Poverty and Income Inequality in Scotland 2022-25

10   Definitions

10.1  Household income

The income measure used in HBAI is weekly net (disposable) equivalised household income. This comprises total income from all sources of all household members including dependents. An adjustment is made to sample cases at the top of the income distribution to correct for volatility in the highest incomes captured in the survey.

Income is adjusted for household size and composition by means of equivalence scales, which reflect the extent to which households of different size and composition require a different level of income to achieve the same standard of living. This adjusted income is referred to as equivalised income (see definition below for more information on equivalisation).

Income before housing costs (BHC) includes the following main components:

• net earnings
• profit or loss from self-employment (after income tax and National Insurance contributions)
• all UK and Scottish social security payments, including housing and council tax benefits, tax credits, and the state pension
• occupational and private pension income
• investment income
• maintenance payments
• top-up loans and parental contributions for students, educational grants and payments
• the cash value of certain forms of income in kind such as free school meals, free welfare milk and free school milk and free TV licences for the over 75s (where data is available)

Income is net of:

• income tax payments
• National Insurance contributions
• contributions to occupational, stakeholder and personal pension schemes
• council tax
• maintenance and child support payments made
• parental contributions to students living away from home

10.2  Income sources

The analysis on income sources is the only analysis in this report using gross income. This analysis is based on income before taxes from employment or self-employment, social security payments, investment, occupational pensions and other income. In some cases, income from self-employment was negative in a year, for example, when someone in self-employment made a loss. In these cases, total income from earnings was set to zero. Negative investment income was also set to zero.

10.3  Housing costs

Housing costs include the following: rent (gross of housing benefit); water rates; mortgage interest payments; structural insurance premiums; ground rent and service charges.

This publication presents analyses on two bases:

• Before Housing Costs (BHC) where the housing costs are not deducted from the reported household income.
• After Housing Costs (AHC) (AHC) where housing costs are deducted from the reported household income.

10.4  Real prices

Unless otherwise stated, all figures relating to income are in 2024/25 prices. Values from previous years are uprated to account for inflation using a variant of the Consumer Price Index (CPI).

A change in methodology was applied in 2014/15 prior to which the Retail Price Index (RPI) was used. Full details can be found at this link: Methodological changes to poverty statistics (pdf)

10.5  Equivalisation

Equivalisation is the process by which household income is adjusted to take into account variations in the size and composition of the households in which individuals live. This reflects that in order to enjoy a comparable standard of living, a household of, for example, three adults will need a higher income than a single person living alone. The process of adjusting income in this way is known as equivalisation and is needed in order to make sensible income comparisons between households. 

Equivalence scales conventionally take an adult couple without children as the reference point, with an equivalence value of one. The process then increases relatively the income of single person households (since their incomes are divided by a value of less than one) and reduces relatively the incomes of households with three or more persons, which have an equivalence value of greater than one. 

Consider a single person, a couple with no children, and a couple with two children aged fourteen and ten, all having unadjusted weekly household incomes of £200 (Before Housing Costs). The process of equivalisation, as conducted in HBAI, gives an equivalised income of £299 to the single person, £200 to the couple with no children, but only £131 to the couple with children. 

The equivalence scales used here are the modified OECD scales. Two separate scales are used, one for income Before Housing Costs (BHC) and the companion scale for income After Housing Costs (AHC). 

Table 1: Modified OECD equivalence scales, rescaled to a couple without children

Household member	Before housing costs	After housing costs
First adult	0.67	0.58
Spouse	0.33	0.42
Additional adults	0.33	0.42
Children aged 0-13	0.20	0.20
Children aged 14+	0.33	0.42

The construction of household equivalence values from these scales is quite straightforward. For example, the BHC equivalence value for a household containing a couple with a fourteen year old and a ten year old child together with one other adult would be 1.86 from the sum of the scale values: 

0.67 + 0.33 + 0.33 + 0.33 + 0.20 = 1.86 

This is made up of 0.67 for the first adult, 0.33 for their spouse, the other adult and the fourteen year old child and 0.20 for the ten year old child. The total income for the household would then be divided by 1.86 in order to arrive at the measure of equivalised household income used in HBAI analysis. 

