Women still make up just over a quarter of higher rate tax payers

The total number of high earners has grown by nearly one million in four years, but the proportion of women paying 40%+ remains flat.

by Rebecca Smith
Last Updated: 18 Jan 2016

There’s been much discussion about ways to tackle the gender pay gap, but new research from law firm Clyde & Co has shown that the proportion of female high earners has remained the same over the past four years. Data from HMRC showed that women made up just over a quarter (27%) of all higher rate tax payers – defined as those declaring an income between £31,786 and £150,000 – in each of the last four financial years.

In 2014 just 1.21m of the 4.47 higher rate tax payers were women and, while the total number of those paying higher rate tax has grown by nearly 1m in four years, the percentage of women within this bracket has stagnated.

The gender pay gap in itself has been a more complex issue than often reported. It’s not as simple as looking at the absolute pay difference between men and women, which is partly what sparked the prime minister’s July announcement that new rules would be introduced for UK firms with 250 employees or more. From spring 2016, these companies will be required to publish information on the difference between the average pay of their male and female employees. This was extended in October to cover bonuses and public sector organisations, along with private and voluntary sector employers.

There’s no doubt the issue has been given increasing attention by the government in recent months, but the question remains as to how effective its incoming measures and aims will be. While Lord Davies set a new voluntary target for FTSE 350 boards to be 33% female by 2020 (having succeeded with his original 25% in 2015 target), some were disappointed that he didn’t focus on the arguably more pressing issue of lack of female executive directors.

Some businesses have started taking matters into their own hands, which is a positive – Lloyd’s Banking Group said it was aiming to have women in 40% of its top 5,000 roles by 2020 and (not to be outdone) HSBC committed to make 50% of its senior managers women. This latest data, however, indicates that current initiatives are unsurprisingly something of a slow-burner, and gender pay gap reporting will need to be nuanced enough to address this.

‘Over 40 years since we saw the first legislation aimed at tackling differences between the sexes in the workplace, these further initiatives, and the intent behind them, are welcome,’ said Charles Urquhart, employment partner at Clyde & Co. He pointed to recurring issues with the perception of the gender pay gap – if employers are required to publish an average of men and women’s basic pay and bonuses every three years ‘it won’t tell us much more than we already know’.

‘For gender pay reporting to be valuable, a like for like comparison across all levels within an organisation, from the CEO to unskilled levels of employee, would be needed,’ Urquhart added. While the data compiled from such an approach would undoubtedly be much more useful, the burden it then places on employers would be significant ‘which the government will no doubt be wanting to avoid’.

Some European countries, including the likes of Norway and Sweden, have opted for quotas to up the numbers of women in senior roles, and a global index from Catalyst at the beginning of 2015, suggested these were effective. Norway was the first country in the world to mandate that women account for 40% of its board seats and topped the ranking of 20 countries across three regions, with 35.5% female representation on the boards of its OMX-listed companies.

Such measures do remain controversial though. They can be seen as the catalyst that initiates cultural change in the workplace, but as Uquhart mentioned, quotas are often ‘a blunt tool’. They can serve to move the focus away from which individuals are best suited for a role and can have the effect of leaving some individuals at a disadvantage.

If more firms follow in the footsteps of the likes of Lloyds, and take on the responsibility of promoting diversity in the workplace, rather than waiting until they’re pushed by government to make changes, a more organic and likely more sustainable approach to addressing the gender pay gap will emerge.

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