What it means to be wealthy in 2025

Most of us think we're poorer than we are – this disconnect creates worse social outcomes for us all

The contents of Rachel Reeves’ red box was bound to anger the HENRYs Pic: HM Treasury

In the US, members of the Democratic Party often quip that it’s hard to sell progressive policies because Americans on the breadline see themselves as multi-millionaires who haven’t made it yet. In the UK, we’re more prone to the opposite affliction: our wealthiest people have absolutely no idea just how rich they are.

Last week, the Times newspaper published the results of its recent wealth survey. It’s an interesting snapshot of British life and our relative comfort, but buried deep inside was this staggering statistic: 83 per cent of people who have £1m or more in cash savings do not consider themselves rich.

The mental gymnastics it takes to reach that conclusion is something to behold. Thanks to our juggernaut housing market, there are many people in this country who may be rich on paper but cash poor, holding a lot of equity in a home they bought in the 1970s but still just-about-managing on a low income while their property falls into disrepair. In fact that’s an incredibly common story, but it’s not what we’re talking about here.

How can anyone with ready access to large amounts of liquid wealth feel they are not the very luckiest among us?

The Times currently has a tool on its site where you can test this, and I stumbled at this hurdle too. I had assumed my middling income, within the basic tax bracket, made me wealthier than about 60 per cent of the population but I was out by almost 10 per cent. (I went further and filled in a whole lifestyle section which then uncovered that, as a family with two children, we are spending far too much on food – something to think about.)

This disconnect happens because we’re just not very good at understanding how we compare financially with others in our society, and it’s not just the richest that are out of kilter with reality; the vast majority of us think we are a lot poorer than we are. That failure of reckoning is a function of three things: our social atomisation, our unbalanced media and our broken politics. All three were on rude display this week after the Chancellor announced her latest Budget.

The contents of Rachel Reeves’ red box was bound to anger the currently infuriated sub-section of society known as the HENRYs [higher earner, not rich yet] with her focus on reducing child poverty and raising living standards for those in low-paid work. The Treasury’s own analysis admits the tax measures in the Budget will reduce the incomes of the top 10 per cent of earners (which the HENRYs, with their £100,000+ pay packets, are well within) by around £2,000 a year. What’s more interesting is the response from the wider public to other measures, particularly the mansion tax and the changes to the rules around savings into tax-free ISA accounts.

The mansion tax, which places a yearly levy paid through your council tax bill, on homes worth over £2m will affect only around 160,000 homes in the whole of England. For those whose properties just tip over into that bracket, the charge comes to around £200 a month. Anyone servicing a large mortgage of a property of that value can find that money in their budget; those who are asset rich and cash poor can defer the payment until sale. It is such a tiny expectation that it will also raise a relatively modest sum (around £400m a year). The backlash is disproportionate.

Meanwhile a change to the rules on ISA savings means that from April 2027 there is a cap of £12,000 a year on cash ISA savings, and any more you can squirrel away up to a total of £20,000 can remain tax free as long as it is invested in a stocks and shares ISA instead. Reeves is trying to subtly change behaviour; she wants British people to invest in our own markets and benefit from the growth she aims to bring them, even though YouGov polling indicates that there is really no appetite for it.

People are upset about this measure because they don’t like being told what to do with their money – even when it’s money they simply don’t have.

For the vast majority of people, saving anywhere near £12,000 a year is impossible. There are lots of estimates available but here’s one of many: according to the NatWest Savings Index, people in England save on average approximately £230 a month. They would need to find another ten grand spare in their annual budget to get anywhere near the threshold. For most people, the policy is noise. For the wealthiest, it may drive investment.

What this shows is that it doesn’t really matter how we feel about our own wealth, because those feelings are usually divorced from reality. Unless you’re living in significant poverty, you more likely believe you are worse off than you are, and the urge to shy away from that leads to worse social outcomes for us all.

Ultimately, when public life is so fractured, so in need of urgent repair, our emotions about our sense of relative comfort are unimportant. Pragmatic decisions have been made by the Chancellor with facts in mind. The alternative is the queasy emotional rollercoaster of populism.

Still, the government has been unnecessarily timid. Had the mansion tax been introduced starting from properties worth £1.5m it would have brought in far more money for the country, and still generated the same noise. If Labour hadn’t been so neutered by fear during the pre-election campaign they would never have drawn up a manifesto that prevented the across-the-board tax rises we so desperately need to speed up the pace of change.

If you’re reading this worrying that you’re going to struggle more as a result of this budget, let me reassure you: you’re already wealthier than you think, and you’re still most likely to benefit.■

About the author: Hannah Fearn is a freelance journalist specialising in social affairs. She was comment editor of The Independent for seven years, and has previously worked for The Guardian, Times Higher Education and Inside Housing. She has a special interest in inequality, poverty, housing, education and life chances.

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