A puzzle has emerged amidst rising inequality: why do people profess high levels of belief in meritocracy even as income gains are increasingly concentrated at the top? In light of contradictory theories and evidence, we undertake the first assessment of the relationship between local income inequality and meritocratic beliefs outside the United States, using data from the UK Household Longitudinal Study. We find that the positive relationship between country-level income inequality and meritocratic beliefs identified in the recent literature does not translate straightforwardly below country level: there is no robust relationship between local income inequality and meritocratic beliefs in England. However, there is a robust—and somewhat paradoxical—positive association between high local income inequality and meritocratic beliefs among those with the lowest incomes. On average, respondents with annual household incomes of £10,000 are five points more likely (on a 100-point scale) to believe their hard work will pay off if they live in the most rather than the least unequal places in England. We also show that this applies beyond the specific case of meritocratic beliefs: low-income respondents in unequal places are also notably more satisfied with their own (low) income than similar respondents in more equal localities. In line with system justification theory, we argue that belief in meritocracy serves as an important tool of psychological resilience for low-income individuals who regularly come into contact with others more economically fortunate than themselves: though it legitimates their current position at the bottom of the status hierarchy, this belief also offers the promise of future advancement. While this reduces concern about the psychological effects of growing local income inequality on the most economically vulnerable, it also suggests that there is little prospect of demand for systemic economic change emerging from what might have been considered the most likely places.