Is the “Singles Tax” a real thing?
Life might be getting easier for some, but singles are still struggling with the ‘singles tax’. But what is it, and how can savers be better prepared?
Last Updated: 1 January 2003
Over the past six years, a lot of people have managed to cut unnecessary spending enough that their overall financial resilience has improved.
Life might be getting easier for some, but it still feels impossibly difficult for others. Singles are struggling with the ‘singles tax’ and poor financial resilience, especially those with dependants.
What is the ’singles tax’ and how can you keep on top of your finances as a single household?
This isn’t personal advice. If you’re unsure about a certain course of action, take financial advice.
How financially resilient is the UK?
The latest HL Savings & Resilience Barometer shows how financial resilience has changed pre and post pandemic.
On a scale for financial resilience, on average people score 61 out of 100. This has gone up by four points since 2019 but down by two since the pandemic when we could save more than usual.
Covid-19 put into perspective the importance of financial contingency. Pre-pandemic, only 47% of households had emergency savings and had an average of only £110 left over at the end of each month. Post-pandemic, around two-thirds of households (65%) now have emergency savings and can end the month with £235.
Not everyone has been able to build more savings, and the benefits have been felt disproportionately by higher earners. Dividing UK earners into ten groups based on how much they’re earning, the groups fourth from the bottom to eighth from the bottom have seen savings scores rise by 20 points, compared to the lowest earners who only saw them rise by 1.3 points.
For lots of people, being in these lower groups and single, brings with it even more financial struggles.
What is the ‘singles tax’?
Single households have missed a massive chunk of the recovery their coupled-up-counterparts have seen in the past few years. Their resilience has improved far less.
Not just bearing all household costs alone, singles also face the ‘singles tax’ – financial burdens they have that couples don't.
For example, on essentials, a single adult will spend £8,100 on average to cover housing, bills, and groceries.
This is marginally higher compared to £7,800, the equivalent average per person spend for a couple. But for single people it comes out as 36% of their net income, compared to 29% per person for those in a couple.
Prioritising needs over wants and scraping the barrel for nice-to haves is the reality for singles. Singles with dependants suffer, either because they can’t work, or because of the extra cost of childcare.
71% of single parents have poor to very poor financial resilience, which is twice the average rate. They’ll have £50 left at the end of the month and be more likely to have late bills and debt repayments.
Make the most of your money
While the results of our financial resilience survey could seem daunting, they’re a great motivator to get your finances in order. Achieving financial success takes time and discipline. Take a look at our recipe for financial success for inspiration on managing your money with confidence.
Sticking to this recipe can help you build a strong financial foundation and help you achieve your long-term financial goals.
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