Labour’s commitment to women’s equality can already be felt in the representation of female MPs elected to Parliament in 2024, now at a record high of 40.6%, a significant jump from 34.2% in 2019.
Women now make up a significant proportion of Labour’s Cabinet including Rachel Reeves, Labour’s new Chancellor; Liz Kendall, Secretary of State for Work and Pensions; Bridget Phillipson, Secretary of State for Education and Minister for Women and Equalities and Anneliese Dodds Minister for International Development and Women and Equalities.
Labour has been known for its more feminist policies, previously tackling low pay for women and abolishing VAT on sanitary products. Now Labour plans to go further.
Gender Pensions Gap (GPG)
The latest research on the Gender Pensions Gap (GPG) determined that a woman’s private pension is significantly less than that of a man’s on retirement, with an average of £69,000 compared to £205,000 for men – that is a £136,000 difference!
The main reason for this gap is lower average earnings throughout a woman’s working life, often having more periods of career breaks or part-time work and disproportionally working in lower-paid roles. This impact is elevated further given women live longer than men.
Labour’s plans to close the Gender Pension Gap (GPG)
Labour has specific aims to reduce the GPG and strengthen equal pay legislation, implementing requirements for more robust reporting from businesses on how they will address pay gaps, and further measures are planned to address low pay and improve in work security.
Additional plans to strengthen maternity and menopause discrimination and to allow more flexible working should support more women to stay in the workplace. Labour is also looking to improve access to childcare, with confirmation that they intend to continue the extension of free childcare to 30 hours as announced in Jeremy Hunt’s last Budget.
How to increase the value of your pension
When thinking about your retirement, even if it is a few years off, it’s worth considering whether you have scope to increase pension contributions.
Those earning over £100,000
- For every £2 of earnings between £100,000 and £125,140, your personal allowance (i.e. the amount that you can earn without tax each year) is reduced by £1, meaning an effective 67.5% tax rate between these figures in Scotland and 60% in the rest of the UK. Pension contributions can be used to regain the personal allowance so can be particularly beneficial at this level of income.
- Tax-free childcare can provide working parents with up to £2,000 per child per year (or £4,000 per child per year for children with a disability) to help with childcare costs, however, this is withdrawn for those with a net adjusted income over £100,000. Pension contributions can reduce net adjusted income and regain eligibility so those with income over £100,000 should consider if contributions would mean they’re better off.
To put this into perspective, the below shows tax for those across the UK (excluding Scotland) where income is £125,140 (i.e. would have no personal allowance) where no pension contributions are made, and where a net pension contribution of £20,112 is made.
Before pension contribution
| Tax band | Rate | Tax |
| N/A | Personal allowance 0% | Not available |
| £0 to £37,700 | Basic rate 20% | £7,540 |
| £37,701 to £125,140 | Higher rate 40% | £34,976 |
| Total tax | £42,516 |
After pension contribution
| Tax band | Rate | Tax |
| £0 to £12,570 | Personal allowance 0% | £0 |
| £12,571 to £50,270 | Basic rate 20% | £7,540 |
| £50,271 to £75,410 (additional basic rate band equivalent to gross pension contribution of £25,140) | Basic rate 20% | £5,028 |
| £75,411 to £125,140 | Higher rate 40% | £19,892 |
| Total tax | £32,460 |
In addition to the tax saving of £10,056, there is also £5,028 tax relief received within the pension and further savings still for those who also regain their tax-free childcare.
For those paying at Scottish rates, the difference is even more pronounced given the introduction of the advanced rate band of 45% for incomes between £75,000 and £125,410.
Those earning between £60,000 and £80,000
- Child benefit is withdrawn at a rate of 1% for every £200 over net adjusted income of £60,000. Again, pension contributions can be used to reduce net adjusted income and regain child benefit payments. With child benefit payable at £25.60 per week for a single child and £16.95 for each additional child, additional pension contributions can be particularly beneficial for those affected.
The below shows the tax position in the UK (excluding Scotland) where income is £80,000 (i.e. the entirety of child benefit would need paying back) before and after a net pension contribution of £16,000 is made, and assumes that there are two children.
Before pension contribution
| Tax band | Rate | Tax |
| £0 to £12,570 | Personal allowance 0% | £0 |
| £12,571 to £50,270 | Basic rate 20% | £7,540 |
| £50,271 to £80,000 | Higher rate 40% | £11,892 |
| Total tax | £19,432 | |
| High Income Child Benefit Charge (benefit fully withdrawn) | £2,212.60 | |
| Total tax and High Income Child Benefit Charge | £21,644.60 |
After pension contribution
| Tax band | Rate | Tax |
| £0 to £12,570 | Personal allowance 0% | £0 |
| £12,571 to £50,270 | Basic rate 20% | £7,540 |
| £50,271 to £70,271 (additional basic rate band equivalent to gross pension contribution of £20,000) | Basic rate 20% | £4,000 |
| £70,272 to £80,000 | Higher rate 40% | £3,891.60 |
| Total tax | £15,431.60 |
In addition to the saving of £6,213, there is an additional £4,000 tax relief received in the pension.
Again, this difference is more pronounced for those in Scotland given the introduction of the additional rate band.
You can find more information on how to get the most from your pension here.
Gender barriers affecting entrepreneurs and business owners
The 2023 Rose Review of Female Entrepreneurship determined that, despite female entrepreneurship rapidly rising in the UK, ongoing barriers are precluding a potential boost to the UK economy of £250bn.
The Rose Review also identified access to funding, knowledge and networks as key barriers women face to entrepreneurship, with caring responsibilities noted as a particular barrier to starting a business twice as likely for women than for men.
Labour is keen to position their Government as pro-business and pro-wealth creation and while they have not specifically addressed the gender imbalance, they are looking to address barriers to entrepreneurship more generally.
Having advised entrepreneurs and business owners for many years, we know the impact these barriers can have both on your business and personal priorities with the two being very much intertwined.
Tax raid in the Autumn Budget
Rachel Reeves has all but confirmed that we will see tax rises in the Autumn Budget, taking place on 30 October. These rises are to help plug the £22bn debt inherited from the Conservatives Government.
Labour has already confirmed it will introduce VAT to private school term fees from 1 January 2025, making the UK an outlier in Europe by taxing education.
Other tax changes could include changes to CGT, IHT, Pensions Taxation, SDLT and Benefits in Kind.
You can read more on our predictions here.
Connect with us
Whilst it is great to see that Labour is making progress in closing the gender economic gap, there is still a long way to go to have full gender economic parity.
Over the next few months and post the Autumn Budget, we could see significant changes, in particular to the tax landscape. As independent financial planners, we can support you with any concerns you may have regarding your personal finances.
Backed by Forvis Mazars, a leading global professional services network, we can also support you with your business needs, offering audit, accounting, tax and financial advisory services. If you would like to speak with one of our team, please do not hesitate to get in touch.
