Understanding the top earners in the UK can tell us a lot about the country’s economy. The top 5% of income earners often get a lot of attention in discussions about money and society. By looking at this group, we can get a better idea of how wealth is spread out in the UK and what it means to be a top earner.
In this article, we will look at how much you need to make annually to reach the Top 5% of earners in the country. We’ll even take a look at the best careers to get you there. Let’s jump in.
How Much Do Top 5% Earners Make In The UK
According to the latest government data, the top 5% of earners make an annual income of £82,200 or more in the UK. This is significantly more than the median average UK income of £33,280 in the UK.
Of course, this is pre-tax income which could be made up of multiple income sources such as salary, dividends, interest and more. We all know that we don’t get to keep everything we make. The tax man also wants his cut.
What Is £82,200 After Tax In The UK?
On an £82,200 income, you will be paying in the higher rate tax bracket. This means you will pay zero income tax on the first £12,570 due to the tax-free income allowance. You will then pay 20% on income between £12,571 and £50,270. Lastly, on the remaining £31,930 you will pay 40% tax.
You will also have to pay National Insurance. Here’s how it all breaks down:
On an £82,200 salary, your take home pay will be £55,499 after tax and National Insurance. Income tax comes out to £20,312 per year while National Insurance comes out to £6,389 per year.
This is based on the full income being taxed as normal income. Some high earners may receive income in dividends or even interest which could result in a lower tax liability.
What Is A Top 5% Net Worth In The UK?
Just because you are earning a Top 5% income, does not mean you are Top 5% when it comes to Net Worth. Anyone can make money, but becoming wealthy requires you to save, invest and make your money work for you. You can earn as much as you like, but if you spend it all, you will never become rich.
According to the latest data from the Office for National Statistics, households need to be worth at least £1,988,500 to be in the Top 5%.
Reaching a net worth of £2 Million is possible without ever being a Top 5% earner. For example, if you invest £20,000 per year at a rate of 10%, you would have over £2 Million in just 25 years. Even at a conservative 7% rate of return, you would reach £2 Million in just 30 years.
You can use our compound interest calculator to adjust contributions and returns to see how long it would take you to reach a top 5% Net Worth.
How To Become A Top 5% Earner In The UK
If you want to become a Top 5% earner in the UK, you will need to work in a specialised field that will allow you to reach this level of income in your career lifetime. Alternatively, you could start your own business that has the potential to pay you over £82,200 per year.
Here are some fields that have the potential to reach an £82,200 income level:
- Medicine: Specialties with high earning potential include consultant surgeons, anaesthetists, and radiologists.
- Finance: Top earners often come from roles like investment bankers, fund managers, private equity professionals, and key positions in banking.
- Law: The legal high-flyers often include senior partners at premier law firms, especially those specializing in areas like mergers and acquisitions or international law.
- Corporate Executives: Commanding the top echelons of companies, roles like CEOs, CFOs, and COOs in large corporations are among the highest paid.
- Entrepreneurship: Venturing into and scaling a prosperous business can yield vast earnings, though the risk is inherent.
- Tech Industry: The tech giants and rising startups often compensate top software developers handsomely, especially those holding pivotal roles like CTOs or lead architects.
- Professional Athletes: A niche field, but sports stars in prime leagues, notably football, can rake in lofty salaries and endorsements.
- Entertainment Industry: The limelight shines bright (and lucratively) for renowned actors, musicians, directors, and producers.
- Real Estate Development: The property landscape rewards well for top-tier developers and astute property investors.
- Aviation: Navigating the skies, senior airline pilots for premier carriers often command substantial paychecks.
- Engineering and Project Management: Those steering major undertakings in sectors like oil & gas or infrastructure often find themselves in the higher income brackets.
- Sales and Commission-Based Roles: High commissions await those excelling in luxury goods, premium real estate, or enterprise software sales.
- Consultancy: At the apex of the consultancy pyramid, senior partners and specialists in elite firms often enjoy substantial compensation.
- Pharmaceuticals: The world of drugs and therapies pays well for those in key roles, be it in R&D or the executive boardrooms of major pharma corporations.
- Digital Marketing: The digital realm is golden for those pioneering successful agencies or mastering the art of affiliate marketing.
Final Thoughts
If you are trying to reach the top 5% of earners in the UK, you will need to pull in over £82,200 per year pre-tax. There are plenty of career paths that can get you there but it will require hard work and dedication to get to this level.
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