Posted in:

Is 40K a good salary in the UK?

With the seemingly ever-growing immigrant population, the cost-of-living crisis, and a £1.02 (9.79%) increase in the National minimum wage for 23-years-olds 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 £30k to £36k per annum) are thought to be getting a decent wage, it’s not bad. Those earning a gross salary of £3,300 to £4,000 per month (£39,600 to £48,000 per annum) however, are on a good salary by UK standards.

Is 40K a good salary in the UK?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?£11.44

To avoid doubt, when we ask, “Is 40k a good salary in the UK?” we are talking about gross salary, whereby 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 what 40,000 after-tax in the UK looks like. But income tax on a 40 000 salary in the UK isn’t the only thing to worry about – there’s NI, too. The amount you take home after all taxes in the UK is £32,319.60, which is 80.08% of your gross income. 13.72% is deducted as income tax, while there is a 5.49% deduction for National Insurance.
£40,000 Salary Tax Breakdown

Is 40k a good salary in the UK from the income tax point of view? Well. it’s as good as it can be, once you’ve breached the £12,570 threshold. Using the tax code 125L, the total income tax you pay per year is £5,486. With the assumption of full-time employment, the National Insurance under the Class 1 National Insurance contributions will be £2,194.40, making the annual total tax sum equal to £7.680.40.

Gross Income£40,000£3,333.33£769.23£109.59
Income Tax£5,486£457.17£105.50£15.03
National Insurance£2,194.40£182.87£42.20£6.01
Total deductions£7.680.40£640.04£147.70£21.04
Taxable Income£27,430£2,285.83£527.50£75.15
Personal Allowance£12,570 per year
Take Home (NET)

From April 20204


Figures gotten from UK gov tax service website.

In the Spring Budget of March 2024, Jeremy Hunt announced that Class 1 and 4 National Insurance contributions would be decreased to 8%, with effect from the 6th of April 2024.

If you want to know what this means to you, you can search online for a salary calculator for UK wages. Just be a little bit careful. Some are not fully up to date with the latest NI contribution rates. You can, however, rest assured that 40k after tax in the UK is as shown above.

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, according to the ONS, the average total earnings across the UK is £682 per week (£2,728 per month/£32,736 per annum). 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

In 2022 the website put the cost of living for an average key worker here in the UK at £2,005 per month, and £3,073 per month for a household. These cost-of-living figures include rent/mortgage, utilities, food, commuting, clothing, and entertainment.

After living expense deductions, this 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 2024, the NimbleFins website puts the average cost for a household significantly higher. The monthly average before paying for a roof over your head is put at £2,700. Add to this £493 per month for renting from a housing association or local authority, or £973 per month for renting privately, or £1,439 for paying a mortgage, and the total average comes to £3,193, £3,673, and £4,139 respectively.

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

However, a lot has happened in recent years, what with the aftereffects of COVID, the Russian invasion of Ukraine, and the war between Israel and Hamas resulting in inflation skyrocketing. So the real situation today in terms of a £40k wage and current average costs of living, is not as rosy as it once was.

Median pay by region vs average cost of living per region

The average cost of living in London is £2,200 for a single person and £3,874 for a family of four. In Scotland, the average monthly cost for a family of four (without rent) is £2,400 and in Northern Ireland and Belfast, the figure is £2,370. 

40k a year after tax leaves £32,319.60 which equates to £2,693.30 per month. With the average cost of living for a family of four in London at £3,874 per month, it clearly falls short of the mark. According to NimbleFins, the average cost for a family of four across the UK as a whole is £2,721 per month (You’ll find a full breakdown on their website). In other words, take-home pay from 40,000 doesn’t cover the cost of living, if only one salary is coming in.

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

What is a good salary in the UK if you want to retire at 55? Is a 40k salary enough to meet your early retirement goals? The answer seems bleak – even if we are talking about a single-person household According to an article entitled “How to retire at 55,” you need to set aside £2,200 per month or more.

The salary breakdown shown earlier indicates that after taxes and National Insurance if you are on an annual salary of £40K, you’ll be left with £2,693.30 per month. With the average cost of living at £2,005 per month, you will be left with a disposable income of £688.30 per month. It’s well short of the £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 2023

According to the Office of National Statistics, as of November 2023, high- and low-paid employees earned a gross hourly wage of £23.82 and £10.59, respectively. High-income earners make a gross income of £45,334 per annum, while low-income earners make a gross income of £20,155 per annum. These figures are calculated on 36.6 hours per week according to the ONS website (January to March 2024). Is 40K a good salary in the UK in terms of high and low earners? It falls somewhere in between.

On average, the age range for High-income earners is from 25 to 54, and they 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.

Geographically, 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, working in North East or Yorkshire and The Humber.

Is 40K a good salary in the UK? Not according to standout-cv if you’re one of the highest earners (over £60,000 per annum) in the UK. These jobs 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 Telecoms directors.

Top paying jobs in the UK in 2023

If you are fortunate to work for one of the top 22 paying jobs as published on the MSM Unify website, salaries vary from £120K to millions 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 2024/2025 tax year is £60k. 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. Of course, a 40,000 salary after taxes means you can’t get anywhere near the 60k limit.

Your personal ISA allowance is £20K per annum, so is 40K a good salary in the UK from this viewpoint? Well, maximising your ISA allowance would take more than 50% of your gross wage, making getting by on the balance extremely challenging if nigh on impossible. 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.

Did you find this content interesting?

You already voted!

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