Meet the Henry- High Earner not rich yet

[Ontobetterthings]

This was a very interesting read about a man who earns 100k but struggling financially working in London. After doubling his wage to 100k with inflation costs he is only 6k better off a year.

https://www.cityam.com/100k-isnt-a-big-salary-and-we-need-to-talk-about-it/

I can believe 100k salary in London is a struggle. Aibu?

But they haven't paid tax on the increase in value. If they're currently 60+, they could have seen a significant six figure increase in the value of their home over what they paid for it. Some people's homes have earned them more than they have from working and it's all untaxed. Plus if owned by a married couple, the first £1M of value is exempt from IHT.

I'm going to feel sad and demoralised if I'm expected to pay more in taxes so people who want to pass on their unearned equity to their children can do so. Speaking of the same people paying and paying again, which is what happens when we tax productive labour more than we do unearned wealth.

And it almost certainly is unearned, as the pp explained. There are vanishingly few properties that are worth the same in real terms in 2025 as they were before the spiralling of house prices earlier this century.

I find this really odd. There are loads of places where he could buy/rent cheaper and commute maybe 30-40 mins on a train and still afford to save.

Of course choosing to live in central London is ridiculously expensive.

He isn't real. It is an example showing how much less a salary of £100,000 is worth now than it was 10 years ago. He isn't looking for budgeting advice.

He can’t afford to save up for a deposit and the train costs would be high, so he may as well stay in London for the convenience.

There will be no inheritance, as stated above it will all go on care home fees! I don't want nor need their money, but I do feel its unfair that tĥe ones who pay in the most get the least back, and vice versa.

It is at least in part earnt wealth. They paid tax on their mortgage, tax on upgrades to the property or did the work themselves, increases in value are not only due to house price increases, but also due to investment, in todays money they have probably spent at least 250k on extending and improving . There should be a way to offset all these at today's prices against any inheritance tax.

They don’t have “nothing to show for it” though, and they will be able to pass on significant wealth to the next generation. I don’t think anyone is saying that there should be inheritance tax of 100%, but it should certainly be higher than it is now.

It makes no sense that people’s earnings are taxed to the hilt but unearned wealth is not. It is a disincentive to work, it entrenches inequality, it stifles social mobility, it reduces the tax take for the nation which has a knock on impact on all of our public services, it’s bad for diversity.

But they haven't already paid tax on the income used to buy that house. They've paid tax on the income to used to pay the mortgage for the amount that they borrowed to buy the house when they first bought it. They haven't paid any tax on the increase in value. So by your reasoning, the only part that should be 'safe' would be the amount of the original purchase price.

But the logic doesn't work. Henry is paying tax on the income he uses to pay rent. He doesn't get to save that money and pass it on to his children. Why should he have to pay more tax to fund your parents care because your parents were in the position to buy a house, and he wasn't? Both have had to spend taxed income on housing throughout their lives, but somehow if that is a mortgage rather than rent it's more virtuous.

There won’t be any care home fees to pay @Bushmillsbabe as explained this morning by @bookdook

The ones who pay in the most do get the least back. That's the entire point of a progressive tax system. But why do you think your parents have paid in more than Henry is/will?

If you're saying it's because they had high earnings and shouldn't be penalized because this allowed them to buy a nice house i.e. because they're rich, this sort of the point of a Henry - he has the high earnings but he actually can't buy the house because he's not rich. Your parents should have to be paying more than Henry because they are richer than he is.

Is it 'fair'? Well it depends on what your view is of a progressive taxation system, but this is the society the UK has chosen to build.

I don't know what you do, but there isn't a chance that being tied in to be paid a lowish salary for 3 years covers the actual costs of the healthcare training you received. If the value of a newly qualified person in that part of healthcare is so high and the NHS so underpays in the first three years, then private employers would be funding people to break that three year deal, and offer to pay them a bit more but have a longer commitment.

