in 2022?

London is an expensive city to live in. The average salary might seem high, but when you factor in the cost of living, it’s not as much money as you might think. 

But, what is a good salary in London, how does it compare to other cities in the UK, and what are some of the highest-paying jobs in the city?

Let’s find out.

What is considered a good salary in London in 2022?

The cost of living in London is notoriously high, and fewer industries have kept pace with the rising cost of rent, food, and other essentials, which is why a good number of Londoners are struggling to make ends meet. 

A good salary to live in London is around £40,000-£50,000. A gross salary of £50,000 amounts to over £4,000 a month, which is enough for a single individual to cover all living costs and live a comfortable life in the capital, even after tax is paid.

A family of four would need an income of at least £70,000 a year for a decent life, including a two-bedroom apartment that’s not too far from the city centre, eating out, and going away on some weekends.  

For that, you’ll almost certainly need at least two streams of income. 

Example of a good salary in London

Academics with a few years of expertise can expect to earn around £50,000 per year. If you earn £50,000 per year, the sum comes to £3,320 per month after tax, or £37,000 annually. 

In London, the cost of living is approximately £3,000 per head monthly if you include all expenses.

A two-parent household with a one-year-old would need around £49,714 per year or £4,142 per month.

Food, rent, and other necessities are more than twice as expensive in London compared to other cities not just in the UK but around the globe, according to the Price Index for London (which measures 222).

Did you know

So, here are the average expenses in London with an average salary: 

Housing

In London, a one-bedroom apartment will set you back at least 30% of your monthly income. The rent rises in direct proportion to the proximity to the city centre.

If you want to rent a good place in a well-connected area (zones 2-3 of London), expect to pay £1,200 for a studio and £1,500-£1,600 for a 1-bedroom flat. Renting a family home, on the other hand, costs about £3,100 per month on average in the downtown region and around £1,900 outside of it.

You can expect to spend around £200 on utilities (gas, electric, and water for an 85m2 flat), as well as £32 for the internet and £80 for council tax.

Groceries, food, and transportation

London has an above-average restaurant scene, and its cuisine is on the European average in terms of quality. However, London’s dining and drinking costs are greater than those of most EU nations —you can easily spend £50 – £100 on a single evening out.

For example, the average price for a pint in London is £6, a cocktail costs £12, and dinner will set you back at least £30 per person. 

Groceries, on the other hand, are more reasonably priced at discount merchants like Aldi, but regular and high-level supermarkets are typically more expensive. When you shop in a typical supermarket, your monthly food budget may be around £400 for a family of four.

As a rule of thumb, ex-pats should save £500 to £600 each month for food in London, while singles and students may live on less.

In the United Kingdom, public transport costs a fortune. A subway+train London monthly pass can cost around £400 per month.

Meanwhile, UK car drivers spend more than £3,000 to keep their cars running with East Londoners paying the most expensive premiums—close to £900!

Monthly disposable income

The average monthly disposable income in the UK is a little under £700 per month. 

On average, a British family spends £80 on entertainment and culture and £20 on communications and apparel. 

Although it isn’t a must-have expenditure, British people go on vacation at least once a year and spend around £670. However, most Brits go away twice per year and spend around up to £4,000 a year.

Savings

You might be able to put away a few hundred pounds with a salary of £50,000 per year. At the very minimum, you’ll need to make at least £40,000 to live a decent life in London as a single and save some money for vacation and entertainment, but it will be tough to budget while making less than £30,000 in London.

With a decent salary, you can save between £300 and £600 and maybe more, provided that you live frugally and avoid unnecessary expenses.

Gross vs Net salary in the UK

Most workers in the UK are paid a gross salary. This means that your salary will include all of the money that you earn before deductions, which may include things like national insurance contributions and tax. 

Unemployment, sickness, disabilities, occupational accidents, illnesses, maternity leave, and widows’ pensions are all examples of British social insurance, which is taken out of your salary.

