Corporate report

HMRC gender pay report 2023

Published 30 November 2023

Introduction

As HMRC’s Gender Equality Champion and Chief People Officer, I am pleased to publish our 2023 Gender Pay Gap (GPG) report.

I know that achieving a respectful, inclusive and representative workforce that reflects the society we serve is crucial. We strive to be an organisation where all colleagues are able to thrive, and where difference is valued. This demands focus, long-term organisation level goals, and accountability at all levels. 

Our published Public Sector Equality Duty (PSED) objectives provide us with a framework to achieve this, driving our actions to embed equality, diversity and inclusion into everything we do, taking a holistic approach to creating an inclusive workplace.

Since the publication of our last GPG report, we have strengthened our approach to equality, diversity and inclusion at HMRC – clarifying our responsibilities and accountabilities and becoming more data-driven and evidence led, to ensure we focus on the right priorities to achieve the greatest change.

Our ambition is for equal representation of men and women at all grades. Our diversity data identifies where in the Department there are differences in the representation of men and women, highlighting how distribution of women in our workforce drives gender pay gaps. Our data evidences that continuing progress at the same rate will not bring about the improvements required. We have set a Departmental level inclusion priority to increase workforce diversity at senior grades: increasing the representation of women in SCS, Grade 6 and Grade 7 levels will contribute to closing the gender pay gap.

Our mean pay gap has reduced from 6.6% in 2022 to 6%. However, our median pay gap has increased from 12.6% to 13.9%. Women make up 52.4% of our workforce overall but are over-represented in the administrative grades, making up 57.5% of colleagues in the lower quartile, and under-represented in the highest quartile (senior grades) making up 46.4% of colleagues in that quartile. Our highest disparity is in the highest quartile, highlighting the importance of focussing our efforts on balancing our senior grades.

There are differences in our GPGs between those who work full-time, and those who work part-time hours. Women make up over 50% of our current workforce, but the majority of our part-time colleagues are women with a large proportion in administrative grades. The biggest change in our GPG is for the median gap for part-time colleagues, which has increased from 4.3% to 6.2%.

I remain committed to deepening our understanding of the data, and of where and how we need to best focus our efforts. One of our actions from the 2022 GPG report was to analyse our diversity data across all protected characteristics and points in the employee lifecycle, in order to understand better where we are making good progress, where we have further areas for improvement and to target interventions. We completed this work, analysing diversity data from the last 5 years. From this, we developed 12 inclusion priorities with success measures at a corporate level, under which we are developing specific actions to work with business areas on. These priorities focus on where the greatest disparities or barriers for colleagues lie, or where progress is most needed.

Having corporate goals alone is not enough to effect change however. We said we would work with business areas to analyse data for each group against our organisation position, and work with them directly to identify what they already have in place and if it’s working, in order to inform future, targeted actions. These will be embedded into their People and Business plans and reported up to our Workplace and Workforce Steering Group, the committee with organisational responsibility for meeting our legal obligations under the Equality Act 2010, thereby firmly embedding equality and inclusion into our business. We have started this work, mapping data for each business against departmental priorities.

We firmly believe a holistic approach is needed to achieve our PSED objectives overall, and so along with our data-driven goals to create a representative workforce, we continue to work with colleagues to embed inclusive decision making into our business processes, and into our employee policies. We are undertaking a transformation of recruitment policy working across HR and Shared Services. As part of this review one of our key objectives is to optimise EDI outcomes, recognising that recruitment is a critical tool to both help the department bring in diverse talent and also progress it through the department. 

We will be undertaking a wider programme of upskilling across the department with relevant teams to ensure colleagues are aware of how to consider inclusion in business and policy decisions, and to help vacancy managers and others identify where it may be appropriate to use the provisions in the Equality Act to support our goal of balancing our most senior grades.

Additionally, we are setting clear parameters and expectations around staff networks, activity taking place in business groups, and actions being led at a regional level – by focussing different groups on different activities that best fit their purpose, we believe we can accelerate our progress in meeting our PSED objectives to create a representative, inclusive and respectful workplace. Specifically, we will be reviewing who we directly engage with across the business to bring them together to share good practice, and keep our collective efforts focussed on our organisation priorities and on the interventions that will make a difference.

