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.
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.
Did you know? According to Statista, the average salary in London was £39,700 per year in 2021. Meanwhile, the national average in the UK was £25,971.
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).
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So, here are the average expenses in London with an average salary:
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.
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!
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.
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.
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:
The majority of Britons pay 20% in income tax and 12% in social security.
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.
Did you know? There is a majority of freelancers living and working in the Greater London area (24% opposed to 18% solo self-employed) and they earn nearly £19 per hour.
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|
|4||Properties & Real Estates||£74,608 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|
|19||Marketing, Sales, Purchase||£51,436 GBP|
|21||Geography & Geodesy||£49,714 GBP|
|22||Making Design||£48,853 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|
|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|
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.
The average salary in London was £39,700 in 2021. However, salaries in London vary depending on the role and industry.
The highest paying jobs in London are typically in the financial or technology sectors. Investment bankers, software developers, and medical professionals usually have high salaries.
The lowest paying jobs in London are typically in the service industry, including waiters, bar staff, and retail workers.
London is one of the most expensive cities in the world to live in and although salaries are above average, they don’t always stretch as far, considering the living costs in the city. In comparison, New York City has a higher average salary but lower living costs, while Tokyo has a much lower average salary but higher living costs.
Bojana is my name and writing is my game. I am a content writer from Bitola who is always interested in the latest research in almost all areas of life. I have a Bachelor’s degree in English literature and a perfectionist character, both of which help me find the most accurate data and information available. Although I have my head stuck in studies and reports most of the time, I still have a bit of free time during which I enjoy knitting and watching classic 90’s Disney movies.