Cost of living in the UK

Factual Questions
1

I have been searching all day for information on cost of living in the UK.

A student of mine is moving to the UK. He doesn’t have access to the Internet so he asked me if I could find anything for him. I haven’t had any luck so now I am turning to the TMs. I am sure there are some of you who live in the UK or know a good website.

He is moving specifically to Edinburgh, Scotland. He needs information on:

  1. Monthly cost of food.
  2. Monthly cost of transportation (gas for a car)
  3. Car insurance, renter’s/home insurance.
  4. Monthly Utilities.

Help me Teeming Millions, you’re my only hope.

What more could you expect from somebody who lets people kick him to the head?

2

Hey, we’ve been talking about this in the European Dopers thread in MPSIMS, you can find it here: http://www.straightdope.com/ubb/Forum4/HTML/001860.html

Sorry, I don’t know how do that fancy link stuff.

Anyway, you can ask Glee, he/she (sorry Glee, I don’t know what you are) has said that he/she would be glad to help with questions of that nature.

Glad to volunteer my fellow Doper’s help,
Tracy

3

I will try to get that for you tomorrow, we have tables at the office. The tables vary by family size and income level (obviously), and are based on “average”, and are used by companies moving individuals from the U.S. to the U.K., to determine how much allowance to provide for the cost of living differential.

When it comes to actual costs, rather than theoretic averages, clearly, individual tastes will play a large role.

4

The family in particular is my student, his wife and their daughter (2 years old). He is a computer programmer, and I believe the salary offer was for about 25K pounds (or so). The currently live in a two bedroom apartment in an apartment complex.

CK, any info you have would be great and very appreciated! The company in question, of course, is telling him that 25K pounds (his wife can find work as a secretary and make about 11K pounds) is plenty. He would rather have some relatively unbiased information.

5

A lot depends on what you mean by living well. I lived in the U.K. between 1987 and 1990. I estimated that on average an American made about 40% more than Brits for a comparable job, and the average cost of an item in a store in the U.S. was about 20% less than in the U.K., although a few things were cheaper in the U.K. (insurance, for instance, and repairmen like plumbers).

Still, most Brits were about as satisfied with their incomes as Americans were. They just had a different view of what an acceptable lifestyle was.

6

I lived in the UK (near Edinburgh) for three years and recently returned. What I have to offer is mostly anecdotal.

For the most part you should expect to trade a dollar for a pound. In other words, what you pay a dollar for in the US will cost about a pound in the UK. There are exceptions… petrol (tell your friend not to call it gas or he’ll be ridiculed) is about 4 to 5 times the cost in the UK. However, I found that all the cars I drove got better gas milage. As for insurance, he should expect to pay too much for insurance until he gets his UK driving license and many insurers won’t even talk to him until then. However once he does have his UK license, I think insurance will probably be less than what he pays in the US, though it’s all dependent on what kind of car you drive and where you live - similar to the US, only more pronounced. Automobile theft is rampant in the UK - if he stays away from the popular cars, he’ll get better rates. My company arranged renters insurance for me, so I don’t know how much that costs or how easy it is to acquire… Utilities will vary; telephone costs more, but heating is usually less (most homes use radiative systems that are very effective). Air conditioning is rare, but then the need for it is equally rare…

You wrote:

I would say that this is consistent with the starting salaries for his peers, but the standard of living in the UK is a bit lower. On that salary, he should expect to eat out less, see fewer movies, and use public transportaion more…
On getting a UK license, I’ve got some advice. First, don’t rush down to the examiner and try to take the test - I guarantee that he’ll fail both the written and the physical. I recommend that he and his wife take lessons. It sounds silly, but take my word for it - the tests are tough and they look for the strangest things…

Credit cards can be a problem. It’s next to impossible to get a Visa in that country without being a registered voter. We finally managed to get a card through the SKY Broadcasting System, but we had to have letters from my employer, prove of permanent residence, bank statements (to show we didn’t actually need credit) and probably the fact that I had a Visa Platinum card from a US bank didn’t hurt. Getting a UK Visa was critical for us. We used our US Visa when we could because I was paid into a US account in dollars, so I got better exchange and interest rates through my US Visa. However, occasionally we couldn’t use our Visa internationally (for various reasons) - it just wouldn’t go through. The first time that happened, we had to scramble to get money wired from our US bank to our UK bank and that was unnecessarily expensive.

