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Is 40K a good salary in the UK?

With the seemingly ever-growing immigrant population, the cost of living crisis and a £0.59 increase in the National minimum wage for 23 and over, now might be the time to ask yourself, is 40K a good salary in the UK?

If you consider that people earning £2,500 to £3,000 gross per month (which equates to a gross salary of around £40K per annum) are thought to be getting a decent wage, then yes. Those earning a gross salary of £3,300 to £4,000 per month, are on a good salary by UK standards.

🤔️ Is 40K a good salary?40K is a decent salary
💰 How much do I take home if I earn £40,000 in the UK?Minimum of £30,881.32
🤑 £40,000 salary is how much per month?£3,333.33 gross income
❓ What is the current national minimum wage for those aged 23 and over in the UK?£9.50

To avoid any doubt, when we talk about gross salary, we refer to salary before any deductions (income tax, national insurance, etc.) are made.

Breakdown of £40,000 per annum after tax in the United Kingdom

Below is a detailed breakdown of £40,000 net income after tax. The amount you take home after taxes in the UK is £30,881.32, which is 77.20% of your gross income. 13.5% is deducted as tax, while there is a 9.1% deduction for National Insurance.£40,000 Salary Tax Breakdown

Using the tax code 125L, the total tax you pay per year is £5,484.20. With a full-employment assumption, the National Insurance under the Class 1 National Insurance contributions will be £3,634.48, making the annual total tax sum equal to £9,118.67. Personal allowance per individual as of 2022  stays at £12,570 per year.

Gross Income£40,000£3,333.33£769.23£153.85
Income Tax£5,484.20£457.02£105.47£21.09
National Insurance£3,634.48£302.87£69.89£13.98
Total Tax£9,118.67£759.89£175.36£35.07
Taxable Income£27,430£2,285.83£527.50£105.50
Personal Allowance£12,570 per year
Take Home (NET)£30,881.32£2,573.44£593.87£118.77
Tax Home From November 6th 2022£31,224.20£2,602.02£600.47£120.09

Figures gotten from UK gov tax service website.

On the 22nd of September 2022, Chancellor Kwasi Kwarteng announced that the 1.25% point increase which took effect in April 2022 to fund health and social care in National Insurance will be reversed. Next year, individuals will save be able to save an additional £330 on average.

From November 6th 2022, the standard rate of National Insurance rate for employees will decrease by 1.25%. The NI rate will move from 13.25% to 12% on income of £12,570 to £50,270 a year (£242 to £967 a week and £1,048 to £4,189 a month). Also, earnings over the upper threshold of £50,270 (over £967 a week and £4,189 a month) will decrease by 1.25%, from 3.23% to 2%.

The National Demographic

The cost of living, of course, varies depending on your geographical location in the UK. It’s not surprising that the average salaries and cost of living in London tend to be higher than anywhere else in the UK.

The website has a comprehensive breakdown of the average salary in London across a wide range of professions based on gender, age, experience, and occupation.

Interestingly, the average annual salary across the UK is £29,600 per year (£1,950 per month). This national average is considerably lower than the 40,000 a year, which is considered to be a good income.

Average UK cost of living statistics

According to, the cost of living for an average key worker here in the UK is £2,005 per month, while it’s £3,073 per month for a household. Cost of living expense is distributed across rent/mortgage, utilities, food, commuting, clothing, and entertainment.

After living expense deductions, the amount leaves them with an average disposable income of minus £50 (minus £48.04, according to standoutcv). For these people, the prospects of saving or investing are non-existent.

In light of the above, the answer to the question is 40K a good salary in the UK for one person, is undoubtedly yes. It would enable them to live comfortably and even think about how to invest money.

Is 40K a year a good salary for your retirement aspirations?

For anyone looking to retire at 55, is 40K a year a good salary for UK workers to achieve an early retirement goal? The answer seems bleak. According to an article entitled “how to retire at 55,” you need to set aside £2,200 per month.

