London high earners turn to SIPP pensions to cut taxes and keep childcare benefits
Six-figure earners in London are using self-invested personal pensions to lower their adjusted net income, avoid the 60 % effective tax rate and regain eligibility for subsidised childcare.
London’s high-earning professionals, often labelled HENRYs, are feeling pressure from high mortgage repayments, student-loan burdens and the loss of childcare subsidies once income passes £100,000. The personal-allowance taper creates an effective tax rate of about 60 % on part of their earnings, prompting many to seek ways to reduce their adjusted net income. George Mantilas of Trading 212 notes that contributing to a self-invested personal pension (SIPP) can restore the full personal allowance, lower the effective tax rate and make parents eligible again for government childcare schemes.
A £10,000 gross SIPP contribution would require an outlay of £8,000, with HMRC adding £2,000 in tax relief and another £2,000 recovered through the allowance restoration, effectively costing £4,000. The SIPP also offers control over investment choices and tax-free growth, though withdrawals are only permitted from age 55 (57 from 2028). Trading 212 advertises no monthly platform fees or commission, though other charges may apply.
