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In real terms, your net income is probably a lot lower now than it was in 1997

The past is the past, but ahead of today’s probably punitive budget, here’s a moment of nostalgia.

Figures from accountants Smith Williamson show just how much the UK’s highest earners have lost from their post-tax pay packets over the past 13 years. The amounts are substantial.

In 1997, someone earning the equivalent of 200k today would have taken home 126k after tax and national insurance were deducted; in 2010 they take home 116k.

The discrepancy is even broader at higher income levels.

In 1997, someone earning the equivalent gross income of 500k today, took home a net income of 305k; today they take home 263k. Equally, someone earning the equivalent of 1m in 1997 took home 605k; today they have 508k.

The picture is even more punitive when house moves are factored in. What with rising property prices and higher stamp duty, Smith Williamson calculates that the wealthy are now spending six times more on property taxes.

In 1997, for example, stamp duty was 1% and the average person with a gross income of 1m might have purchased a house worth 2.1m. Today, stamp duty is 4% on properties worth more than 500k, and the average person earning 1m might buy a house worth 5m. As a result, their stamp duty payments have risen from 30k to 200k.

Given that taxes are likely to rise higher this afternoon, it’s probably not worth dwelling on this for too long.

Comments (4)

Comments
  1. I’ve got a mate who’s worked his way up to over 100,000 a year but he spends so much on gadgets that he doesn’t really need that his savings have taken a hit and he complains to anyone who’ll listen. Spening over a grand on an Apple Mac just to do the ocassional web surf is beyond me but he thinks it’s ‘cool’.

    Wait ’till he gets married and starts a family….

  2. You think that spending 1K on a Mac for a guy earning over 100K is stupid?

    I earn a lot less than him but have kust bought an iMac 27 for 1600, a macbook pro laptop for 1500 and an ipad for 700. All for the occasional web surf. Will be getting the iphone 4 this week aswell. I live in a 5 bed detached with two front rooms both which have 50 inch plasmas, PS3, Xbox 360, Blu ray player, HD DVD player and 1000+ AV speaker systems EACH.

    Granted I have no savings at the moment but I also have no debt except the mortgage of course.

    Point is, is that if your friend can’t buy such stuff on his salary who the hell can?

    Steve Jobs best friend Reply
     
  3. >Spening over a grand on an Apple Mac…
    I have spent 1950 on an Apple iMac early this year. A grand probably can buy an Apple Mac mini only.

    >Wait ’till he gets married and starts a family….
    I have a family.

    >I’ve got a mate who’s worked his way up to over 100,000 a year
    I can earn over 100,000 a year too though.

  4. @ Steve Jobs best friend – You are really stupid. “No debt except mortgage”: what is mortgage if not debt? Your body temperature is higher than your IQ.

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