He should expect living conditions to be a bit more cramped than in the US. I lived in a house that cost nearly 300K pounds (I was renting) and still the master bath room would only accomodate 1 person at a time. Our bedrooms were barely big enough for a bed and one dresser. We were lucky enough to have closets, but older homes frequently do not. Most housing is just plain smaller.

Another thing to watch out for is the service mentality in that country… if he finds a service mentality, let me know. The only times we ever received good service in anything was when we were dealing with American held companies. I’m not just alking about resturant service here… If your friend has to buy appliances it can take several weeks to get delivery and they seem to try and make it as inconvenient as possible. I could tell you stories!!!

On a happier note; Edinburgh is a beautiful town and Scotland is righ with culture. We loved our stay there and despite all the inconveniences and the weather (your friend does know about the weather, right?), we loved our stay there and were sorry to have to leave. It took us about a year to adjust, though I have other American friends that tried it and just couldn’t stand it.

It’s like that Chinese guy used to say in every episode of “Kung Fu” - “Be as a reed, grasshopper, that bends softly on the wind. For if you are but a dry twig, you will surely break”.

If I think of anything else pertinent, I’ll try to add, but feel free to ask specific questions.

7

Joey’s comments are well taken.

I do not have tables for Edinburgh, but I have Glasgow, and it’s probably comparable. These are broad statistics based on data collected locally in terms of prices of items and services, and then averaged. They are used by companies in transferring employees from the US to the UK; there are several companies who do (and charge for) these statistics.

  • Food at home will probably cost about 85% of what it costs in the US; food in restaurants, about 90%.
  • Groceries about 70% of US costs, although fruits and veggies at 90%
  • tobacco and alcohol at double US prices
  • personal care at double US prices
  • clothing at about 1.3 x US prices
  • recreation at about 1.5 x US prices
  • transportation about double

Overall, costs for goods and services ON AVERAGE at about 1.5 times what they are in the US. Be careful of that “on average” – individual preferences may lead to more expensive or cheaper purchasing needs. For instance, if he’s buying lots of diapers, that won’t be “average” anymore.

The statistics show that an American in the US on a USD 35,000 salary would spend about USD 18,000 on goods and services (about 50%). A Brit in the UK on a GBP 25,000 salary would spend aobut GBP 16,000 on goods and services (about 65%).

Rental costs depend on what type of place you want to live in (obviously); a local would probably rent smaller quarters than a US citizen might be comfy with. One bedroom apartment on average ranges from GBP 400 to GBP 500 per month unfurnished; add another GPB 100 to 200 for each additional bedroom. Figure utilities at around GBP 70 per month, and add GBP 10 - 20 per bedroom.

Just for comparison, the same sources show housing and utilities cost for a US employee with salary of USD 35,000 to be around USD 700 per month. Depends very much on where you’re living, you ain’t gonna be in downtown Manhattan for that.

Taxes will be higher. A US employee (married, one child) with income of USD 35,000 would on average pay around USD 3,500 in income tax and about USD 2,700 in social security contributions. A UK employee with an equivalent salary will pay around USD 6,000 in income taxes and around USD 3,600 in social security contributions.

He should check on the social security situation. If it is possible for him to remain on US social security and to be exempted from UK social security (there is a treaty between the countries that allows that for certain categories of transferred individuals), that should be looked into. Not just because it’s cheaper, but so that there’s no interruption in US social security when he gets back – cleaner, thirty or forty years from now, when he doesn’t have to worry about getting a small payment from UK social security. However, whether the treaty is applicable depends very much on his circumstances (who’s the employer, etc.) US social security tax is about 7.6%; UK is about 10%, but the ceiling is much lower.

REMEMBER that a US citizen must still file a US tax return each year, even if he also must file a UK tax return. The tax treaty between the two countries prevents double taxation, but it can be complicated to figure out.

It used to be that it was difficult for a spouse to get a work permit. Now, under the treaties between the US and the UK, in many cases the spouse can work under the employee’s work-permit. This should be verified; she shouldn’t go looking for work if she’s not legally eligible to work.

The real trick in international transfer is to live as much like a local as you can. Don’t shop at the supermarkets where the other Americans hang out, they tend to be overpriced. He probably won’t eat out as much as he might at home (probably won’t with a 2-year old anyway.)

Medical care is an issue to consider. The UK National Health service will cover most expenses, the quality is good, but the “service” may not be up the standards that an American expects. Supplemental health coverage is not too expensive, but is not included in the figures here. He also needs to be sure he has coverage at home; coming back home over Christmas, frinstance, if the baby gets sick, they don’t want to be SOL by not having US health coverage.

