Telegraph The rise of the £150,000 millennial earner

The rise of the £150,000 millennial earner – and why this luck could soon run out

Young entrepreneurs are starting to earn big money but by rejecting the safety net of employment they could be putting themselves at risk
By Marianna Hunt 7 May 2020 • 6:00am

There has been a huge jump in the number of millennials earning £150,000 or more over the past year, as more young entrepreneurs, influencers and fitness gurus hit the big time.

However, their large incomes may soon run dry, as experts have warned that this group is one of the most vulnerable to the financial aftershocks of coronavirus.

The number of under-40s earning £150,000 or more each year reached 58,000 in 2019, up by 38pc from the year before, according to a Freedom of Information (FOI) request submitted to HM Revenue and Customs (HMRC).

By contrast the number of higher earners among Generation X (those aged between 40 and 55) increased by just 9pc over that period, while for Baby Boomers (those aged 56 to 76) the number dropped by 1pc.

Tim Holmes, of financial adviser Salisbury House Wealth, which submitted the FOI, said high-earning young people often work for themselves. “Worryingly that means they are at risk from a huge fall in income at the moment,” he warned.

Should the profits from their business dry up during coronavirus, these wealthy millennials could miss out on government support, either because they have been earning more than the £50,000 a year threshold or because they have only recently started working for themselves. Those who have set their business up as a limited company and pay themselves via dividends are also likely to miss out.

“This group is also unlikely to have built up a savings net to fall back on,” said Mr Holmes. “Most of them will not have experienced financial hardship before, so won’t have thought about building up a pension or income protection in case they fall ill.” He added that he hoped this would be a wake-up call for them.

Even before the pandemic, experts were attempting to alert high-achieving young people of the dangers of becoming their own boss.

Dr Mike Moss of the Oxford University Careers Service warned alumni in a newsletter that “your twenties are the worst time to be an entrepreneur”, adding that those early in their careers benefit from more structure and stability.

He said that those motivated by financial stability, job security or work-life balance might prefer a traditional graduate scheme.

One 30-year-old Telegraph reader has recently sold his share of a business that he set up for £3m, but admitted he is completely clueless when it comes to his own finances.

“We were making £300,000 a year. I was so focused on that, I never had time to think about what to do with the money,” he said. “Now I have a huge pot and no idea how to use it.”

He added that early March was a good time to sell the business, as profits have dropped hugely since the coronavirus outbreak. He is continuing to work for the firm in a different role but said he plans to set up another business in a few years' time.

“At the moment I’m earning £130,000 plus bonuses, but I’d happily go back to making almost nothing if that’s the sacrifice needed to start something on my own,” he said. “I know lots of other young people who’ve made a heap of money by selling a business but don’t know how to invest it.”

The number of young people choosing to become their own boss is rising faster than in the general population, official figures show. The number of millennial company directors hit 56,000 in 2018, up 37pc from the previous year.

The Government has said it will pay self-employed people up to 80pc of their usual profits  – up to a maximum of £2,500 a month – if they are negatively impacted by coronavirus.

However, more than two million self-employed, including many young people, will not be eligible for a grant as they fail to meet the scheme’s criteria, according to think tank the Institute for Fiscal Studies (IFS).

Are you a high-earning young person who has experienced a fall in income since coronavirus? Get in touch with The Telegraph by emailing marianna.hunt@telegraph.co.uk