Further information on equivalisation can be found in the methodology report on the Scottish Government website.

10.6  Poverty measurement

Individuals are defined as being in poverty if their equivalised net disposable household income is below the poverty line. Different poverty measures have different poverty lines, for example:

• Relative poverty is the most commonly used poverty measure. The relative poverty line is 60% of the UK median income in the same year. People are in relative poverty if they live in a household whose equivalised income is below this amount. Relative poverty statistics fall if income growth at the lower end of the income distribution is greater than overall income growth.
• Absolute poverty measures whether the incomes of low-income households are keeping pace with inflation. The absolute poverty line is fixed at 60% of median UK income in a given reference year. Due to the structural break introduced by the data linkage the reference year for absolute poverty has been moved from 2010/11 to 2024/25.  From 2021/22 the reference year is 2024/25.  Prior to 2021/22, the reference year is 2010/11.
• The severe poverty line is 50% of the UK median income in the same year. People are in severe poverty if they live in a household whose equivalised income is below this amount. Severe poverty statistics fall if income growth at the lowest end of the income distribution is greater than overall income growth.

The latest poverty lines can be found in the Poverty thresholds section.

10.7  Measures of Dispersion

The median is the income value which divides a population, when ranked by income, into two equal sized groups. Since the mean is influenced considerably by the highest incomes, median income thresholds are widely accepted as a better benchmark when considering a derived measure for poverty.

Decile points are the income values which divide the Scottish population, when ranked by income, into ten equal-sized groups. These ten groups are called decile groups; for example ‘the bottom decile’ is used to describe the bottom ten percent of the population.

10.8  Material deprivation definitions

Material deprivation is an additional way of measuring living standards and refers to the self-reported ability of individuals or households to afford goods and activities that are typical in society at a given point in time. Statistics are derived from questions on whether household members can afford items listed on the FRS questionnaire. 

An update was applied to the material deprivation suite of questions from 2023/24, meaning the definitions shifted as indicated below. Full details were published in last year’s report and DWP’s separate technical report.

Child low income and material deprivation:

• From 2023/24, a child is classified as being in combined low income and child material deprivation if they live in a family that is lacking 4 or more items (from an updated list of 22 items) and has a household income below 70% of the median.
• Prior to 2023/24, a child was classified as being in combined low income and child material deprivation if they lived in a family that was lacking 6 or more items from a different list of 21 items and the household income was below 70% of the median. 

Pensioner material deprivation:

• From 2023/24 a pensioner is classified as being in material deprivation if they are lacking 4 or more items from an updated list of 19 items.
• Prior to 2023/24 a pensioner was classified as being in material deprivation if they were lacking 4 or more items from a list of 15 items.

10.9  Deep material poverty defintion

This report also includes the new “deep material poverty” measure for children.  This measure was developed by DWP to capture children experiencing a deeper level of poverty with first results published in December 2025. It is one of the headline metrics for the UK child poverty strategy but is not a statutory target measure for the Scottish Government. The measure draws on results from a subset of the material deprivation questions.

This measure is drawn from a subset of the 22 child material deprivation questions; of these 13 are seen as “essential items”.  A child is classified as being in deep material poverty if they lack at least 4 out of 13 essential items. A lack is defined as being due to financial constraints rather than personal choice.

The 13 essential items were selected from the full list of questions, based on their perceived necessity. The essential items were informed through a public consultation and research conducted as part of the 2023 to 2024 material deprivation review by the London School of Economics. This selection process aimed to ensure the items reflect current public views on what constitutes basic needs.

More information on this measure can be found in DWP’s first release of these statistics.