The reality is that had you had to have paid privately, you would not have been able to recoup the costs in three years even if you had been free to work wherever you wanted for three years. I can't think of any degree you could do where you have to pay the full actual fees where you could recoup the costs in three years, let alone something particularly expensive to run as a health care degree.

Yes I know there'll be no inheritance. What we're discussing is what would happen if the state funded their care costs instead, so they could instead pass the value of their home on.

If you're talking about it being in part earned wealth, hopefully that means you agree that much of it won't be. They'll have paid absolutely no tax on that increase. Whereas if the state steps in for their care costs, lots of the burden is going to fall on earned income. I work much harder for my taxed wages than your grandparents did for their unearned equity (or indeed than I have for my unearned equity). So do you. Placing a greater burden on workers, many of whom will have no access to unearned wealth at all, isn't fair. The money to pay for their care has to come from somewhere, however sad it might make anyone.

And you seem to have missed that there are people sitting on unearned wealth who never paid much tax in. Someone who never earned much and made huge sums because of when and where they bought their house is not someone who paid in the most. There are a loooooot of them who've paid less in than Henry, or indeed you and I.

How do you know they are 'rich'? They both came from poverty, and when they bought their first modest 2 bed house they couldn't afford any furniture, they slept on airbeds and sat on garden chairs. No phone, a gas powered camping stove to cook on, old sheets for curtains etc.
They didn't have high earnings, my mum didn't work due to sustaining an injury which left 1 arm paralysed, so a single salary household. They just didn't spend much so had enough to pay mortgage.

Henry on his earnings could i actually buy. We bought in London zone 3 on combined earnings of much less than him. My brother bought in zone 4 London on a single salary not much above minimum wage (but did loads of overtime). But he chooses to spend 600 a month on food plus pubs eating out etc. Which he should be able to afford to do plus buy somewhere on his salary, but our tax system doesn't allow this.

I am on Henry's side, I think he should be taking home much more if his money, I think people should be able to keep more of what they earn in general.

@waryclam “The ones who pay in the most do get the least back. That's the entire point of a progressive tax system.”

Errrr… is it? I’m not sure I agree actually - and I think this is why Henry is getting a bit annoyed.

The objective of a progressive tax system is that higher earners pay more towards public services so the burden falls more on higher rather than lower earners.

That those who pay in the most should get the least back… why? Should we not be funding equal services for all?

@Bubblesgun I’ve lived and worked in London myself in the not too distant past. In fact the only reason I don’t still live there is because I decided I would prefer to move to a surrounding area where housing and the cost of living was cheaper. So I fully understand the costs of living and working in London as a young professional. And yes there is competition for flats but someone like Henry is going to be in a very strong position to win that competition let’s be honest. And you can definitely find a one-bed flat without mold in it within zone 1-2 for that level of rent. He also doesn’t have to rent (or wouldn’t have to if he had saved hard previously or has access to the bank of mum and dad for a deposit), and could look at a mortgage or part rent/part mortgage scheme. I agree with you not all “Henry”s have access to the bank of mum and dad but many do and the article states that he does which is why I mentioned it. I don’t come from London and I was very downhearted for a long time thinking I was doing something majorly wrong as I struggled to understand why I couldn’t afford the lifestyle and housing options my colleagues seemed to have. But over time it became very clear that nearly all of them had been gifted part or all of their housing costs by their parents.

I'm also wondering why it's a problem when inheritance tax or care costs are payable on an asset that's been partially funded by taxed money, when loads of other taxes are payable from taxed income.

As an example, I have to pay council tax from my wages, which have already had tax and NI taken out of them. Same with VAT, some of which is payable on purchases I can't realistically do without. But apparently the portion of home equity that isn't unearned should be treated differently.

@PutThe as you say it doesn't make sense!

Henry on his earnings could i actually buy. We bought in London zone 3 on combined earnings of much less than him. My brother bought in zone 4 London on a single salary not much above minimum wage (but did loads of overtime).

