Field: 70 per cent of median net household income (BHC) in latest prices

Description

Net Household Income Threshold: 70 per cent of median net household income (BHC) in latest prices, as reported by FRS respondents, where:

• the definition of a household used in the Family Resources Survey (FRS) is 'one person living alone or a group of people (not necessarily related) living at the same address who share cooking facilities and share a living room, sitting room, or dining area'. So, for example, a group of students with a shared living room would be counted as a single household even if they did not eat together, but a group of bed-sits at the same address would not be counted as a single household. A household may consist of one or more benefit units, which in turn will consist of one or more people (adults and children) - see Family Type for more information.
• income:
• is from all sources from all household members (including children's):
• usual net earnings from employment;
• profit or loss from self-employment (losses are treated as negative income);
• income from director's dividends (from 2021/22);
• state support - all benefits and tax credits, including state pension;
• income from occupational and private pensions;
• investment income;
• maintenance payments, if a person receives them directly;
• income from educational grants and scholarships;
• the cash value of certain forms of income in kind, including free school meals.
• is net of (after deductions have been removed for):
• income tax payments and National Insurance contributions;
• domestic rates/council tax;
• contributions to occupational pension schemes;
• all maintenance payments;
• student loan repayments;
• parental contributions to students living away from home.
• is equivalised: an adjustment is made to income to make it comparable across households of different size and composition.
• is SPI-adjusted: an adjustment is made to sample cases at the top of the income distribution to correct for under-reporting of earnings and volatility in the highest incomes captured in the survey.
• median net household income is middle net household income identified by dividing the population of individuals, when ranked by net household income, into two equal-sized groups.
• 70 per cent of median net household income is a low income threshold that is a proportion of the UK average median net household income.
• Before Housing Costs (BHC) indicates the following housing costs have not been deducted from income:
• rent (gross of housing benefit).
• water rates, community water charges and council water charges.
• mortgage interest payments.
• structural insurance premiums.
• in latest prices indicates variants of the Consumer Price Index (CPI) are used to adjust income for inflation to look at how incomes are changing over time in real terms.

Relative low income sets a threshold as a proportion of the UK average (median) income and moves each year as average incomes change. It is used to measure the number and proportion of individuals who have an income below this threshold (typically 50, 60 or 70 per cent of the median).

Classification

Applicable to: All Individuals.

• Not in low income (at or above threshold)
• In low income (below threshold)

Number of categories: 2

Quality Statement

During 2022/23 the government announced and implemented additional support to families with several cost-of-living support schemes, depending on peoples' circumstances. These payments are included as part of the relevant income variables in HBAI.

From 2021/22, income received from director's dividends is included in the estimates following an addition to the Family Resources Survey. From 2022/23 they are only included where directors are classed as employees following a methodological review. The income is treated as income from earnings.

For the 2021/22 estimates, wages are treated as income from employment rather than state support, irrespective of any support payments from Coronavirus Job Retention Scheme (CJRS) that the respondent's employer was receiving in respect of their employment. Amounts received through the Self-Employment Income Support Scheme (SEISS) for the self-employed are indirectly included as part of the reporting of profit data for the most recent available tax year.

Further information can be found in the HBAI Quality and Methodology Report here.

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