Esther Wallington, Chief People Officer, HM Revenue and Customs

Overview

In 2017, the government introduced legislation that made it a statutory requirement for organisations with 250 or more employees to report annually on their gender pay gap. Government departments are covered by the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017, which came into force on 31 March 2017. These regulations underpin the Public Sector Equality Duty and require relevant organisations to publish their gender pay gap by 30 March annually. This includes:

• the mean and median gender pay gaps in hourly pay
• the mean and median gender bonus pay gaps
• the proportion of men and women who received bonuses
• the proportion of men and women full-pay relevant employees in each pay quartile

The gender pay gap is a measure of the difference between men’s and women’s average earnings across an organisation of the labour market. It is expressed as a percentage of earnings for men.

If a workforce has a particularly high gender pay gap, this can indicate there may be a number of issues to deal with, and the individual calculations may help to identify what those issues are.

The gender pay gap is different to ‘equal pay’. Equal pay legislation deals with unlawful pay differences between men and women who do equal work, meaning that they carry out the same jobs, similar jobs or work of equal value.

We have not included contractors, who are on HMRC’s payroll and provide a personal service to HMRC. Under the Equality Act 2010 (2017 Regulations, schedule 1, paragraph 2(3), we are not required to include data relating to a relevant employee if the employee is under a contract personally to do work, and the public authority does not have the data, and it is not reasonably practicable to obtain the data.

Pay elements used in the calculation include allowances, whereas voluntary salary sacrifice for childcare vouchers and cycle to work schemes are excluded.

HMRC supports the fair treatment and reward of all our people irrespective of gender through our values of:

• being professional
• acting with integrity
• showing respect
• being innovative

This report gives the gender pay gap data in HMRC as at 31 March 2023 and covers 69,238 employees as defined by Regulation 2(1) of the Equality Act 2019 (Specific Duties and Public Authorities) Regulations 2017.

Our calculations followed the legislative requirements and we confirm the data reported is accurate.

Organisation structure and pay

HMRC uses the standard Civil Service grading system ranging from Administrative Assistant (AA) to Senior Civil Service (SCS).

Since 2023, HMRC has increased its workforce by 988 with the largest decreases in our AA and Executive Officer (EO) grades. Overall, the number of women has increased by 337 and the number of men has increased by 651.

Women continue to be over-represented in administrative grades, where pay is lower, and under-represented in more senior grades.

Table 1: HMRC Data as at 31 March 2023 showing relevant employees

Grade (increasing seniority)	Number of men (% of men who work in this grade)	Number of women (% of women who work in this grade)	% Women
AA/AO	8,086 (24.5%)	11,439 (31.5%)	58.6%
EO	7,214 (21.9%)	8,226 (22.7%)	53.3%
HO/SO	12,495 (37.9%)	12,046 (33.2%)	49.1%
Grade 7/Grade 6	4,842 (14.7%)	4,006 (11.0%)	45.3%
SCS	272 (0.8%)	237 (0.7%)	46.6%
Non-grade	54 (0.2%)	321 (0.9%)	85.6%
Total	32,963	36,275	52.4%

Delegated grades – AA to Grade 6

As a Civil Service department, HMRC is governed by public sector pay policy, as set out in the Civil Service Pay Guidance for delegated grades. The Senior Civil Service (SCS) is covered by separate SCS pay guidance published by government. 

The pay guidance defines the overall financial parameters for Civil Service pay awards each year to ensure that these pay awards are consistent with the government’s overall objectives.

In HMRC, the AA and AO grades consist of a single spot rate of pay, whereas grades Officer to G6 each have basic pay ranges consisting of a minimum and maximum rate of basic pay. There are no target rates, steps or progression points within the pay ranges. Upward movement within the pay ranges is via annual pay awards.

Given our geographical offices across the UK, each grade has 2 basic pay ranges; London and national. The split between men and women on the London pay range is 49.5%% and 50.5% favouring women. The national pay range split is 47.3% and 52.7% favouring women employees. 13.5% of all women are on the London pay range, a increase of 0.8%. 14.5% of all men are on the London pay range, an increase of 0.3%.

HMRC’s settlement date for annual pay awards is 1 June. In February 2021, HMRC trade union members voted to accept a three-year pay and contract reform offer.

The 2022 pay award was the last of the annual awards to be paid from the three-year deal.

Our in-year reward system is Simply Thanks Vouchers of £20 for appreciation of good work and positive behaviours.

Dependant on the nature of the work undertaken in certain roles, additional allowances or supplements may also be paid, which together with the basic pay forms the annual salary.

The value of the pay awards is negotiated with our 2 recognised trade unions.

Senior Civil Service

Pay and grading for the SCS across the Civil Service are governed by the Cabinet Office.

