What Is a Good Salary in London in 2023?

London is one of the most expensive cities to live in. Knowing that you would need an annual salary of at least £45,000 to cover living expenses.

Yet, the latest data puts the average salary in London at £39,700 a year. This is lower than what you would need to lead a comfortable life in the city.

In the article below, we will explain more about what is a good salary in London for singles, couples and families, as well as what jobs can get you to that level. Plus, we will take a look at how wages in the capital compared to the rest of the UK.

What Is a Good Salary in London in 2023?

As mentioned above, if you want to make the capital your home, you need to aim for a salary of over £45,000 a year. 

With that said:

• A single person living in London would need about £50,000 a year; 
• A couple should be able to get by with £60,000 a year;
• A family of four would need an average income of £70,000 to cover the cost of living in London.

Speaking of which…

How Much Does It Cost to Live in London in 2023?

Judging by the answers of people who actually live in the city, here is a breakdown of the most common costs. 

Housing

This is one of the biggest costs of living in London.

In fact, Londoners could end up spending as much as 23% of their monthly income on rent. The cost of this rises in direct proportion to the proximity to the city centre.

For instance, renting a family home costs about £3,100 per month in the centre and around £1,900 outside of it. So, some of the best places to live with a family will definitely come with a cost.

In Zone 1 or 2, rent can range from £1,200 (for a studio) to £2,400 (two-bedroom flat). Monthly rent for a one-bedroom flat in the centre costs around £1,500. You could pay less, but then you would have to commute for about an hour to get to work or meet friends in the centre.

For comparison, rent outside the capital is an average of £1,068.

Flat sharing is a considerably cheaper alternative and costs £400 to £500 a month. But this means that you would have to share the kitchen and common space with your flatmates. 

What about owning a home?

Average house prices in London can go up to £500,000, which is double the UK average of £251,500. 

What’s more, the median property price to median earnings ratio in the capital is 12.5. Thus, an average Londoner would need a 12.5 gross yearly salary only to buy a medium-priced property.

Considering these prices, it is no wonder that there are over 10.94 million outstanding mortgages in the UK. 

Rent is not the only expense, though. Other monthly housing costs include: 

• Utility bills: £350, including water, gas and electricity (around £160) and council tax, phone and internet— the latter is a must in the capital where 93% of residents have access to the net. 
• Cleaner: Around £10 to £15 an hour.

Socialising & Entertainment

How much of your salary after tax in London should you expect to pay for a night out? Here is how much entertainment costs in the capital:

• Going out for meals two times a week: £350-£400
• Going out for drinks from time to time: 50 to £100 per night (this depends on how much one drinks but a pint can cost £6 in Zone 1, while cocktails can be £10-£12) 
• Going out to the theatre: Around £77 for two (could be higher based on the seats you want)
• Going to concerts and shows: £30-£100
• Gym membership: £35-£50
• Books, music, apps, streaming services and hobbies: £300
• Occasional shopping: Around £250

Transportation 

Getting around the city can eat up a huge chunk of average London salaries. 

Owning a car

It costs over £3,000 annually to run a car in the UK, with petrol being the biggest expense. Besides the common car running costs, you have to factor in expensive parking (an average of £6.60 an hour). Don’t forget the infamous London congestion charge (£15 a day).

Public transport 

An Oyster card can set you back around £130 a month, depending on where you live and travel. Bear in mind that public transport may not be cheap, but it is very well organised, which means you can get around without a car, especially if you are single. 

Taxis are understandably more expensive. The minimum fare is £3.80, and prices can go up to £8 or £11.20 per kilometre (or even higher). 

Groceries

You can expect to spend around £350 on groceries a month, depending on where you shop. Groceries are better priced at discount merchants like Aldi or other cheap online supermarkets in the country. But, some shops like M&S and Waitrose are often more expensive.

Going on Holiday 

Holidays are the most common reason for travelling abroad. Thus, it’s no surprise that Brits spend at least £4,000 a year on vacations across all age groups. 

Yet, thanks to cheap flights, and sites like Booking.com and Airbnb, travelling has become less expensive. Now, you can end up paying somewhere in the range of £1,000 to £1,500 for holidays abroad twice a year.

Childcare

A childminder costs about £160 to £330 a week. 

On top of that, preschool at a private school can go up to £1,300 for the full day. Private school tuition can cost from £10,000 to £23,000 a year. This accounts for over half of the average salary after tax in London.. 

Note: The average private school fee for the rest of the county is £13,700 a year. 

Savings

In an ideal world, you should have enough left over to put around 10% of your net salary into some savings account. Such accounts can be a cash ISA or Stocks and Shares ISA.

How Does the Cost of Living in London Compare to the Rest of the UK? 

London is definitely not on the list of cheapest places to live in the United Kingdom. For instance, the cost of living in the capital is 42% higher than living in Manchester. 

The cost of living in London is also well above the national average, as can be seen from the following figures:

• A family of four: an average of £4,850 per month in London vs £3,500 across the UK 
• A single person: an average of £2,892 per month in London vs £2,000 across the UK 

Here is how London compares to other cities in the UK and the world, according to Wise: 

	1 bedroom flat in city centre	Transportation	3-course meal for two
London	£1,662	£158	£60
Edinburgh	£828	£57	£60
Manchester	£849	£71	£60
NYC, USA	£2,321	£95	£73
Sydney Australia	£1,422	£116	£54
Toronto, Canada	£1,121	£90	£46

What is the Average Salary in London?

