The gender tax gap has narrowed, but gender gaps in pensions and investments continue to be too wide, new analysis from AJ Bell has warned.
Government figures show that for the 2026/2027 tax year, an estimated 18.9 million income taxpayers are women and 21.9 million are men – a split of 46.3% women and 53.7% men.
Over the past decade, the number of men paying tax has risen by 22% (4 million), while the number of women has jumped by 42% (5.6 million). As a result, the percentage of taxpayers made up by men has dropped from 57.4% to 53.7%.
However, Sarah Coles, head of personal finance at AJ Bell, says that some of this is due to frozen tax thresholds.
“Closing a gender gap is usually a cause for celebration, but when it comes to the gender tax gap, it’s a far more mixed blessing – and not just because it means more women handing over their hard-earned money to the taxman.
“In some respects, this is a positive development because it reflects the fact the gender pay gap has been narrowing. However, this isn’t the full picture. The rise in female taxpayer numbers represents huge numbers crossing the threshold of the personal allowance, and in recent years, this is often simply because they have been dragged into paying tax by frozen tax thresholds.
“They might only have had a pay rise that helps them keep pace with inflation, so they’re no better off, but by crossing the threshold they qualify for the dubious honour of being a taxpayer.”
AJ Bell also stressed that women are failing to take the same steps as men to cut their tax bill.
The number of women with pensions isn’t dramatically different to the number of men thanks to auto-enrolment, however, the amount they hold is significantly different, the investment platform said.
The average held in pensions in 2020/22 among those aged 55 to 59 was £81,000 for women and £156,000 for men, creating a gender pension gap of 48%.
This is linked to the fact women are more likely to take career breaks for caring responsibilities, with pension contributions slipping down the pecking order.
The figures around ISAs also reveal a gap between men and women. While figures from 2022/23 show women make up the majority of people paying into their ISA (51.6%), they are heavily weighted towards cash. Women paid into 56% of cash ISAs, but only 42% of stocks and shares ISAs.
Coles said: “Closing the gap on tax-efficient investing isn’t straightforward, because hesitance owes a great deal to the gender pay gap and less secure incomes, which may lead some to feel they can’t afford the risks they associate with investment.
“There is risk involved, but it’s vital not to over-estimate the risk of investment losses and underestimate the risk that the value of cash can be eroded by inflation over time. Getting to grips with the reality can make a huge difference.”
Coles added that making small regular investments can build both wealth and experience over time and investing gradually can help to increase confidence.
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