Its all a question of Gender

A question that landed, not the first time and unlikely to be the last, asked:

At the moment we currently only record Male or Female on our payroll & HR systems.  Do you know if HMRC are likely to want us to include more options for employees that may be transitioning or don’t identify themselves with either gender?’.

We have also received other requests for no gender to be recorded on payroll for a client employee who didn’t want to identify as either gender.

With public attention on diversity matters, we see gender choice or neutrality being promoted and recognised, gender related stereotype: terms, items, toys, activities – being challenged or promotion actively curtailed.

Schools even went through a stage of removing toilet segregation, a banning of skirts to make uniform ‘gender neutral’ to promote gender equality for transgender students and combat complaints about decency (the skirts were being hitched up), and a Church of England school that was threatened with legal action by a parent concerned that some boys are being openly allowed to wear skirts/dresses to class.  

Modern liberal law through the application of the Equality Act 2010, provides a means for individuals to define elements of their life based on preference. Does this extend to Payroll and HMRC?   What about HR records?

PAYE law mandates the employer to report to HMRC the name, date of birth and gender of all employees. Can that gender be anything other than male or female? #PAYE law and the consequent Real Time Information (RTI) Full Payment Submission (FPS) requires that the employer both records and reports data item 11 ‘Current Gender’ with the values that must either be ‘M’ for male and ‘F’ for female.

So for taxation purposes there is no option of gender neutrality (yet), and no immediate plans to change.  

However there is some movement – the gender is not required to be applied to the end of year P60 with the Gender Box not present. However, Gender is still applied to form P45:

Where will an employer get the correct gender to record?

Gender is captured from employee documentation that shows right to work, whether that is birth certificate, passport or other documents or maybe self-declaration of the individual of their legal gender.

Either way, for payroll they must presently be male or female and the recorded gender used.  

Can an employee now choose to be something different?

With regards to some elements of HR – Yes.

But with PAYE tax and the application of National Insurance reporting and recording, the answer is NO unless this gender change is undertaken legally.

Gender Recognition

The Gender Recognition Act 2004 enables transsexual people to apply to the Gender Recognition Panel to receive a Gender Recognition Certificate (GRC). If granted a full GRC, that individual is then considered in law to be of the acquired gender and entitled to all the rights appropriate to a person of the acquired gender at that date and going forward. This includes rights to retire and receive state pension.

Going through the process of GRC even enables those whose birth was registered in the United Kingdom to obtain a new replacement birth certificate with the acquired name change and gender, however, it is not retrospective and does not change history.  HM Revenue and Customs (HMRC) is informed automatically.

The individual would also need to inform their employer with a copy of the certificate so that the payroll and National Insurance contributions going forward reflect the change.  HMRC updates its record with any gender and name change provided, informs the Department for Work and Pension (DWP), and restricts the individuals records to specialist staff at the HMRC’s Public Department 1.  

Under the Equality Act 2010, it is unlawful to discriminate against a person with protected characteristic of gender reassignment – a transsexual person, or a person mistakenly perceived to be a transsexual person.

What about Gender Pay Gap Reporting

For Gender Pay Gap Reporting (GPGR), the action is different. In cases where an individual does not self-identify as either gender, an employer may remove that individual from the GPGR calculations, even though for tax purposes a gender type of male or female has been applied.

What Gender is recorded where?

Employers may be in a position of needing to be able to record legal Gender for tax purposes, and gender choice (which could be different) to meet the requirement of the Equalities Act 2010.

So yes, legal current gender on payroll  must be male or female, but as for HR records, there may be a need for a separate HR gender preference or neutrality different to the payroll record gender.

Gender neutral and the HMRC FPS

Oh, as a bye the way, if Gender is missing for a single individual on the Full Payments Submission (FPS), HMRC will reject all of the employee records on that submission.

Other articles on Gender that may be of interest

Gender recognition application modernised
Gender neutral X passport case lost
Gender Recognition Certificate fee reduced
Public buildings to have separate male and female toilets

PAYadvice.UK 16/7/2023

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