We really need to hear what years, for this to mean anything. It happens soooooo often on MN. There should be a site rule that anyone saying that they bought a home on a particular wage thus it's possible now has to specify year of that purchase, year of first purchase of any of the buyers and level of family help.

(2015, nothing financial but helped us do it up which has some monetary value)

There will be no inheritance, as stated above it will all go on care home fees! I don't want nor need their money, but I do feel its unfair that tĥe ones who pay in the most get the least back, and vice versa.

But that's because the inheritance is going on care home fees, so are you arguing fees should be free?

Yes, it's unfair that some people need to go into care homes and some don't. However it's also unfair that people pay tax for years and drop dead 6 months after they retire. Unfortunately that is life.

Also it would take him years to save up a deposit when he has a monthly disposable income of £1.5k.

Fair enough and I thought that when just after I said it! I think in a tax system that works properly that will always be the case though. The more tax you pay, the higher your wealth should be and the more likely you are to take advantage of paying for services privately at greater cost.

Of course you can start to say some services can never be provided privately, but there will always be some that are.

How do you know they are 'rich'?

You said that they were some of the ones paying the most in. The people paying the most in are high income earners. You've now said they've been on low incomes and just very frugal. If that's the case they have not paid much in at all.

In fact, by being frugal to be able to buy a house, and pay for private education, they have paid much less in tax than another couple on the same income who have 'wasted' money more - that couple have been paying more to the government in VAT, and their landlord will probably have been paying tax on the rent received.

It's lifestyle inflation. He Spends more now on food and the pub.

The only way to feel better off is to NOT increase your spending when you get wage increases.

Plus we know rent and bills has gone up - this is the hard truth, you have to cut your spending if you can in these difficult times. Anyone who hasn't cottoned onto this - should do. By cutting spending and saving, you can eventually improve things.

It's also shit because property isn't really going up right now, so you feel like you are stuck on a grind mill. But if Henry saves then he might be able to pay off some of his mortgage early, then could downsize later and release cash.

I think in my whole working life I've had maybe 2 years when I felt comfortable, the rest has been depleted savings from buying a home, paying back loans for a car, paying off my student loan, saving for something I value.

@Bushmillsbabe and just to be clear - I get that your parents have struggled and worked extremely hard and in an ideal world this would mean that they had a comfortable retirement, were high income earners and could give lots of money to their children. Of course this is what you/they would ideally want. Of course they should be praised for it and of course it's really sad what happened to your dad's pension. But there are also lots of people who struggled, worked extremely hard, and never actually managed to make it above the poverty line (for whatever reason).

Someone has to pay for things like care, and in the current system where wealth is ignored, the idea that one group of people (parents) don't have to pay tax on assets to the benefit of an arbitrarily decided second group of people (their kids - they don't necessarily need the money any more, and they don't necessarily deserve the money any more) and we should all be ok that Henry should have to cover the cost of that is just wrong. What if Henry had the exact same circumstances as your father and has dragged his way to 100k? What if it's a choice between your parent's care and support for a single mum with a baby who has just escaped domestic violence - why should your inheritance take priority? There are ever increasing demands on public funds, and it can't all come from the Henries.

[I say care but there's actually a whole lot more to this - it's actually pretty luck of the draw even with care. If someone needs residential care (eg at end of life can no longer live unaided because of things like dementia or because they are physically unable to live alone) they are expected to pay for care out of assets. If someone needs hospice care (i.e. at end of life they have a disease) they're not expected to pay for care. It's actually a fairly arbitrary distinction when you think about it. Although of course saying you're going to put a charge against the house of someone with terminal cancer makes you look like a monster even if that house is worth 10m hence why no government will ever raise it.]

Read the article. It's done on the basis that his spending is exactly the same on those areas. The increase in the cost of them is because of inflation. He's buying the same amount of beer as he was 10 years ago but it's so much more expensive and the impact of incremental tax is so high that doubling his salary from 50k to 100k only actually leaves him 6k better off in real terms.