Hope that helps.

8

Sorry… bottom line: yes, he can live on that, that’s reasonable pay for a UK programmer, but it will be tight. Americans tend to live somewhat higher life styles than Brits or Scots, so he may need to lower expectations somewhat.

Where shall I send my bill? (Joke)

9

This is all wonderful information! I personally appreciate it, and I am sure he will as well.

Of course, this doesn’t have to necessarily be an end to the thread. If anybody has anything else to add, please feel free to chime in.

10

“I estimated that on average an American
made about 40% more than Brits for a comparable job”
I know a guy who works for British-Airways in the computer section. Said that he makes 76,000 pounds [about $122,000 US based on the exchange rate: 1.61, not 1-1]. But still has 3 mortgages on his house. It just doesn’t seem logical. I still havent figured out if he was lying about his salary or not.

11

I can get some salary statistics if you’d like, but overall, most Brits are paid less (in absolute terms) than most Americans for comparable jobs. The laws of supply and demand, of course, mean that there are lots of exceptions for particular jobs in particular areas.

But remember that the mere exchange rate doesn’t tell the whole story. Brits pay a higher income tax, but much lower property tax, than do US folks. British social security charges are higher, but the ceiling at which they stop is lower. British medical care is paid (largely) through taxes. You need to look at buying power, not just at the exchange rate.

That having been said, British wages are sure to increase over time, with the impact of the euro and the need to be more competitive with the continent.

12

Oh yeah, taxes… I forgot to mention taxes… This is clearly the biggest drain of hard earned pounds in the UK. I’m not sure about property taxes, but their income tax is pretty healthy. Then on top of that you have your sales tax (known as VAT - Value Added Tax)… To Americans, a 17% sales tax is an eye opener!

PS
I found food prices to be higher in the UK, not slightly lower as your data indicates. Maybe it’s just my shopping habits…

13

I’d heard that an American living overseas did not have to pay Federal taxes. I’m not sure of the details of this, but I thought it was in the case where you are working for a US company, but you’re living on foreign soil. There’s some restrictions to this - like you can only visit the US for 30 days or less per year - but all in all it seems like a great deal. Anyone know the details?

14

I lived and worked in Europe for more than 3 years, most of it in the UK. I could say a lot, but think most of it’s been covered.

To answer Athena’s specific question:
If you are working/earning and paying taxes in a foreign country (may only be countries with which the US has such an agreement), you do not owe Federal Income Tax on the first $X thousand dollars of income. When I was doing this, it varied between $75 and $80k. If I earned more than that (HA!) then I owed tax on it in the US. Sounds great, until you realize that I was liable for UK taxes. Also, what you said about the 30-day thing is true: to be eligible for any 365 day period (need not be a calendar year) you can only have spent a max of 30 of those 365 days in the US.

Actually this was a good deal for me, because my US employer -

  1. paid my UK taxes on my behalf (so I got the US tax break w/o the UK tax liability), and
  2. gave me a “cost of living allowance” (couple hundred $US a month) so that I could “purchase” the same level of life style that I had in the US - same size apartment, etc. Since I chose to “live like a native” (i.e. in a local-sized apartment, drive a small european car, not have a TV in every room, etc.) I managed to same a LOT of money - enough to quit my job and go to grad school when I returned to the US.

Both these things (1 & 2) were common practice for US employees of US companies working/living oversees back then (late 80’s), but I think things might have changed some since.

As for the cost of things, I found the cost of durable goods (washing machines, cars, etc.) and clothes to be much higher in the UK, the cost of basic goods (food, etc.) to be only slightly higher (and the quality also higher), and the cost of services (car repair, plumber, etc.) to be much lower. Housing costs varied dramatically and for US-comparable would be much higher, but a smaller place can be found for much less.

The standard of living in the UK is, IMO, not as high as in the US: fewer cars, TVs, material things in general per capita/household, smaller homes, fewer
entertainment activities (other than the pub) and items (massive CD collections are rare, for example). However, the quality of life (based on time for friends and family, fear of crime, etc.) was higher than in the US. Alas, as the UK (and much of Europe) becomes more like the US (and more globally competitive), I fear they are losing some of this advantage.

For Glitch’s friend-
Long and short of it is, if you’re prepared to live like a local - which is not the same standard of living as the US - you should do just fine. I loved it (well except the restaurant food, but that’s another thread).

Well, I ended up saying much more than I intended when I started. Oh, well. Hope it helps.

