Is £100k A Good Salary In The UK?

James Beattie By James Beattie 16 Min Read

There is no doubt a £100k salary in the UK is good. But how good is it? With inflation on the rise and rents rocketing, £100k doesn’t go as far as it used to. In this article, we will explore the actual value of a £100k per year salary compared to earnings in your local area and the UK national average.

Quick Overview
Earning £100k per year puts you in the top 4% of earners in the UK, making it a great position to be in. This salary will be able to provide an amazing lifestyle for you and your family no matter where you live in the UK. Even in London, the highest cost of living region in the UK, £100k will be able to provide a great lifestyle.

How Good Is A £100k Salary In The UK?

A £100k salary in the UK is very good compared to the £33,280 median average salary of UK full-time workers. It puts you in the top 4% of earners in the country based on pre-tax income. Good job you’ve likely worked hard to get to this point.

Even in London £100k is a huge jump from the London average salary of £41,866 per year. While the cost of living is significantly higher in London, £100k is enough to live an amazing life in the city.

Ultimately, earning £100k per year is a great salary no matter where you live. Even more so if you live outside London or the South East. £100k a year in cheaper cost-of-living areas in the UK can go a long way. If you live with a partner who is also earning a full-time salary, you and your family should have a significant amount of disposable income each month.

What Is £100k After Tax In The UK?

Landing a £100k per year job is exceptional and puts you in the top tier of earners in the UK, however, you won’t be bringing all of that home. The government wants their cut in the form of Income Tax and National insurance.

On a £100k salary, you will be paying in the higher rate tax band. This means you will get your tax-free allowance of £12,570, pay 20% on income up to £50,720, and finally pay 40% tax on the remaining £29,280.

Many people think if you enter into the higher rate you will pay 40% of all of your income. This is not true. You will only pay 40% on any income above the initial £50,270.

On a £100k per year salary, you will pay £27,432 in Income Tax and £6,968 in National insurance, leaving you with a take-home pay of £65,600 per year or £5467 per month.

£100k salary after tax

Is £100k A Good Salary Where You Live?

Location plays a huge role in how far your salary will go. Living in a higher average salary area usually comes with a higher cost of living. For example, the average salary in the North East is £29,521 whereas the average salary in London is £41,866.

If you are earning £100k in a lower average salary region in the UK, your £100k is amazing by comparison.

Earning £100k in the North East is going to give you a much better lifestyle than earning £100k in London. Pound for pound, you are going to get a much better house in the North East vs London. Someone earning £100k in the North East also has the option to keep their expenses very low and invest heavily in their retirement.

Earning £100k outside of London means you’re on a very good salary. With this income, you can enjoy a great life, go on vacations, and save a significant amount for your retirement.

What’s it Like Living In London On £100k Per Year?

With an annual income of £100k, you can comfortably afford to live in London. This amount surpasses the average Londoner’s earnings by £58,134. It enables you to secure a nice flat, indulge in occasional dining out and entertainment, all while responsibly setting aside 20% for retirement savings.

Average wages in London are about 30% higher than in the North East. However, London’s rent prices are roughly 300% higher. This drastically cuts the disposable income of many Londoners, compared to those living in other UK regions.

You should be comfortable on £100,000 per year in London and potentially be able to save more than the recommended 20% of your income if you get aggressive with your saving. We recommend living with a roommate to try and cut down on living costs.

Budget Template For £100k Salary

£100,000 is triple the Median average salary in the UK. While that’s incredibly good, it doesn’t mean you don’t have to be sensible with your spending. If you want to get wealthy and potentially retire early then having a budget and following it diligently is important.

Using a budget to track your spending is the best way to see where your money is going each month.

On a £100k per year salary, you are bringing home £5,467 per month after tax and national insurance. I have put together a rough budget template below to help you get started. However, everyone’s financial situation is different so you may need to make some adjustments.

We will follow the 50/30/20 rule. This means roughly 50% goes towards needs, 30% to living life, and 20% to savings/investing.

Monthly Net Income£5,467
Utilities & Insurance£350
Entertainment, Clothing etc£1717
Saving & Investing£1100
Monthly Budget For £100,000 Salary

If you want to get into more detail with your own personal budget, I would recommend checking out our Monthly Budgeting Google sheet.

50/30/20 Budget Planner - Google Sheets
  • Monthly Budget Overview
  • Custom Categories
  • Transaction Log
  • View Daily Spending Overview
  • Track Needs, Wants, Savings/Investments & Debts

How Much Can I Spend On A House Earning £100k

Housing costs typically represent a significant portion of our expenses in life. With a £100k salary, you should be in a comfortable position to consider buying a house once you have saved up for the deposit.

