STUDY OBJECTIVE: To analyse to what extent differences in income, using two distinct measures-as distribution across quintiles and poverty-explain social inequalities in self rated health, for men and women, in Sweden and Britain. DESIGN: Series of cross sectional surveys, the Swedish Survey of Living Conditions (ULF) and the British General Household Survey (GHS), during the period 1992-95. PARTICIPANTS AND SETTING: Swedish and British men and women aged 25-64 years. Approximately 4000 Swedes and 12 500 Britons are interviewed each year in the cross sectional studies used. The sample contains 15 766 people in the Swedish dataset and 49 604 people in the British dataset. MAIN RESULTS: The magnitude of social inequalities in less than good self rated health was similar in Sweden and in Britain, but adjusting for income differences explained a greater part of these in Britain than in Sweden. In Britain the distribution across income quintiles explained 47% of the social inequalities in self rated health among women and 31% among men, while in Sweden it explained, for women 13% and for men 20%. Poverty explained 22% for British women and 8% for British men of the social inequalities in self rated health, while in Sweden poverty explained much less (men 2.5% and women 0%). CONCLUSIONS: The magnitude of social inequalities in self rated health was similar in Sweden and in Britain. However, the distribution of income across occupational social classes explains a larger part of these inequalities in Britain than in Sweden. One reason for this may be the differential exposure to low income and poverty in the two countries.