15

wireless wrote:

I found this to be true for me, as well. My car repairs were dirt cheap, but I always attributed this to my car (a Mini Cooper), but it may be a general truism. I even had one visit each by a plumber and an electrician where there was no charge. They came in fixed something simple and refused to take any money. They just said, “be sure and call me when you have something serious break.” The plumber we never needed again, but we did call out the electrician again… he only charged me the price of materials the second time…

Lest you think this is contradictory to my earlier statements about service, it’s not. In the case of the plumber, it took two days from when we called him before he showed up and we were without water in the entire upstairs for that time. Similar thing for the electrician. First it took a week from the initial call for him to show up, then he had to order a part, then he had to reorder the right part, then he broke a third part (fortunately he had one of these in his truck). The part he was fixing??? Just a motor driven valve that controlled the heating system… in the middle of the winter. That was a cold two weeks in our house.

16

Athena asked about US citizens outside the US being excused from US taxes. Wireless answered pretty much correctly, I’d just like to clarify a few points.

  • A U.S. citizen is required to FILE a U.S. income tax form annually, regardless of where he/she is living. It may be necessary to FILE the tax forms, even if you own no tax. (A very few categories of U.S. citizens, primarily those with very low income levels, need not file tax forms… but you should check this out carefully. The big mistake people make is on the other side, failing to file the forms because they owe no tax. The IRS will get you for that.)

  • The U.S. is the only country (that I can think of at the moment) that taxes its citizens, regardless of where they live. Every other country taxes RESIDENTS regardless of citizenship. Thus, a U.S. citizen resident in a foreign country is usually subject to two taxing authorities – the local country’s and the U.S. IRS. This is called “double taxation.”

  • If you are a U.S. citizen living abroad and paying taxes to another country, there are basically two ways that you can handle double taxation (that is, the problem of two taxing authorities):
    (1) You can claim the foreign earnings exclusion (which is about USD 70,000 as Wireless said) on your U.S. tax forms. This means that the first USD 70,000 of income is excluded from U.S. taxable income, and is subject only to the foreign income tax. Any amounts of earned income over USD 70,000 are subject to U.S. income tax AND to the foreign income tax.

    While the USD 70,000 sounds like a lot, it may not be so far out of reach. If the company is paying for your housing and gives you a meal allowance and so forth and so on, it’s not hard to hit that USD 70,000 mark … although you might not perceive it all as “income”, but IRS will.

For instance, Joey mentioned that his company tax-equalized him – that is, they paid his foreign taxes. The amount of foreign tax they paid for him is viewed as INCOME to HIM under IRS rules, and would be taxable (or would count towards the USD 70,000)

(2)The U.S. has tax treaties with many countries (including the U.K.) that handle the double taxation by allowing you to include all income as taxable for the U.S., but then to offset any foreign taxes paid.

The question of whether to use method (1) or method (2) is a question for your own tax advisor, and I highly recommend using a specialist who understands international tax situation for transfers. Your brother-in-law who normally helps you with your taxes is probably NOT well equipped to handle this one.

Under the different tax treaties that the U.S. has with other countries, there are a few other situations that might warrant exceptional (that is, favorable) treatment… students, artists, pensioners, and various other special categories may be treated in special ways under the appropriate tax treaty.

The topic is (as you may have gathered) a complicated one.

17

Quite a few people with lots of money keep give up US citizenship & find a country with low tax rates & claim citizenship their.

18

Mostly, but rents are higher in Edinburgh.

19

Glitch, sorry not to reply earlier, but I’ve been on holiday.

I think JoeyBlades and CKDextHavn have wrapped things up nicely (especially as they know what American prices are for comparison).

Nevertheless I’m sure I can get a Scottish friend of mine living in Edinburgh to answer questions if you want.

As for some other points:

£76,000 is a healthy salary, even for a computer man. If he was a manager, BA could easily pay that.

Us Brits go in for mortgages far more than the rest of Europe. 3 mortgages however sounds excessive. Usually the first lender would give all the required sum (based on the salary, they would offer around £180,000). Further lenders would apply similar criteria, so I would be surprised if they would lend any more than the first one.
If you have a temporary financial difficulty/need, you can take out a second mortgage, but this is rare.

One of our politicians had a career blip when he borrowed money from another politician to buy a house, but didn’t tell his official mortgage company (there were also problems over undue influence between the two politicians - both Government Ministers).

I just had deja vu, and I’m sure it’s happened before…