Background. The prevalence of psychological distress and common mental disorders has been shown to peak in midlife but analyses have ignored the association of poor material circumstances with prevalence. This study aimed to test the hypothesis that the midlife prevalence peak occurs only in lower-income households. Method. Pooled data were used from the annual Health Survey for England, a nationally representative cross-sectional study, on community-dwelling individuals aged ≥16 years from years 1997 to 2006 (n =100 457). 12-item General Health Questionnaire scores, reported mental illness diagnoses and receipt of relevant medication were assessed in relation to household income and age. Analyses were separated by gender and adjusted for age, ethnicity, smoking, social class, education and co-morbidities. Results. Prevalence of psychological distress, diagnoses and treatments rose with age until early middle age and declined subsequently. In analyses conducted separately by income categories, this pattern was marked in low-income groups but absent in high-income groups. Income-related inequalities in the prevalence of psychological distress were greatest in midlife; for example, in men aged 45-54 years the odds ratio of receiving psychiatric medication in the lowest income group compared with the highest was 7.50 [95% confidence interval (CI) 4.24-13.27] and in women aged 45-54 years the odds ratio of reporting mental illness was 10.25 (95% CI 6.16-17.05). Conclusions. An increased prevalence of psychological distress, common mental disorder diagnoses and treatment in midlife is not a universal phenomenon but is found only in those in low-income households. This implies the phenomenon is not inevitable but is potentially manageable or preventable.