High earners earning just over £100,000 – often referred to as “Henrys” (high earners, not yet rich) – could be hit hardest in next month’s Budget, with analysts warning their effective tax rate could rise above the already onerous 60% threshold.
Henrys typically consist of mid-career professionals and dual-income households with limited accumulated wealth or assets. They often fall into what experts call the UK’s “secret tax trap”. This group is already disproportionately affected by frozen tax thresholds, cuts to childcare allowances and criminal cuts to personal allowances once income exceeds £100,000.
Under current rules, workers earning between £100,000 and £125,140 will lose £1 of their personal allowance of £12,570 for every £2 earned above the £100,000 threshold, resulting in a marginal tax rate of around 60%.
Hargreaves Lansdown points out that many Henrys also lose access to state-funded childcare once their income exceeds £100,000 – adding thousands of pounds to annual household costs not incurred by low earners.
As wage inflation continues, analysts warn that an extension of the existing income tax threshold freeze – expected to be included in Rachel Reeves’ November budget – will attract more professionals into this high tax bracket.
The number of taxpayers paying the additional 45% tax rate on income above £125,140 has more than doubled since 2022, highlighting how the tax burden is changing the tax landscape for upper middle earners.
Pension relief and property reforms could cause further setbacks
While many Henrys currently reduce their tax burden by making salary sacrifice contributions to pension schemes, proposals to introduce a flat 20% pension tax relief could dramatically reduce the effectiveness of this strategy for higher rate taxpayers.
Such a reform could bring billions to the Treasury by cutting generous tax breaks for working people who pay 40% or 45% taxes – many of whom fall into the Henry category.
Possible changes to local tax could lead to further burdens. Ministers are considering reforms to ensure more expensive homes pay more. The proposals range from new higher tax brackets to premium surcharges for high-value properties.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Henrys would face even higher tax bills if council tax reforms were introduced, particularly in London and major cities where property values are higher.”
She warned that proposals once considered by George Osborne – including extra bands for expensive properties – could re-emerge as part of Labour’s revenue plans.
The Chancellor is expected to turn to those with the “broadest shoulders” to meet her fiscal rules amid weak growth forecasts and higher borrowing costs. Analysts say that could leave Henry exposed to further income tax measures, limited relief and higher local taxes – even though he is not traditionally wealthy.
With the cost of living remaining high and pressures on childcare, housing and pensions weighing heavily on this income group, tax planning for professionals in the £100,000 to £150,000 range is likely to be on the agenda as Budget Day approaches.