The structure consists of 3 grades: Deputy Director (SCS1); Director (SCS2); and Director General (SCS3), and each grade has a set pay range with a minimum and maximum rate of basic pay.

The settlement date for annual pay awards is 1 April, and for 2022 the award comprised 3 elements:

• a consolidated award paid to all our people in the SCS
• a non-consolidated, non-pensionable award linked to exceptional (moderated) performance against objectives for the performance year 2021 to 2022
• a non-consolidated, non-pensionable award linked to short-term exceptional performance during the year

The parameters for SCS pay in HMRC is governed by the Cabinet Office and managed by HMRC’s Executive Committee. 

Gender pay gap data

Gender balance

Image showing that females make up 52.4% of the workforce at 36,275, down by 0.3% from 2022, and males make up 47.6% at 32,963, up by 0.3%.

2023 gender pay gaps in hourly pay

Mean hourly rates and pay gap percentage

Image showing the mean hourly rate is £18.00 for females and £19.15 for males, a gap of 6.0%. This is a decrease of 0.6% from 2022.

HMRC’s mean gender pay gap in hourly pay has decreased this year by 0.3% from 2022. A major factor would be due to more women having been promoted or recruited into administrative grades. The pay gaps are based on the hourly rate of pay rather than reduced take home pay for colleagues who are part-time, which ensures that the pay gaps are not further distorted. For example, 2 Assistant Officer national colleagues (one full-time and the other part-time) with an annual salary of £22,524 as at 31 March, will both have the same hourly rate of £11.66. 

We do know that while 22% of our workforce are part-time, a high 33% of women are part-time, compared with just 10% of men working part-time. Whilst this does not directly impact on the hourly rates of pay for GPG, working patterns probably impacts on career aspirations and choices. Part-time women (compared with men) have more representation in the AA to AO grades, but this favours part-time men in the senior grades and perhaps contributes to the imbalance we have in HMRC where a higher proportion of women remain in junior grades.

Median hourly rates and pay gap percentage

Image showing the median hourly rate is £15.47 for females and £17.97 for males, a gap of 13.9%. This is an increase of 1.3% from 2022.

The median gender pay gap however has increased by 1.3% from 2022.

The median gap would be influenced by the higher proportion of women compared to men in the administrative grades at AA and AO. This would therefore be a drop in the median salary when you look at the median for men and women in comparison.

The Gender Pay Gap figures are based on the snapshot date of 31 March for Ordinary Pay. Therefore, any payments made after 31 March would not be accounted for. The median pay gap would have had a positive effect and therefore would have been lower, had Pay Award related non-consolidated payments been accounted for. The non-consolidated payments were made to those who have reached the maximum of their respective pay range. This would have been the value of their pay award for their particular grade. 

The table below illustrates the median range length for women and men.

There continues to be a higher proportion of men in the senior grades of Grade 7, Grade 6 and SCS than of women. Therefore, men continue to have higher average earnings at the senior grades. 

Compared to 2022, there was a net increase of 3% favouring women at Grade 7 and Grade 6. 

Part-time employees make up 22.3% of the overall workforce of which 77.9% are women. 

91.1% of part-time colleagues are based outside of London of which 78.5% are women and 44.0% of the part-time workforce are of AO grade of which 80.2% are women.

Proportion of men and women by pay quartiles

Table 2 shows the proportion of full-time men and women in each pay quartile.

The pay quartiles are created by ranking each full-time employee in order from lowest earning (first quartile) to highest earning (fourth quartile).

The pay quartiles broadly reflect the uneven distribution of women through the grades in HMRC, ie that proportionally more women than men are in lower paid grades.

We will look further into the data and roles that are represented in these quartiles, to identify any justifiable disparities and develop actions accordingly (action 4).

Table 2: proportion of full-time men and women in each pay quartile

Quartile	Female (%)	Male (%)
First (lower) quartile	57.5	42.5
Second quartile	52.9	47.1
Third quartile	48.1	51.9
Fourth (upper) quartile	46.4	53.6

Bonus pay gap data

2023 bonus pay gaps

Mean bonus gap

Image showing the mean bonus pay gap between males and females is -0.9%, a decrease of 15.6% from 2022.

Median bonus gap

Image showing the median bonus pay gap percentage between males and females is 0.0%, the same as 2022.

Bonus received

Image showing 36.1% of females and 36.1% of males received a bonus in 2023. This was down by 2.7% for females and down by 1.8% for males from 2022.

