Facts and figures about UK taxes, benefits and public spending.
Income distribution, poverty and inequality.
Analysing government fiscal forecasts and tax and spending.
Analysis of the fiscal choices an independent Scotland would face.
Case studies that give a flavour of the areas where IFS research has an impact on society.
Reforming the tax system for the 21st century.
A peer-reviewed quarterly journal publishing articles by academics and practitioners.
How rich are you? When asked this question, most people think they are in the middle. From people in the poorest third of the income distribution, up to people in the richest five or ten per cent, many will happily report that they think they're in the middle. Obviously, not everyone can be in the middle and IFS has used the latest data on household incomes to give you an accurate picture of where you actually are in the distribution.“Where do you fit in?” is a simple tool that lets you know your position in the income distribution and can be accessed online here or downloaded as an iPhone App
So how can you compare your income to that of other people in the UK? One way is to compare your salary to that of other people working in the UK. In 2011, the median gross salary for people in full-time work was around £26,000 per year. But this does not tell the full story. Of the 48 million adults in the UK, about 11.7 million are above state pension age and mostly live off income from pensions. About 5 million working-age adults live in households where no-one works and are thus largely dependent on out-of-work benefits. There are many people in work receiving benefits as well. Some people have income from self employment or investments and some pay higher taxes than others. All of these factors affect the total income that households can use to spend on the items of their choice, and hence their material living standards.. Moreover, a single person on the median salary of £26,000 will tend to have a significantly higher standard of living than a person supporting a spouse and child on the same salary.
While there are many ways to measure income, let alone broader measures of living standards, here we use the same definition as the government in its official income statistics. We measure total household income after direct taxes (including council tax) are deducted and after all benefits are received. We also make an adjustment for family size so that it is possible to compare the living standards of households with different numbers of people living in them.
In using “Where do you fit in?” all you have to do is enter the number of adults and children in your household, add up the take-home income of each person (don’t forget to include any benefits you receive) and enter how much council tax you pay. Our tool will show you where you and your household fit into the UK’s income distribution. Who can we call average? That depends on family type. Imagine a family with two adults and two young children. If both parents go to work and each of them earns a gross salary of £19,000 per year, then they have a net income of around £600 per week. Adjusting for household size, this leaves them with income near the middle. Interestingly, this is only just above the level of gross earnings that a recent report by the Joseph Rowntree Foundation deemed necessary to achieve an adequate standard of living for this family type, according to society’s view of acceptable living standards. Thinking about other family types in the middle of the distribution, a couple without children who both have gross annual salaries of £14,000 would also be right in the middle.
Those towards the bottom of the income distribution are more likely to be on benefits. For example, a single unemployed person living alone receiving Jobseeker’s Allowance plus Housing Benefit of £80 per week to cover their rent would be at the 10th percentile. A single pensioner with similar housing costs and dependent on the Basic State Pension and Pension Credit would be at the 32nd percentile.
At the other end of the spectrum, many might be surprised to find that a childless couple each earning £30,000 (before tax) would find themselves in the top 10% of the income distribution and would be in the top 1% if earning £85,000 each. Of course, those with children need rather more to achieve the same living standards. A single earner with two children would need to be on close to £100,000 to be in the top 10% and £285,000 to be in the top 1%.
Overall those in the middle of the distribution have income about twice the level of those at the 10th percentile, while income at the 90th percentile is twice that at the median. Within the top 10%, incomes shoot up as you get closer to the top of the distribution, and have been ‘racing away’ more and more quickly over time in recent history.
We hope that you find “Where do you fit in?” informative. Punch in your numbers and you might be surprised where you end up.
View all Observations in the series
Cutting the deficit: three years down, five to go?
The UK is in the fourth year of a planned eight-year fiscal tightening. Following further announcements made in Budget 2013, this fiscal consolidation is now forecast to total £143 billion by 2017–18. The UK is intending the fourth largest fiscal consolidation among the 29 advanced economies for which comparable data are available. By the end of this financial year, half of the total consolidation is expected to have been implemented. However, within this tax increases and cuts to investment spending have been relatively front-loaded, while cuts to welfare spending and other non-investment spending have been relatively back-loaded.
The March Budget forecast that borrowing would fall by £0.1 billion from £121.0 billion in 2011–12 to £120.9 billion in 2012–13. On Tuesday, the Office for National Statistics is due to release its first estimate of public sector net borrowing in March 2013 and, therefore, for the whole of 2012–13. Borrowing could easily end up being higher or lower than it was in the previous year, either due to backwards revisions, the uncertainty inherent in forecasting borrowing even a month in advance, or both. However, whether borrowing is slightly up or down in cash terms is economically irrelevant. Either way, the bigger picture is that having fallen by roughly a quarter between 2009–10 and 2011–12, borrowing is forecast to be broadly constant through to 2013–14.
Women working in their sixties: why have employment rates been rising?
Employment rates through the recession have been remarkably robust, with today’s ONS figures showing employment remaining close to 30 million. The young have experienced historically low employment rates and high unemployment rates but the employment rate of women aged 60 to 64 has increased as fast since 2010 as it did during the 2000s. An important explanation is the gradual increase in the state pension age for women since 2010, which has led to more older women being in paid work. Without this policy change, the employment rate for 60 to 64 year women would have been broadly flat since 2010.