Reform vows to scrap tax on overtime to benefit workers

Monday, May 25, 2026

The Reform party has proposed eliminating all tax on overtime pay for hours worked beyond 40 per week, aiming to benefit three million workers and reduce taxes for those earning up to £75,000 annually. Critics warn the policy could reduce overall productivity, lead to job losses, and be funded by substantial public spending cuts, while Reform argues it would boost work incentives and productivity.

The Reform party has proposed scrapping all tax on overtime as part of a £5 billion plan aimed at benefiting around three million workers, particularly in the North and Midlands. The policy would introduce an uncapped personal allowance applying to all hours worked beyond 40 per week, up to an annual income of £75,000, covering approximately 90 percent of workers. The move is intended to appeal to voters in key constituencies known as the Red Wall, including Makerfield, where Reform hopes to prevent Labour’s Andy Burnham from returning to the Commons.

Under the proposal, a warehouse worker at the South Lancashire Industrial Estate working six hours of overtime weekly could save around £700 a year, while a Band 3 prison officer at HMP Hindley working eight hours of overtime each week might gain approximately £1,300 annually. The party says the policy would be funded through cuts amounting to £40 billion a year if Nigel Farage were to become prime minister—measures that include capping foreign aid and ending welfare entitlements for foreign nationals.

Nigel Farage expressed support for the plan, stating that it responds to frustration among hard-working individuals who feel their extra efforts are not adequately rewarded. He added that the policy would "make work pay," boost productivity, and revive a strong work culture.

However, the proposal has faced criticism from economic experts and political figures. Julian Jessop, a fellow at the Institute of Economic Affairs, warned that incentivising longer working hours might reduce productivity and harm welfare. Jessop also suggested that some employers could react by redistributing total working hours among fewer employees, potentially causing job losses. He noted that many businesses already pay higher rates for overtime, and lowering overtime tax could lead firms to reduce pre-tax wages, negating benefits for workers. Jessop pointed to a similar policy implemented in the United States under the Trump administration, which he said has had unintended negative outcomes.

From the government side, Chief Secretary to the Treasury Lucy Rigby criticized the plan, accusing Farage of disguising cuts to the NHS and workplace rights under the guise of supporting working people. Meanwhile, Shadow Chancellor Sir Mel Stride acknowledged the importance of rewarding hard work but emphasized the need for tax reductions to be managed in a fair and responsible manner.

Reform’s announcement highlights ongoing debates about how best to support working individuals, balance incentives, and ensure the sustainability of public finances and welfare systems.