IG report reveals ‘breadwinner penalty’ of up to £12,450 for HENRY households with one £100k earner

• First-of-its-kind report shows how household income structure can dramatically affect finances around £100k tax cliff edge

• Dual-earner households can be materially better off than higher single earners, despite near identical combined incomes

• Jeremy Hunt backs IG campaign calling for reform of the £100k childcare and tax cliff edge

08^th June, London - 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 now 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

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: “The £100,000 salary threshold has become one of the most absurd features of the UK tax system. It creates cliff-edge penalties that can leave households thousands of pounds worse off and sends the wrong signal to people who want to progress in their careers.

“Our research shows that two families on almost identical incomes can end up with dramatically different outcomes simply because one person earns more of the household income - this clearly isn’t fair..

“HENRY households should be building wealth, investing for the future and driving economic growth. Instead, many are spending their time trying to avoid crossing an arbitrary line in the tax system. The government should smooth these cliff edges and bring the rules into line with today's earnings. The current system is outdated and increasingly unfair.”

Jeremy Hunt MP 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.”

-ENDS-

Notes to editors

For any press enquiries, please contact:
IG PR: jack.crone@ig.com or press@ig.com
VCCP Roar: ig@vccproar.com

About IG Group
IG Group (LSEG:IGG) provides online trading platforms and educational resources to empower ambitious clients around the globe. Headquartered in the UK, IG Group is a FTSE 100 company that offers clients access to c.19,000 financial markets worldwide. 

About The Big HENRY Squeeze
The Big HENRY Squeeze’ is a new report from IG examining how the UK’s £100,000 adjusted net income threshold affects household finances, work incentives and long-term investing behaviour among HENRYs (High Earners, Not Rich Yet).

The modelling analysed a range of household structures and income scenarios, including the impact of childcare eligibility rules, personal allowance tapering and income distribution between earners.

The report forms part of IG’s wider HENRY campaign, which is calling for reforms designed to reduce cliff-edge distortions, support aspiration and encourage long-term investing and wealth creation in the UK.