HENRY (High Earner, Not Rich Yet) households where income is concentrated in one main earner can face a ‘breadwinner penalty’ of more than £12,000 a year because of the UK’s £100k tax cliff edge, according to new research from investing and trading platform IG.
The Big HENRY Squeeze – a new report examining the impact of the £100,000 adjusted net income threshold on UK households – finds that how income is split within a household can have a major impact on finances, even where total earnings are identical.
The report forms part of IG’s ongoing HENRY campaign, which has been backed by former Chancellor and current MP Jeremy Hunt. The campaign highlights how the current tax cliff-edge system can discourage career progression, distort work incentives and reduce households’ ability to invest and build long-term wealth.
IG’s modelling compared two households each earning a combined income of around £120,000, both with two nursery-age children.
In the first household, income is concentrated in one main earner on £110,000, with a second parent earning £10,575 – the minimum required to qualify for funded childcare. In the second household, income is split evenly between two earners on £60,000 each.
Despite virtually identical household income, the dual-earner household retained around £12,450 more in annual financial benefit because neither individual crossed the £100,000 adjusted net income threshold, which triggers both the withdrawal of childcare support and the tapering of the personal allowance.
Table: How different household income structures affect finances
| Household type | Income structure across two earners | Outcome |
| Primary earner HENRY household | £110,000 + £10,575 | Baseline |
| Dual-earner household | £60,000 + £60,000 | +£12,450 (with children) / +£2,809 (no children) |
The effect extends beyond families with children
Among households without children, a dual-earner household on £60,000 retains around £2,650 more annually than a comparable primary-earner household. The financial gap between household types is driven by a combination of factors, including the tapering of the personal allowance between £100,000 and £125,140, differences in how income is split across earners, National Insurance structure, and pension contribution dynamics. (Full breakdown in notes to editors section.)
IG says the results highlight how the UK tax system can effectively penalise households where income is concentrated in a single earner, particularly around the £100,000 threshold.
As part of its campaign to create a fairer system and fuel participation in retail investing, IG is calling on policymakers to uprate childcare thresholds in line with inflation, smooth the personal allowance cliff edge above £100,000 adjusted net income and preserve flexibility around pension salary sacrifice.
IG UK & Ireland Managing Director Michael Healy said: “Our analysis highlights how the UK tax system can create significant distortions around the £100,000 threshold. This is not just a quirk of the system – it has real consequences for career progression, earnings decisions and household finances, particularly for HENRYs.
“This demographic of workers should be among the UK’s strongest drivers of investing and wealth creation, but too many feel discouraged from progressing, earning more or investing consistently for the future. We believe there is a real opportunity to smooth some of these distortions and create a system that better supports aspiration, work and long-term financial planning.”
Former Chancellor and current MP Jeremy Hunt, who publicly backs the HENRYs campaign added: “This is an important piece of research into a fast-growing group of workers who are increasingly affected by sharp distortions in the tax system. The findings highlight how thresholds around £100,000 can create unintended consequences for work, progression and family finances. As the economy changes and wages are pushed up by inflation, it’s important that the system evolves too – supporting aspiration, encouraging long-term investing and ensuring people are not penalised for getting on.”
