Is Earning £100k in the UK Really All It's Cracked Up to Be in 2026?
- Hugo M
- 4 days ago
- 3 min read
I always dreamed of earning £100k. It felt like a milestone that would bring financial freedom, comfort, and a sense of success. But as 2026 rolls in, I’m starting to question if hitting that six-figure salary is really as great as it sounds. Between rising taxes, creeping inflation, and the cost of living, the reality of earning £100k in the UK today is more complicated than I expected.
Let me walk you through what £100k actually means in take-home pay, how inflation and tax changes chip away at your earnings, and why this salary might not stretch as far as it once did.
What Does £100k Look Like After Tax in 2025?
When you hear £100,000, it sounds like a lot. But the UK tax system means you don’t get to keep all of it. For the 2026 tax year, the take-home pay on a £100k salary is roughly £68,000 after income tax and National Insurance contributions.
Here’s a quick breakdown:
Income tax: You pay 20% on the first £37,700 (basic rate), then 40% on the remaining amount up to £100k.
National Insurance: You pay 12% on earnings between £12,570 and £50,270, then 2% on anything above that.
Because of these rates, your gross £100k salary shrinks significantly once taxes are deducted. This means your monthly take-home pay is about £5,700.
Why Inflation Makes £100k Feel Smaller
Inflation has been a persistent issue in the UK economy. Prices for essentials like food, energy, and housing have risen sharply in recent years. Even if your salary stays the same, your money buys less.
For example:
Energy bills have increased by over 50% in the last two years.
Grocery prices have risen by around 15% since 2022.
Average rent in many cities has gone up by 10% or more.
If you earned £100k five years ago, your purchasing power was much stronger. Today, even with the same salary, you might struggle to cover the same expenses or save as much.
Higher Taxes on £100k Earners
Another factor reducing the appeal of a £100k salary is the way tax bands work in the UK. Once you earn over £100,000, your personal allowance (the amount you can earn tax-free) starts to reduce by £1 for every £2 earned above this threshold. This means:
Between £100,000 and £125,140, you lose your personal allowance entirely.
This effectively increases your marginal tax rate to 60% on income in this range.
So, if you get a raise pushing you just over £100k, you could end up with less take-home pay than expected. This tax trap makes earning just above £100k less rewarding.
What £100k Can Cover in 2026
Despite these challenges, £100k is still a good salary compared to the UK average, which is around £33,000. But what does it actually cover?
Housing: In London, average rent for a one-bedroom flat is around £1,500 per month. Outside London, rents are lower but still significant.
Transport: Commuting costs vary, but public transport season tickets can cost several hundred pounds monthly.
Food and essentials: A single person might spend £200-£300 per month on groceries.
Savings and lifestyle: After bills, you might have £1,000-£1,500 left for savings, entertainment, and other expenses.
This means that while £100k offers a comfortable lifestyle, it doesn’t guarantee luxury or financial freedom, especially in expensive cities.
How to Make the Most of £100k in 2026
If you’re earning £100k or aiming for it, here are some practical tips to stretch your income:
Budget carefully: Track your spending to avoid surprises and identify areas to save.
Maximise tax reliefs: Use pension contributions and ISAs to reduce taxable income.
Shop smart: Look for deals on essentials and avoid lifestyle inflation.
Consider location: Living outside expensive city centres can reduce housing costs.
Plan for inflation: Build an emergency fund to cover unexpected price rises.
Final Thoughts on Earning £100k in the UK Today
Earning £100k in the UK still places you well above the average income, but it’s not the guaranteed ticket to wealth many imagine. Inflation and tax policies mean your money doesn’t go as far as it used to, and the tax system can even penalise those earning just over £100k.
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