Different Levels of Income and Expenditure for a Typical UK Individual - Essay Example

?Topic: Different Levels of Income and Expenditure for a Typical UK Individual Introduction The typical UnitedKingdom citizen has many factors social and economical working in their favour. According to many rating agencies, the United Kingdom scores highly compared to other countries in terms of the average income, the employment rate, the quality and affordability of housing, health services and safety in general. It also rates highly in working conditions and general satisfaction among the citizens. It has among the highest employment levels worldwide with the majority of the working age bracket (15-64 years) employed. It also has high quality of living conditions that give its citizens a life expectancy of 79.91 years on average as of the year 2010. Its quality of education is high and the literacy levels are among the highest in the world. Its learning institutions, especially the universities, rank highly in global ratings. The income levels in the United Kingdom are above the global average (Cordner, Das, and Cordner, 2010, p. 76). A typical UK citizen is thus destined to experience many levels of income and expenditures due to the nation’s diverse nature. Income The average household net-adjusted disposable income on the global scale is $22,387 per year. United Kingdom’s average citizen outdoes this and has an average annual income of $26,552. This is according to the Organisation for Economic Co-operation and development (OECD) survey carried out in 2010. The UK also has an average household wealth of $59,923 according to the OECD survey. This also is above the average household wealth of $36,238 for OECD members. The debt level though was $73,039 in 2010 according to a national financial education charity called Credit Action. This includes all debts mortgage and credit card debt. Also, the OECD estimates that the income for the top 20 per cent of earners is $55,138 per year. This greatly contrasts with the bottom 20 per percent of earners who earn $9,556 annually. The income bracket age with the highest earnings is from thirty five to forty nine years. The lowest earning age bracket is from fifteen to nineteen years (Clark, 2007, p. 88). The professional and managerial jobs earn the highest incomes. In contrast, elementary jobs earn the least incomes across the board. Of the total working population, 7 per cent have contracts lasting six months or less. 75 per cent of the men and 65 per cent of the women have jobs in this diverse economy. With more than 70 per cent of the working age bracket employed, this is a fairly good condition compared to other nations. It means that few people are below the poverty line and the living conditions are quite luxurious. Although there exists a big gap between the high and low income earners, access to basic needs is almost assured for all levels of income. This has ensured a relatively stable economy. Expenditure Taxation Since all governments the world over depend on taxation in funding public projects to avail social amenities to their citizens, great interest is generated by this subject (Black, 2010, p. 89). The United Kingdom, being no exception, has an elaborate taxation scheme to see to the availability of public goods among them roads, hospitals and educational facilities. The typical UK citizen has a number of taxes they pay during their lifetime. A few of the taxes are personal taxes, business taxes and sales taxes. All these taxes serve the sole purpose of contributing to the national basket. Personal taxes, among them income tax, council and inheritance taxes, are directly levied to each citizen. Income taxes to a typical United Kingdom citizen include taxes levied on salaries, bonuses, commissions and overseas allowances. The basic income rate, covering incomes from 0.00 British pounds to 35,000 British pounds, charged 20 per cent income tax (Becker, 2009, p. 45). The next higher tax bracket, covering incomes from 35,001 British pounds to 150,000 British pounds, pays an income tax of 40 per cent. The highest group of earners pays an income tax of 45 per cent of their income. This includes all those earning an annual income of over 150,000 British pounds. Their tax plan is referred to as the additional rate. Making up for a percentage of the personal taxes is the inheritance tax levied on all transfers of possession from a deceased person to an heir or heiress. The current threshold for this type of tax is currently set at 325,000 British pounds per year. Anything above that is charged a 40 per cent annual tax on the death or 36 per cent if the estate is used as a charitable donation. Another form of personal tax in the United Kingdom is the council tax charged to fund local government activities. The rate for this kind of tax was 1,146 British pounds in 2008. Business taxes in the United Kingdom also a large chunk of the national tax income. Businesses have to pay these taxes whether they locally or internationally owned. Taxes for the self-employed, partnerships, limited companies, the construction industry and Value Added Tax and their rates are stated on the government website ‘HM Revenue and Customs.’ For the self-employed, the tax rates are free for those earning 6,475 British pounds and below, 20 per cent of earnings from 6,475 to 37,400 British pounds and 40 per cent for earnings from 37,400 British pounds and above. Unlike other taxes where the government takes it share from the pay, the self-employed in the United Kingdom are expected to set aside a part of their income aside for the bills that they shall receive. The taxing plan is similar to those in partnerships. UK citizens with limited companies pay taxes on the profits made by their companies. The rates are 20 per cent for profits equal or less than 300,000 British pounds and 24 per cent above that. These rates keep on changing but the differences between tax changes by the government are not usually big. The rates given are as of April 2012 (Cowell, 2011, p. 78). Housing Shelter is a basic need for all people. Housing refers to the living quarters in general and not only the house. It is in essence another name for a home. The quality of a home depends upon the availability of facilities like water and electricity to the dwellers. The nations of the world provide shelter at different prices and since the focus is placed on the United Kingdom, the housing in this country is of high quality. The cost of either owning or renting a house is an important consideration when it comes to housing expenditure. It was estimated that the average United Kingdom household spends 23 per cent of its disposable income on housing. Bundling up detached, semi-detached, terrace