According to Statista, the average salary in London was £41,866 a year in 2022, the highest in the country. 

London Average Salary vs UK Average Salary 

Meanwhile, the mean salary in the UK was £33,000 in the same period. 

Government figures from April 2021 put the weekly median income in London at £728. This is £117 higher than the median for the entire nation.

What is a Good Salary in the UK?

This depends on where you live. More expensive cities like London would need a higher income.

But, in general: 

• A couple in the UK can have a comfortable life on an annual salary of £27,340 
• A single person should make ends meet with £20,383 a year
• Couples with young children would need more, or around  £49,714 per year
• Couples with older children should be satisfied with annual pay of £31,902.

How Much Do Londoners Make: Gross vs Net Salary?

Most workers in the UK get a gross salary, i.e. the money you earn before deductions. These may include national insurance, income tax, pension contributions and student loan repayments.

How Much Is Deducted From Your Pay Every Month?

National Insurance and Income Tax are the most common deductions.

National Insurance contributions are required if you want to qualify for benefits such as the State Pension. These are mandatory for all working individuals who are over 16, make more than £184 weekly or are self-employed and make more than £6,515 in profit a year.

National Insurance contributions come out to 13.25% of your salary if you make £190 to £967 a week. If you earn more than £967 a week, NI contributions are 3.25% of your pay. 

Income Tax is paid on any amount you earn that exceeds your Personal Allowance (set at  £12,570 for the 2022/23 tax year).

The income Tax rate is divided into 4 brackets in the UK as displayed in the table below:

	Taxable Income	Income Tax Rate
Personal allowance	Up to £12,570	0%
Basic rate	£12,571–50,270	20%
Higher rate	£50,271–150,000	40%
Additional rate	£150,001+	45%

So, if you earn £50,000 a year, your take-home net salary will be £37,198 (after paying tax and NI). This means you are making £3,100 a month or £715 a week.

What Determines a Good Salary in London?

Let’s look at what is the average income in London and the UK. The analysis will be done based on your education level, gender, age and the industry you work in.

Education 

The average wage in London for graduates is £37,579. This is together with extra cash compensation of £6,824, Glassdoor estimates.

Postgraduates naturally earn more. According to Totaljobs, the average salary for a person with a Masters or PhD is £47,500 and £57,500, respectively.

The figures across the UK are slightly lower: 

• No higher education above A level standard: around £25,000
• Graduates: £34,000 
• Post-graduates: £42,000

Gender pay gap (in London and the UK) 

Unfortunately, a gender pay gap is noticeable both regionally and nationwide. 

Based on data presented by Plumplot, in 2021, women in London earned an average of £43,500, while men made £61,400.

The yearly average salary in the UK for women in the same time period was £33,200 as opposed to £41.5k for male employees.

Age 

As expected, younger people earn less than their elders. This is so because they are more willing to take jobs that pay less, such as apprenticeship and entry-level positions.

Salaries go down after workers reach a certain age. Those over 60 earn £28,854 a year, or 7k less than the highest-paid generation of 40 to 49 year-olds.

Industry

In the UK, finance and insurance provide the highest wages for workers with an average salary of £43,821. It is followed by the Energy sector (£42.5k) and Mining (£42.4k).

On the other end of the spectrum is the Accommodation & Food Services, an industry known for paying low wages—here the average salary is £22,779. 

Finance and Banking is the highest-paying industry, with average salaries of £80,203. Management & Business is next, where London salaries average £76,688. Law is third, with average wages of £75,827 a year. 

What Are the Highest Paying Jobs in London?

Listed below are the top 3 highest paying jobs in the UK and the average London salary for the same positions.

#	Job Position	Average UK salary	Average London salary
1	Chief executives and senior officials	£80,232	£101,292
2	Marketing and sales directors	£74,950	£111,741
3	Legal professionals	£74,580	£104,000

What Jobs Bring in the Lowest Average Income in London?

The three lowest paying jobs in the UK by gross weekly pay are:

• Bar staff: £301 a week
• Smiths and forge workers: £303.7 per week
• Waiters and waitresses: £314 a week

The level of experience also determines the average salary. Thus, entry-level jobs in London average around £32,500 across all industries. Senior executive positions get paid an average of £70,000. Although, in reality, they could go up £100,000 and more, depending on your experience and skill set.

How Do Average London Salaries Compare to the Rest of the UK?

The table below shows the difference in salaries between London and the capitals of Wales and Scotland. 

	London	Cardiff	Edinburgh
Graphic designer	£26,738	£23,979	£21,433
Copywriter	£34,113	£23,052	£23,876
Cashier	£15,483	£12,057	£14,387
Financial analyst	£40,042	£24,114	£41,086
Software engineer	£42,925	£32,540	£29,078
Web developer	£32,664	£19,883	£26,423
Teacher	£25,539	£20,300	£23,356

Bottom Line

Even though salaries in London are above the national average, they still fall short.

The cost of living in London is notoriously high, while the number of industries that have kept up with the rising cost of rent, food, and other essentials, remains low. So before you move to London, carefully analyse all living expenses and see if your salary can cover them.