hmmm...very controversial topic here. 40k a year is a lot relative to the national average, but I agree in London its certainly not a particularly high salary.
Where does the money go?
1) Mortgage/rent - If you are young, and lucky enough to own a property in London which most likely in todays climate will cost you a min of 200k (Which is as cheap as they come). And even renting for that matter, is very expensive unless you want to live in a hoodlum gangster area or are you lucky enough to split with a partner. Expect to be paying out nearly £800-1k a month.
2) Cost of travel - you will NEED a travel card due to Ken Livingstone congestion charge and extortionate pay and display zones. Again unless you are loaded enough to live within the first 2 zones, expect to pay out £120 a month.
3) Going out /socialising in London - Going out in London is a force to be reckoned with - £3.85/beer or £6.50 a glass of wine are not uncommon. Not going to quote amounts people spend on nights out but you can imagine how much they can rack up - if you can't, I urge you to try going out in London's West End on a Fri/Sat night.
4) Us supra owners in London - Car insurance if you are under 30 will almost certainly be into 4 digits if you own a supra.
Certainly not saying 40k is nothing, but I agree somewhat that 40k/yr in London is not a great deal of money if you are young and living on your own in London (NOT LIVING WITH PARENTS - I stress that point!!).
But as someone else says, 40k is a lot compared to obviously someone else down the street earning half or a third that trying to make earns meet.