Reform UK Proposes Scraping Income Tax on Overtime for Workers Earning Under £75,000

Reform UK announced a policy to exempt income tax on overtime hours for workers whose earnings are below £75,000. This measure, termed a 'hard work bonus' by the party, is estimated to provide a full-time nurse working six additional hours per week with a saving exceeding £1,300 annually.

The party indicates the policy would incur a cost of £5 billion each year, asserting that this could be financed through proposed cuts to welfare programmes. However, the Labour Party, Conservatives, and Liberal Democrats have all questioned the feasibility of Reform UK's funding mechanism.

Reform UK leader Nigel Farage stated that the overtime proposals would 'finally make work pay, drive up productivity and restore the appeal of a strong work culture once again'. He argued that working individuals 'look around and see that work simply doesn't pay, that benefits often match or beat what they earn, and that ordinary families are being dragged into higher tax bands with nothing to show for it'.

The party claims its £75,000 threshold would benefit 90% of the workforce, estimating that approximately 3.2 million workers currently receive overtime pay. Reform UK has previously advocated for ending Personal Independence Payments (PIP) for individuals with anxiety disorders and removing the right of EU citizens to claim benefits, intending to use savings from these policies to fund the proposed overtime tax cut. The party also plans to amend related EU legislation, such as Working Time Regulations, to facilitate this tax break.

Treasury Chief Secretary Lucy Rigby criticised Reform UK's plans, stating, 'If Reform want people to take their unfunded, back-of-a-fag packet plans seriously, they should come clean about where their £40bn of cuts would fall and which public services would pay the price.' Shadow Chancellor Sir Mel Stride added, 'Hard work should be rewarded, which means getting taxes down in a fair and responsible way. Reform's proposal sets out no new savings... they keep promising things they cannot deliver.'

Helen Miller from the Institute of Fiscal Studies described the Reform UK proposal as 'problematic in principle and practice'. Miller questioned the targeting of incentives towards employees already working at least 40 hours a week if the goal is to increase labour supply, and noted that a similar French policy yielded 'not encouraging' results, potentially creating an incentive to reclassify work as 'overtime' to reduce tax liabilities.