10.10   Food security

Results for food security are contained in the downloadable spreadsheets. Commentary has not been provided this year due to the focus on the data linkage method changes. We anticipate this being a temporary position and we will review content ahead of the March 2027 publication.

The Family Resources Survey collected household food security information for the first time in 2019/20. The questions were adopted from the United States Department of Agriculture’s Adult Food Security Survey Module, using a 30-day reference period, and using the same food security levels (“high”, “marginal”, “low”, “very low”).

The food security analysis excludes shared households, such as a house shared by a group of professionals. These respondents may not have insight into the food security status of others in their household and may not regularly share financial information.

Previously, data on household food insecurity in Scotland had been collected by the Scottish Health Survey. The measure in this report is different from the one from the Scottish Health Survey, because it is based on different questions, which are asked in a different context, using a different sample of the population, and refer to a different period of time. Therefore, these measures cannot be directly compared.

10.11   Dependent children

In this publication, ‘child’ refers to a dependent child. A dependent child is a person aged 0-15, or a person aged 16-19 and: not married nor in a Civil Partnership nor living with a partner, and living with their parents, and in full-time non-advanced education or in unwaged government training.

10.12 Single parents

In this publication, ‘single parents’ and ‘single mothers’ refer to a situation where the primary residence of a dependent child is in a family with one adult. Data for single fathers is not available due to small sample sizes. This family type does not necessarily imply that the child only has contact with one parent. The child may have non-resident parents who contribute to their welfare. Income transfers from a non-resident parent to the resident parent (such as Child Maintenance payments) are included in the household income.

It is also possible that a single parent family shares a household with another family, for example the child’s grandparents. Income from all household members contribute to the household income and determine whether the household is in poverty.

10.13 Household head

The head of the household is the adult with the highest income. If two adults have the same income, it is the older person.

10.14  Shared households

A shared household is a household where the household reference person is unclear or arbitrary, such as a group of students, unrelated adults etc., where the household is being shared on an equal basis. Households where adult children are living with their parents or where there are lodgers, but the owner lives in the household, are both not considered shared households for the purposes of this definition.

11   Find more information

11.1  Tables and further analysis

This publication contains the headline poverty, child poverty and household income statistics. Associated tables are available for download and contain:

• all estimates used in the charts
• additional relative and severe poverty and child poverty estimates including numbers, rates and compositions of those in poverty disaggregated by a wide range of personal and household characteristics such as:
  • housing tenure
  • family type
  • economic status
  • urban / rural area
  • Scottish Index of Multiple Deprivation decile
  • number of children in household
  • child age

11.2   Local poverty analysis

The main poverty data source, the Family Resources Survey, provides information at national level only. Alternative data sources are not directly comparable with the official poverty estimates presented in this report.

More information on local poverty and income analysis from alternative data sources is available.

11.3 Persistent poverty

New figures on persistent poverty were published on 26th March 2026.

Persistent poverty identifies the number of individuals living in relative poverty for 3 or more of the last 4 years. It therefore identifies people who have been living in poverty for a significant period of time, the rationale being that this is more damaging than brief periods spent with a low income, with the impacts affecting an individual through their lifetime.

One of the four statutory child poverty target measures is persistent child poverty after housing costs.

These figures come from the Understanding Society survey which tracks individuals over time. The persistent poverty figures are not directly comparable to the figures in this publication as they use different income definitions and cover different time periods, but they provide useful additional information on poverty in Scotland.

11.4  Scottish Government websites 

Further analysis based on the FRS and HBAI datasets is published by the Scottish Government throughout the year on the Scottish Government’s poverty and child poverty statistics webpages. Previous poverty reports and other Scottish Government statistics are available here:

• Poverty and income inequality analysis
• Child poverty analysis
• Wealth analysis
• Scottish Index of Multiple Deprivation
• Further information on all Scottish Government statistics
• Scottish Government approach to tackling poverty