and flats, the average house goes for 240,000 British pounds as of February 2013. This is the market price for these types of buildings (Dickens, 2009, p. 88). The costs for electricity and other energy sources, piped water and other necessities associated with housing make up a sizeable part of the costs of living. The average gas and electricity costs in the United Kingdom are ?110 per month. The water costs an average family ?150 a year. This includes all the water used in the home be it for flushing toilets or watering the garden. Housing is thus quite costly in the United Kingdom since the amount spend by an average household in meeting its housing costs is more than that in other OECD countries. United Kingdom citizens thus face a bigger hurdle than their neighbours (Harrison, 2005, p. 66). Education Education makes a large part of most families’ living costs since it is mostly through education that people learn new ways of earning a living. An educated population generally makes more progress than an uneducated one. It is also through education that most people get to progress in life in terms of earning higher incomes and producing quality work. It is therefore no surprise that educational costs are a major part of most families’ budgets (Baldock, Manning, and Vickerstaff, 2007, p. 32). The UK, having a relatively high literacy level, must be heavily spending on the education sector. With 74% of adults aged between 24 and 64 years of having the equivalent of a high-school degree, United Kingdom citizens are a quite well-educated lot. The average cost of educating a child in the United Kingdom through public schools is ?9,000 per year according to the Independent Schools Council. This includes all costs associated with schooling among them fees, transport costs, food among others. Public schools are supported by the government and thus have many costs cut down for them. It is a common phenomenon the world over that public schools should have lower education costs compared to their private counterparts (Smith, 2009, p. 76). On the other hand, private schools cost a parent an average of ?9,069 per year per child although there are some schools in the United Kingdom that offer quality education for less than that. This is ironical since, as stated above, public schools should cost less than private ones. Research into this anomaly revealed the presence of bureaucratic red tape that cost the public education system extra costs for no good reason (Alcock, May, and Wright, 2012, p. 100). It is thus a burden that the United Kingdom citizens have to carry to educate their children. The United Kingdom, though dogged by these high education costs compared to her peers, compensates for it being having learning institutions that rank highly in the world. The famous Oxford, Cambridge and Bristol universities, not forgetting the London School of Economics, make great examples of the country’s educational prowess. Most of them offer bursaries to both local and international students who are bright thus reducing the learning costs for the select few. Health Health has been the most important aspect since time immemorial due to its intimate connection to a people’s ability to earn a living. Countries dogged by poor health tend to produce less capacity compared to their healthier counterparts. It is with great planning that a given nation attains a given level of health to term its population as a healthy one (Powell, 2007, p. 19). Although the United Kingdom has high life expectancy, it is outdone by her neighbours namely Italy, Germany and France. It cost the average citizen in the United Kingdom $3,129 to access health care. Private health care costs an individual ?1,000 per year on average. The quality of health care provided by various health organisations differs even though the costs are approximately uniform across the board. It is usual for the high income earners to choose pricier health care given the perceived notion of better quality (Alcock, 2008, p. 118). One of the health issues in the United Kingdom is obesity. It has been found out that two out of three men in the UK are obese and one in four people for the whole population. The total costs incurred by patients who are overweight or diagnosed with obesity is ?7.4 per year. This is according to the House of Commons Health Select Committee (HSC) survey of 2007. The same survey points out other costs associated with overweight people, among them the lost earnings, to be to the tune of up to ?2600 million annually. This is therefore a cost big enough to get noticed. Conclusion Coming to the end of this discussion, one observes that the United Kingdom is a mature economy undergoing the problems associated with such levels of development. It is a diverse society characterised by individuals who have already achieved basic needs in life and aim to make their lives better by the day. When compared to her neighbours and other countries, the United Kingdom scores high marks in almost all areas affecting the living conditions of its citizens positively. The costs incurred in sustaining her good social amenities are directly attributed to her high literacy levels, high employment levels and an enterprising population. Many countries in the world use the conditions in the United Kingdom such as her health facilities, banks, airports and harbours for their needs since they are of high standards. The United Kingdom is also has a great history that much of its greatness is attributed to. References Alcock, P., 2008. Social policy in Britain. New York: Palgrave Macmillan. Alcock, P., May, M. and Wright, S., 2012. The Student's Companion to Social Policy. New York: John Wiley & Sons. Baldock, J., Manning, N. and Vickerstaff, S., 2007. Social Policy. London: Oxford University Press. Becker, G., 2009. Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. Chicago: University of Chicago Press. Black, I., 2010. The UK Economy: 1999-2009. New York: Anforme, Limited. Clark, T., 2007. The Complete Personal Finance Handbook: Step-By-Step Instructions to Take Control of Your Financial Future. New York: Atlantic Publishing Company. Cordner, G., Das, D. and Cordner, A., 2010. Urbanization, Policing, and Security: Global Perspectives. New York: Taylor & Francis. Cowell, F., 2011. Measuring Inequality. Oxford: Oxford University Press. Dickens, J., 2009. Social Work and Social Policy: An Introduction. Chicago: Routledge. Harrison, D., 2005. Personal Financial Planning: Theory and Practice. Chicago: Financial Times Prentice Hall. Powell, M., 2007. Understanding welfare. Chicago: Policy Press/Social Policy Association. Smith, S., 2009. Living the Lazarus Life: A Guidebook for Spiritual Transformation. New York: David C Cook. Read More