The website shows that after taxes and National Insurance, those on yearly salaries of £40K would be left with £2,573 per month. With a cost of living of £2,005 per month, they will be left with a disposable income of £568 per month. It’s well short of £2,200 needed to retire at 55. But with the right investment strategy, it could still provide a decent income in retirement.

For more information, you should check out this “how much do I need for retirement” blog article.

High and low-income earners in the UK in 2022

According to the Office of National Statistics, as of October 2022, high- and low-paid employees earned a gross hourly wage of £23.7 and £10.5, respectively. Therefore, high-income earners make a gross income of £45,504 per annum, while low-income earners make a gross income of £20,160 per annum.

On average, High-income earners age range from 25 to 54 and work mostly in finance and insurance, information and communication, professional scientific and technical, and public administration and defence industry. Low-income earners work in the hospitality, arts, and retail industry.

High earners are mostly professionals, managers and directors, and associate professionals who work in London, while low earners are mostly in elementary, sales, and customer service occupations who work in North East or Yorkshire and The Humber.

According to standout-cv, the highest earners (over £60,000 per annum) in the UK include CEOs, legal professionals, aircraft pilots and flight engineers, marketing and sales directors, financial managers and directors, medical practitioners, transport associate professionals, senior professionals of educational establishments, and IT and Telecomms directors.

Top paying companies and industries in the UK in 2022

If you are fortunate to work for one of the top 20 paying companies published on, the salaries vary from £85K to £121K per annum. Not only could you afford a more comfortable life, but looking at how to invest £10,000 regularly, or even how to invest £100K every two or three years, would be a definite possibility.

But investing £100K is a lot of money, and it does pose certain problems from a tax point of view. Depending on your investor profile, you might be attracted to maxing out your pension contributions and opening a stocks and shares ISA.

Annual allowances

Putting as much money as possible into a private pension is wise. However, there is an annual cap. The cap for the current 2022/2023 tax year is £40K. Pay anything over that amount, and you will not receive the full tax relief on any excess contributions. So it’s a good idea to check out the tapered tax allowance.

Your personal ISA allowance is £20K per annum. However, suppose you are fortunate enough to have money left over after taking full advantage of your pension and ISA contribution allowances. In that case, you might want to consider other investment accounts, such as a GIA account.

The pros and cons of general investment accounts

Some people might consider general investment accounts (GIAs) as alternatives to pensions. If you are thinking along these lines, here’s what you need to know,

The advantages of GIAs

The disadvantages of GIAs

  • You might have to pay capital gains tax if you’ve already used your allowance.
  • You might have to pay income tax on interest earned or dividends
  • There is no tax relief on contributions
  • GIAs are accountable for inheritance tax

Putting your money into a private pension is a safer option. However, you can only access 25% of your funds tax-free once you reach age 55. So, while a GIA offers unlimited withdrawals, if you take out too much, your available balance may be inadequate to support the lifestyle you desire in retirement.

Is £40K per person a good salary for a UK couple?

A couple who work full time with a household income of 2 x £40K is in a relatively good position. But of course, circumstances such as geographic location and the cost of living have an important bearing, and with the current inflation rate, it will be even more critical to many.


What is a good salary?

A good salary is the amount of money you need to earn to live comfortably regardless of your standard of living. The exact figure for a good salary could vary significantly depending on how much money you want to spend to be comfortable.

Is £40K a good salary?

A £40,000 salary in the UK is an excellent income for a single person who has no major expenditures. A 40K a year may be considered a bit below average for some, but it doesn’t necessarily indicate that it isn’t enough for living expenses. Keep in mind that several factors, such as geographic location, living expenses, and lifestyle can affect how comfortably you can live off a £40K salary.

Is 40K a high-earner salary?

According to the UK income tax band, the higher taxable income rate starts from £50,271. So, £40,000 will not be considered a high earner salary.

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*Capital at risk. Tax treatment depends on your individual circumstances and may be subject to change in the future.