Britons earning £100,000 to 'bear the brunt of tax rises' in Autumn Budget - Five ways Rachel Reeves could hit wealth

The absence of Government support for childcare costs and expensive housing mean they struggle to save adequately for their future.

Sarah Coles, head of personal finance at Hargreaves Lansdown, warns that "so-called Henrys (High Earners Not Rich Yet) could bear the brunt of tax rises."

She notes they "already face significant income tax burdens, and those earning more than £100,000 fall off the cliff edge of government support for childcare too."

Income tax

Despite their high earnings placing them in the top five per cent nationally, many find themselves unable to accumulate substantial savings or investments.

Those earning between £100,000 and £125,140 face a particularly punishing tax burden.

For every £2 earned above £100,000, they lose £1 of their personal allowance, creating an effective 60 per cent marginal tax rate on this portion of income.

Once earnings exceed £125,140, the personal allowance disappears entirely and the 45 per cent rate applies.

This group already contributes heavily to the public purse, with the top 5 per cent of earners paying 49 per cent of all income tax.

The freeze on income tax thresholds until 2028 compounds these pressures.

As Coles explains, if the Government extends this freeze beyond 2028, "it would mean more people pass over the threshold to pay 60 per cent, and more pass into the realms of 45 per cent tax too."

Council tax

Council tax represents another growing burden for Henrys, who typically rent larger properties in more desirable areas, placing them in higher tax bands. With the Spending Review protecting policing budgets, councils face pressure to raise taxes to cover costs.

Rachel Reeves has indicated council tax rises won't exceed five per cent annually, but this translates to significantly higher absolute increases for those in expensive properties. A Band D property owner might see a £114 increase, whilst someone in Band H could face a £228 rise.

More concerning is the possibility of structural changes to council tax. George Osborne previously considered adding new bands for the most expensive properties, effectively creating a mansion tax by another name.

Though abandoned by the Conservatives, this option could resurface under the current Government, with Henrys renting premium properties squarely in the firing line for substantially higher bills.

Tax on investments

Even modest investors face growing threats from reduced capital gains and dividend tax allowances, which have been cut dramatically in recent years. Further reductions could expose those with limited investments to these taxes.

Tax on pensions

Pension planning presents particular challenges for Henrys, with fewer than half of those earning £100,000-£130,000 on track for a comfortable retirement, according to the HL Savings & Resilience Barometer. Potential changes to salary sacrifice schemes pose a significant threat.

These arrangements allow employees to exchange salary for pension contributions, saving both income tax and National Insurance. Many Henrys use them to reduce taxable income below the £100,000 threshold or to shelter bonuses from tax.

If outlawed, such changes would remove crucial tax planning options and could prompt employers to reduce pension benefits. Speculation about reinstating the lifetime allowance further undermines confidence in pension saving.

Tax on inheritance

Inheritance tax changes could prove particularly damaging for Henrys counting on family wealth to bridge their financial gaps. The complex system offers numerous potential targets for revenue-raising reforms.

These could range from reconsidering spousal exemptions to extending the seven-year period for larger gifts to leave an estate. Each option carries significant drawbacks but remains under consideration.

As Coles notes, uncertainty around inheritance tax might prompt those planning to leave money to Henrys to "do so sooner rather than later, to take advantage of gifting allowances or get the clock ticking on the seven years it takes for a larger gift to leave their estate."

However, concerns about giving away too much during their lifetime may lead many to retain assets, potentially resulting in larger tax bills that diminish the inheritances Henrys hope will secure their financial futures.