For bonus pay we captured data for the 12-month period between 1 April 2022 and 31 March 2023 from our in-year Simply Thanks Vouchers scheme.

HMRC’s bonus pay gap has decreased this year as 36.1% of women and 36.1% of men received a bonus. This is a decrease from 2022 whereby 38.8% of women and 37.9% of men received a bonus. 

HMRC follows the standard public sector approach to pay and reward, and an agreed fund is reserved for payment of non-consolidated, non-pensionable awards linked to performance. As mentioned, our in-year reward scheme is the ‘Simply Thanks’ Voucher scheme. This is where vouchers of £20 are awarded as appreciation for good work and positive behaviours. Senior Civil Servants are not eligible for these vouchers, and they are more typically allocated to colleagues working in roles at grades AA-SO. The larger number of women in these grades drives our mean gender bonus pay gap, in the same way that it drives our mean gender hourly pay gap. 

The median gender bonus pay gap decreased to -0.9% which is due to the large number of Simply Thanks vouchers that we issued during the year and SCS bonuses that were paid out, as there are more women than men within the HMRC workforce.

Actions

We have made excellent progress over the last year to activate colleagues and identify where we need to focus our future activity. It is clear we still have much to do, as evidenced by the figures in this report.

Achieving our PSED equality objectives is a long-term goal, and many of our actions for the coming year are building on the ones set out last year, along with additional activity to further strengthen our approach of shared accountability to achieve data-led goals, and provide our colleagues with the data, tools and governance to be able to make inclusive decisions and take personal responsibility to create an inclusive workplace.

Action 1

We said we would undertake planned performance and recruitment reviews, including for the latter ensuring non-biased language in job adverts and ensuring inclusive role profiles. Within our review of Performance and Development conversations, we’ve created HMRC’s principles around job design and job adjustments. We aim to share these across the department in early 2024. This will support managers and colleagues to understand when and how to adjust roles where required, for example with special working arrangements. With regards the recruitment review, we completed the discovery phase of this project in October this year with a series of recommendations to take forward into new policy design. We aim to share our transformed policy with colleagues in spring 2024 having socialised with key stakeholders, including departmental trade unions, beforehand.

Action 2

We have monitored our Tax Specialist Programme since 2015 when we undertook specific action to ensure a balanced cohort – this is monitored annually. We want to ensure that the programme is inclusive and diverse and offers the opportunity for everyone to develop their full potential. We have therefore commenced a review involving our trade union colleagues, Business Learning Managers and trainees, along with representatives across business areas, in taking this forward.

To date this has focused on content, and delivery and assessment methodology. We have implemented changes to Stage 1 of the foundation learning which have improved flexibility and accessibility and will continue to consider as part of the progression of the review when considering the more specialised areas of the programme.

Action 3

We said we would undertake a disparity audit across multiple protected characteristics, in order to delve more deeply into the data, enabling us to develop more targeted data-led interventions. We have completed this audit, which considered data over the last 5 years across all the diversity characteristics that we have data on, from which we developed 12 organisation priorities, one of which is the aforementioned objective for improving representation of senior women in HMRC. 

These priorities will be reviewed annually by our Executive Committee, with annual milestones, up to 31 March 2028. We will review progress against all of our priorities annually, and revise them as new issues arise, as our insight and quality of data grow, and as we make progress against them.

Action 4

We said we would work with business areas to analyse more nuanced data throughout the employee lifecycle, taking working commitment into account, to identify gaps and opportunities, and develop specific actions focussing on improving representation across our workforce. We have reviewed business area data and priorities, and have been engaging directly with colleagues in each area leading on equality, diversity and inclusion activity. 

We have worked with them to identify where to embed EDI specific actions into their business and people plans, and agreed a governance route to provide scrutiny. We will continue this work, providing access to our recently developed Diversity Data Zone and information on how to use it, engaging with them to review the impact of any existing actions and develop new or additional interventions to support HMRC priorities. Progress will be scrutinised via our Workplace and Workforce Steering Group.

Action 5

Additionally, we have been working on a number of new operating models for our staff networks and Champions, business groups, and regional teams, in order to clarify types of activity and accountability within each group. We have been consulting on this model, which is fundamental to our strengthened approach to inclusion, and will implement it this year. This provides a clear framework to enable colleagues to contribute to meeting our EDI organisational priorities and Public Sector Equality Duties.

Action 6

We will work with our existing staff networks to continue to raise awareness of sex-based issues within the workplace, including in relation to differential representation, job-share opportunities, and women’s health.