Labor urges HENRY to help boost investment

Wednesday 04 March 2026 15.49
| Updated:

Wednesday 04 March 2026 15.50

The tax constraints facing workers earning £100,000 or more are hurting the UK’s ambitions to encourage greater retail investment, according to IG.

New research from the online investment platform finds that HENRYs, short for High Earner, Not Rich Yet, are unable to invest as much as they would like because of the high marginal tax rates facing workers earning six-figure incomes.

Almost half (48 per cent) of workers earning between £90,000 and £125,000 said they were unable to invest to build their wealth because of tax and financial pressures. Among those with kindergarten-aged children, this figure rose to 92 percent.

Under current rules, when one member of a household earns above £100,000, the personal allowance will be withdrawn gradually, creating an effective marginal tax rate of up to 60 per cent.

Eligibility for additional hours of free childcare is also removed when a worker earns above £100,000, adding additional costs to the household.

A painful £100K tax trap

The research found that 82 per cent of HENRY households changed their behavior to avoid crossing the £100,000 threshold. A third had reduced their work hours, 28 percent had turned down a promotion, and a quarter had turned down a bonus or salary increase, the study found.

More than half (54 percent) said they would immediately invest more if they did not lose childcare benefits.

“When earning more leaves you with less capacity to invest, it’s not just a household problem – it’s a structural problem,” said Michael Healy, managing director of IG Group UK and Ireland.

“Britain’s brutal tax system weighs heavily on the households most able to drive growth in UK capital markets.”

The company argues that the threshold for applying these penalties should be increased in line with inflation.

The free childcare threshold has been frozen since 2013, meaning it would reach £135,000 if raised to match inflation.

And if the threshold at which personal allowances start to phase out had been increased, it would stand at around £156,000 and £195,000 currently.

“Reforming tough conditions would remove disincentives, unlock long-term investment among key demographics, and support household resilience and wider UK economic growth,” Healey said.