If you’re young, I personally would adopt an aggressive savings approach to enter the property market. This may require temporarily reducing expenses on vacations and luxury items for a few years. However, the long-term benefits will be substantial. By saving £1200 per month, you can accumulate a deposit of £29k to £43k within 2-3 years.

When initially renting a property, it’s advisable not to aim for the largest and most expensive house within your budget. Remember that your first rental is temporary, so consider opting for a more affordable option. This allows you to allocate more funds towards savings and expedite the process of purchasing your own home.

How Much Should I Spend On Rent With A £100k Salary?

The rule of thumb for renting is that you should not spend any more than 30% of your income on rent. For example, on an £100,000 salary, you can aim to spend roughly £1600 to £1700 per month on rent.

However, if you live in a high-cost-of-living area such as London or the Southeast, you might need to stretch your housing budget slightly further. In other parts of the UK, you should be able to find a suitable house for around £1700 per month.

Another effective strategy is to consider finding a housemate or partner to share a house with. This way, you can half your rent and other housing expenses with them. You can then save aggressively towards investments or a deposit on your own property.

How Much Mortgage Can I Get On A £100k Salary?

Earning £100k annually in a stable job makes you eligible for a mortgage, providing an excellent opportunity to consider purchasing a house outside of London. If you are buying a property with a partner, your borrowing capacity will increase significantly compared to applying alone. To begin the process, it’s advisable to save up a deposit of 5% to 10%, with 10% being preferable if feasible.

Typically, mortgage lenders allow borrowers to borrow around 3.5x to 5x their pre-tax income.

With a yearly salary of £100k, you could potentially secure a mortgage of approximately £400,000. Assuming an interest rate of 6%, this would result in a monthly payment of £2,398 for a 30-year mortgage.

However, it’s important to note that this exceeds our recommended budget of £1700 per month. It’s essential to consider additional expenses associated with homeownership, such as insurance, council tax, and maintenance costs. If I were purchasing a house alone, I would aim for a mortgage of no more than £300,000, resulting in a monthly payment of £1,799 under the same terms.

On the other hand, if you have a partner with a full-time income, your household could comfortably manage a mortgage of £400,000, offering a more manageable monthly payment.

How To Become Financially Free On £100k Per Year

If you live outside of London, you should not be struggling to live on a £100,000 per year salary. If you are, you’re making some significant financial mistakes. Here are a few fundamental personal finance rules you should follow to become financially stable.

Create A Budget

Creating a budget is the first step to becoming financially free. Knowing where your money is going each month allows you to be intentional about when you spend money.

You can use the template we provided above. You will likely need to make some adjustments based on your own personal situation.

Get Out Of Debt

If you have bad debts, your first priority should be paying them off. This might be credit card debt, car payments, personal loans, etc. With high-interest rates, these debts will make you struggle to ever get ahead financially.

Pay off these debts as fast as you can, starting with the highest interest first. Once you wipe out your debt you can start to focus on setting yourself up for financial success.

On £100k per year, you should be able to wipe out most debt quickly as long as you don’t have a huge amount of liabilities.

Build An Emergency Fund

Once you have cleared your debts, it’s time to start securing your future. An emergency fund allows you to be prepared when things go wrong. If you get laid off at work or your car breaks down, you don’t have to stress. This money is specifically there to fix these problems.

You should aim to save 6 months of essential expenses. This is housing, food, and essential bills. For someone on a £100k salary, this is likely around £2700 per month. You should aim to save £15,900 in an emergency fund.

Keep this money in a high-interest savings account and only touch it for ACTUAL emergencies. Even if you lost your job you have plenty of time to find a new one, without having to stress out too much.

Start Investing

Once you have an emergency fund and have wiped out any bad debts, it’s time to start investing. You may already invest some money in a pension each month through a workplace pension scheme. If they offer a match, you should be maxing this out first.

You have a couple of options for investing. If you are planning to invest for retirement and don’t ever plan on touching the money until then, I would recommend investing in a SIPP (Self Invested Personal Pension) due to the tax relief benefits and government bonus.

I personally try to max out my stocks and shares ISA first as I like to have access to the money at any time, in case an opportunity comes up, such as buying rental property or investing back into my own business.

Either way, setting up one of these investment vehicles and investing in simple index funds is one the most popular ways to start investing.

Final Thoughts

If you are earning £100k per year in the UK, you are doing well for yourself. A £100k salary puts you in the top 4% earners in the UK. Making this type of money you can expect to live a great life no matter where you live in the UK. It is enough to support a family on a single wage and will provide you with a lot of disposable income if you have no dependents. You’ve likely worked hard to get a job like this, so make sure to enjoy it, while also saving and investing diligently for retirement.

Learn how good other salaries are in the UK:

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I'm passionate about personal finance and making money. Currently trying to FIRE solely by building online assets. Grew my stock portfolio to £86,000 by 26.
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