Your net salary is the amount of money that you actually take home after all of the deductions have been made. To calculate it, you should subtract your total deductions from your gross salary.

In the United Kingdom, taxes and social security payments take up approximately 25% of an employee’s gross pay. The most prevailing income tax rate is 20%, with employees paying between 0% and 12% of their salaries depending on their level and class of income. Employers contribute as well.

Britons use the “pay as you earn” (PAYE) method to calculate income taxes. The tax-free allowance (also called Personal Allowance) is £12,570 a year. The tax amount you pay depends on your salary. 

In the UK, there are three income tax rates:

• Basic rate of 20% for those earning up to £50,270.
• Higher rate of 40% for those who earn an annual salary between £50,271 and £150,000.
• Additional rate of 45% for earnings over £150,001.

The majority of Britons pay 20% in income tax and 12% in social security.

Salaries in London

If you’re looking for a high salary, London is definitely the place to be. Men made an average of £61,400 in London while women made approximately £43.500 in 2021.

However, salaries vary considerably across various professions.

The best-paid jobs in London are usually in the financial sector, where they earn an average of £80,203 to £76,688 per year. 

However, there are many other high-paying jobs in the city, such as within the technology and medical industries. 

Individuals with a Doctorate Degree have an annual income of £77,979 and people with a Master’s Degree make around £64,349 per year.

Career history plays a role in determining a person’s salary. For example, professionals with 20+ years of experience make £85,368 per year, while employees who have spent 16-20 years in their respective industries earn around £82,929 per year. 

When it comes to an average starting salary in London, you may make as little as £14,000 a year or as much as £100,000 in the senior position.

In the professional sector, for example, interns and fresh graduates make little money, as well as low-income individuals who do not have an official degree.

The starting salary for a junior or executive position ranges from £18,000 to £30,000. Depending on your experience, managerial positions start at around £35,000 and may reach over £50,000.

Among various professions in London, the typical earnings are as follows:

#	Professional field	Average salary/Year
1	Finance & Banking	£80,203 GBP
2	Management & Business	£76,688 GBP
3	Law	£75,827 GBP
4	Properties & Real Estates	£74,608 GBP
5	Insurance	£71,595 GBP
6	Engineers & Technicians	£67,936 GBP
7	IT & Programming	£67,577 GBP
8	Agriculture & Fishing	£67,075 GBP
9	Construction & Labour Workers	£65,640 GBP
12	Human Resources	£59,973 GBP
13	Engineers & Technicians	£57,319 GBP
15	Health Care & Medical	£55,453 GBP
16	Accounting & Administration	£54,306 GBP
18	Military	£51,938 GBP
19	Marketing, Sales, Purchase	£51,436 GBP
21	Geography & Geodesy	£49,714 GBP
22	Making Design	£48,853 GBP
23	Media	£47,203 GBP
24	Salesman & Saleswomen	£46,486 GBP
25	Architect Constructions	£45,195 GBP
26	Logistics, Road, Railway	£44,908 GBP
27	Sports & Recreation	£44,764 GBP
28	Aviation & Shipping	£44,549 GBP
29	Hotels & Tourism	£43,473 GBP
30	Education & University	£42,397 GBP
31	Public Sector	£42,253 GBP
32	Automobile	£41,393 GBP
33	Fashion	£41,034 GBP
34	Arts, Culture, Performance	£40,317 GBP
35	Manufacturing & Labour Workers	£37,447 GBP
36	Organisation & Coordination	£36,730 GBP
37	Security & Fireguard	£34,936 GBP
38	Customer Services	£33,717 GBP
39	Restaurants, Inns, Pubs	£32,282 GBP
40	Archaeology & History	£28,910 GBP

Bottom Line

So, what is a good salary in London? That depends on a variety of factors, including your level of experience, the industry you work in, and the city or borough where you live. But as a general rule, people working in London can expect to earn more than those living and working elsewhere in the UK but also pay more for rent, utilities, and other living expenses.