Advisers with working-age female clients may need to think about the problem posed by a National Insurance hike to help women make the most of their income.
According to Rachel Harte, head of financial planning for Claro, there are many things people could do to "prepare their finances" for the change in NI announced by the government earlier this week (September 7).
This includes checking the tax code each year, maximising pension contributions and making sure that all the relevant tax credits are being claimed, she said.
With NI rising 1.25 percentage points for employees and employers, taking the hit on the payslip up from 12 per cent to 13.25 per cent, this has caused some - particularly younger, working-age adults - to be "worried about their finances and take-home pay", Harte said.
She pointed out that someone earning £30,000 a year would end up paying an extra £255 each year from April 2022, when the changes come into force.
While this is just £21.25 extra a month, this still can cause a "strain" on individuals and small businesses, which are still trying to recover from the Covid hit.
But while the new social care tax will affect both men and women in the UK, the problems are potentially worse for women, who already face gaps in their working life, lower pay and potentially lower pensions.
According to the latest Payspective salaries report 2021, the average salary in the UK for men is £33,923, compared to £27,981 for women.
The overall average of £31,461 lies squarely between those numbers, which means that men earn more than average while women earn less than average.
As pointed out by Payspective: "The difference is a whopping 21 per cent.
"Now, some of this can be explained by working hours. Even though we only look at full-time workers, some people work 35 hours and some work 55 hours per week and overall, it’s more often men doing 55 and women 35 than the other way around.
"Even when we leave differences in working hours out of the picture, though, and only look at the average UK salary per hour, the Office for National Statistics estimates a 7.4 per cent gap – called the gender-pay-gap."
Making the most of entitlements
So with women more likely to be in caring roles or working part time, it is crucial for advisers to make sure their female clients are making the most of any tax advantages.
Harte commented: "It is also essential to check whether you are entitled to tax credits. You are entitled to claim extra cash if you look after children, are a disabled worker or are on a lower income. This can be vital to help you make ends meet."
By making sure that female clients who fall into those categories are claiming their full entitlements, buying back years of pensionable service to ensure the full state pension and checking their tax codes, the financial strain of the additional NI hike can be mitigated, she said.