UK Household Income Statistics

With 2020 bringing new twists around every corner, the UK and the globe saw a major shift in economies, with disposable and household incomes decreasing, and household savings increasing exponentially.

At GoSimpleTax, we work with thousands of the UK’s workforce each year, helping them simplify their expenses, tax forms, and tax calculations.

To better understand how the UK population’s income has changed over the last year, we’ve compiled some key facts, figures, and statistics about personal and household income in the UK, including:

  • Median and mean disposable household income in the UK
  • Retired vs non-retired household income in the UK
  • Policy changes that impact household and personal income
  • Household weekly expenditure statistics
  • Weekly expenditure by category
  • The effect of Coronvavirus on household and personal income

We collected data from statistical reports and industry reports, alongside our own research, to uncover some very interesting insights into the state of personal income and household income in the UK in 2020.

Here’s what we found:

In the financial year ending (FYE) 2020, the period leading up to the implementation of coronavirus measures in the UK, median household disposable income (after taxes and benefits) was £30,800.

  • This was up 2.3% (£700) from FYE 2019 (£29,400), after accounting for inflation.
  • Since FYE 2013, annual median income has grown by an average of 2.1% per year

 

In FYE 2020, the mean household income increased by 1.6% to reach £37,100.

  • This increase in mean income means it is now at similar levels that it was at prior to the economic downturn in FYE 2008.

 

The employment rate for those 16 years and older increased from 61.3% during FYE 2019 to 61.7% during FYE 2020.

 

UK Retired and Non-retired Household Income Statistics

Median income for people living in retired households grew by 1.3% in FYE 2020

  • This was likely influenced by the rise in State Pension, which grew by 2.6% in FYE 2019.

Median income for individuals living in non-retired households increased by 2.6% in FYE 2020 to £32,100.

 

Policy Changes that Impact Household and Personal Income

In FYE 2020:

  • The personal allowance rose from £11,850 to £12,500.
  • The starting point for the 40% higher tax rates increased from £46,350 to £50,000.
  • The National Living Wage for those aged 25 years and over also increased from £7.83 per hour to £8.21 per hour (up 4.9%)

 

UK Household Expenditure Statistics

Average weekly household spending in the UK was £585.60 in the financial year ending (FYE) 2019.

  • This is a similar level to two years ago (£582.40), after adjusting for inflation

 

Transport, housing and recreation and culture were the largest components of weekly household spending, together accounting for 44% of total household expenditure.

CategoryAvg. Weekly Expenditure% of Total Expenditure
Transport£80.200.137
Housing, Fuel & Power£79.400.136
Other (Council tax, Credit, Licences, etc.)£77.200.132
Recreation & Culture£76.900.131
Food & Non-alcoholic Drinks£61.900.106
Restaurants & Hotels£51.300.088
Misc. Good & Services£45.400.078
Household Goods & Services£40.800.07
Clothing and Footwear£24.400.042
Communication£21.300.036
Alcohol, Tobacco & Narcotics£13.000.022
Health£7.900.014

 

Weekly Expenditure by Category

Households in the United Kingdom spend more on eating-in than on eating-out.

  • In 2019, 55% of all food and beverage expenditure (including alcoholic beverages) was for at-home consumption, compared to 45% spent on restaurants and other out-of-home food services.
  • At the start of 2020, this trend continued, with at-home consumption accounting for 59% of food and drink spending in the first three months of the year.

 

Households in the highest ten percent spent nearly 6 times as much a week on personal care products than those in the lowest ten percent group.

  • UK households in the higher eighth gross income decile group spent an average of £16.70 a week on personal care in 2019, whereas those in the third lower decile group spent just £7.20.

 

In the first quarter of 2020, spending on personal care was around £7.4 billion, dropping to £5.6 billion in the second quarter.

  • Q3 of 2019 saw the highest spend on personal care on record, with about £8.2 billion spent.

 

Households in the tenth gross income decile group in the UK spent an average of £4.7 a week on games, toys and hobbies in 2019.

  • Households in the seventh decile group spent more on games, toys, and hobbies weekly (£4.40) than both the eighth and ninth decile group (£3.7 and £3.5, respectively).

 

Households in the fifth decile group spent an average of £32.20 a week on the operation of personal transport.

  • The income group with the highest weekly expenditure is the highest ten percent group, who spend a total of £62.40.

 

The average weekly share of expenditure on furniture and furnishings across all households amounted to 3.2%.

  • Households in the highest ten percent and the sixth decile group spent the highest percentage of their weekly household expenditure on furniture and furnishings, 3.7% and 3.5% respectively.

 

Household expenditure on clothing and footwear hit the highest point yet in Q3 of 2019, with approximately £18.7 billion spent.

  • The impact of coronavirus on the market took it’s toll in 2020, with Q1 of 2020 seeing about £17 million, and dropping further to just £10.5 billion by Q2.

 

The Effect of Coronavirus on Household Income 2020

As a consequence of the Coronavirus outbreak in the United Kingdom, many businesses have been forced to close for the period, seeing many people placed on furlough or made redundant.

 

Towards the end of FYE 2020 and into FYE 2021, growth in real wages began to fall, to -1.3% in March to May 2020 compared with the same period a year earlier.

 

From March 2020 to August 2020, the total number of UK households on Universal Credit grew from 2,699,140 to 4,595,612, up 58.7%.

 

Over a quarter of survey respondents say the Coronavirus has already impacted their personal income (26%) or household income (29%).

  • 41% of respondents say their household income has not been impacted, but they expect it will be in the future.
  • 26% of respondents say Coronavirus will have no impact on their household income.

 

As of 31 May, 2020, 35% of respondents in the United States lost income to COVID-19, compared to 34% in the UK and 30% in Germany.

 

The household savings ratio rose to 29.1% in Q2 of 2020, the highest since records began.

  • This was likely driven by the huge decrease in household final consumption, as consumers stopped spending at a rapid rate due to lockdown restrictions and non-essential shops closing.
  • Large falls were seen on expenditure in restaurants, hotels, clothing and footwear, recreation, and transport.

 

In Q2 2020, Real household disposable income (RHDI) in Quarter 2 (Apr to June) 2020 decreased by 2.3%.

  • This means that after accounting for price increases in households, incomes after tax decreased by 2.3%.
  • This is a reversal of growth in recent years and is the largest fall on record, which can be attributed to a decrease in employment and wage reductions through the furlough scheme.

 


Sources available upon request.