IG calls for urgent reform of HENRY £100k cliff edge as research shows it’s damaging UK retail investing ambitions

London, 4th March 2026 – Investing and trading platform IG is calling on the government to take urgent action to reform the £100,000 salary cliff edge, warning that frozen tax and childcare thresholds are suppressing retail investing and damaging aspiration.

To assess the impact, IG surveyed workers earning between £90,000 and £125,000 - the so-called HENRY (High Earner, Not Rich Yet) demographic - to understand how cliff-edge tax and childcare policies affect long-term wealth building.

Nearly half (48%) said they cannot invest enough to build future wealth due to tax and financial pressures. Among those with nursery-age children, this rises to 92%, with most (54%) saying they would immediately invest more if they did not lose childcare support when crossing the £100,000 threshold.

Under the current system, once one member of a household earns above £100,000, the personal allowance is gradually withdrawn - creating effective marginal tax rates of up to 60% - while eligibility for additional free childcare hours is also lost.

IG believes this cohort is crucial to growing UK retail investing levels. Typically mid-career professionals with rising earnings and strong savings capacity, HENRY households are well positioned to deploy long-term capital into UK markets. At a time when policymakers are seeking to boost domestic participation in UK equities and support economic growth, unlocking this group’s investment potential is critical. 

Tax cliff edge is damaging aspiration

IG’s research reveals widespread behavioural distortion around the £100,000 threshold, likely limiting both earnings growth and long-term investment. Four in five (82%) HENRY households surveyed reported taking action to avoid crossing it, with nearly a third reducing their hours, 28% turning down a promotion, and roughly a quarter refusing a bonus or pay rise. 

To illustrate how this is damaging aspiration and potential investing activity, IG analysis found that a household with two nursery-age children could be £13,139 worse off next tax year by accepting a standard pay rise in line with expected wage growth.

Michael Healy, UK and Ireland Managing Director at IG Group, said: “When earning more leaves you with less capacity to invest, that’s not just a household issue - it’s a structural problem. The UK’s brutal tax cliff edge system is weighing down the very households who are most able to fuel growth in UK capital markets.

“Reforming the cliff edge would remove the disincentive, unlock long-term investing among a key demographic, and support both household resilience and broader UK economic growth. It would allow families to plan for the future with confidence, increase engagement in UK markets, and ensure that ambition is rewarded rather than penalised. Ultimately, it’s about giving people the freedom to invest, save, and build wealth without being punished for progressing in their careers.”

IG is calling for four reforms to remove these distortions and unlock greater participation in UK capital markets:
 

1. Move childcare thresholds with inflation
   The £100,000 income limit for the additional 15 hours of free childcare has been frozen since 2013. If uprated in line with inflation, it would now stand at approximately £135,000. Indexing this threshold annually would smooth progression and prevent support investing participation.
   
   
2. Adjust the personal allowance cliff edge with inflation
   Higher earners lose their personal allowance between £100,000 and £125,000, creating effective marginal tax rates of up to 60%. If uprated with inflation, these thresholds would stand at approximately £156,000 and £195,000 today. Reform would reduce extreme marginal rates and restore disposable income available for long-term investment.
   
   
3. Introduce a UK Equities Investment Scheme
   A new tax-efficient scheme for middle earners would provide income tax relief on UK-listed shares held in ISAs, encouraging long-term investing in domestic companies. Higher-rate taxpayers could receive relief of up to £8,000 annually while boosting UK capital formation.
   
   
4. Reverse the planned cap on salary sacrifice
   The planned £2,000 cap on NIC-free pension salary sacrifice contributions from April 2029 would erode an important mechanism families use to manage adjusted income and avoid cliff-edge losses. Reversing this cap would preserve pension saving flexibility and increase households’ ability to invest.

 

ENDS

Notes to editors

For any press enquiries, please contact:

IG PR: jack.crone@ig.com or press@ig.com

Ready10: IG@ready10.media

About the research

The research was conducted by Censuswide, among a sample of 1,003 UK Respondents (Aged 18+) earning £90-£125K. The data was collected between 18.02.2026-23.02.2026. Censuswide is a member of the Market Research Society (MRS) and the British Polling Council (BPC), and a signatory of the Global Data Quality Pledge. We adhere to the MRS Code of Conduct and ESOMAR principles

How we calculated the £13k number

IG created a household finance model for an average HENRY family with two nursery age children and used this to model the impact on disposable income of a pay rise that pushes this group above the £100,000 net adjusted salary threshold. This household is based in the South East, commuting into London. Their expenditure on housing, council tax, commuting costs, holidays, and discretionary spending are all assumed to be at average levels with figures taken from ONS data sources. Using OBR/ONS assumptions for inflation and wage growth we modelled the impact of accepting a pay rise that pushed one earner over the £100,000 threshold and therefore losing their entitlement to 15 hours of additional childcare per child. As well as having to pick up the cost of these hours this family would also be negatively impacted by the high marginal tax rate as their personal allowance is tapered away.

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 250 company that offers clients access to c.19,000 financial markets worldwide

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