# How HENRYs can protect their wealth

> High earners face 60% tax trap and lose childcare benefits but can escape with pensions.
- Title: How HENRYs can protect their wealth · MoneyWeek | Shortify
- Summary: High earners face 60% tax trap and lose childcare benefits but can escape with pensions. High earners in the UK who earn over £100,000 annually face a 60%…
- Keywords: henrys, tax trap, pension contributions, childcare benefits, uk tax system, income tax, child benefit, isa, protect, wealth, MoneyWeek
- Source: MoneyWeek — https://moneyweek.com/personal-finance/how-henrys-can-protect-their-wealth
- Published: 2026-10-08T15:39:02+00:00
- Read time: 2 min
- Topics: henrys, tax trap, pension contributions, childcare benefits, uk tax system, income tax, child benefit, isa
## What are HENRYs?
High earners are described as HENRYs (high earner, not rich yet) who are relatively young, often in their late 20s or 30s, and work in London but struggle to afford homes or private school fees.
## Tax trap for high earners
Earning over £100,000 triggers a 60% effective tax rate on income up to £125,140 and removes tax-free childcare benefits for parents.
## Childcare benefits cliff edge
Parents earning over £100,000 lose 30 free childcare hours per week and tax-free childcare support for children aged nine months to four years.
## Tax impact on households
Two-parent households earning £120,000 annually lose £9,800 in tax benefits compared to two mid-earners earning £60,000 each.
## Pension as escape route
Increasing pension contributions by £10,000 for someone earning £110,000 reduces taxable income to £100,000 and avoids the tax trap.
## Maximising tax allowances
Using ISAs and pensions allowances can protect savings from taxation while building wealth without triggering the tax trap.
## Lifestyle creep warning
High earners risk spending more on luxuries like cars and gym memberships, reducing surplus income for investments.
## Time to build wealth
HENRYs have time to increase earnings, escape the tax trap, and build long-term financial security through pensions and investments.
## Tax system mechanics
The tax-free personal allowance tapers away at £1 for every £2 earned above £100,000 until it is removed at £125,140.
## Child benefit reduction
Child benefit is lost entirely at £80,000 income for individuals, reducing household savings for high earners.
## Pension carry forward
Unused pension allowances from the past three years can be used to boost contributions while in the tax trap zone.
## Investment strategy
Diversified portfolios with long-term horizons allow HENRYs to take calculated risks in pensions without jeopardising financial security.
## Tax trap impact
Earning £100,000 annually results in £27,422 in tax, over five times the average earner's tax despite earning only 2.5 times the average salary.
## Tax system cliff edge
The UK tax system removes tax-free childcare benefits and the personal allowance for those earning over £100,000 annually.
## Key takeaway

High earners in the UK who earn over £100,000 annually face a 60% effective tax rate and lose childcare benefits but can avoid these issues by increasing pension contributions.