Reform vows to axe tax on overtime in £5bn pitch to Red Wall

See more Daily Mail on Google - save us as a Preferred SourceBy JAMES TAPSFIELD, UK POLITICAL EDITOR Published: 08:28 BST, 24 May 2026 | Updated: 13:18 BST, 24 May 2026

Reform has vowed to axe all tax on overtime in a £5billion pitch to the Red Wall that could benefit millions of workers.The plan would introduce an uncapped personal allowance to cover all hours worked in excess of 40 hours a week.That would apply up to a total annual income of £75,000 – covering 90 per cent of workers. More than three million people receive paid overtime.The policy is designed to appeal to the 'Red Wall' seats in the North and Midlands, such as Makerfield where Reform is currently battling to stop Andy Burnham making a return to the Commons.The party says the policy would be funded out of the £40billion of cuts a year it has pledged if Nigel Farage becomes prime minister, including capping foreign aid and ending welfare entitlement for foreign nationals.However, economists warned it could create incentives for businesses to structure wages in bizarre ways, and encourage a long-hours culture instead of more productive work. Reform has vowed to axe all tax on overtime in a £5billion pitch to the Red Wall that could benefit millions of workersMr Farage said: 'I've grown increasingly aware of the deep frustration felt by hardworking people who put in the extra hours yet see no real reward at the end of the month.'They 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.'Today we're announcing our bold new policy that will finally make work pay, drive up productivity, and restore the appeal of a strong work culture once again.'Reform said a warehouse worker at the South Lancashire Industrial Estate in the seat working six hours of overtime a week would be £700 a year better off as a result of the tax break.A Band 3 prison officer at HMP Hindley in the constituency working eight hours of overtime a week could be £1,300 better off.However, Julian Jessop, a fellow at the IEA think-tank, warned Donald Trump had already tried a similar idea that was 'backfiring'. 'It is refreshing to hear any talk of tax cuts, but this proposal is a bad idea which would have lots of unintended consequences,' Mr Jessop said.'Incentivising some people to work even more hours is likely to damage productivity and harm welfare. Some firms might also spread the same total amount of hours among a smaller number of workers, meaning some lose their jobs.'Many firms already pay higher rates for overtime and that is a better market-led solution. If overtime is taxed at a lower rate, firms might just reduce pre-tax pay, leaving workers no better off.'The Trump administration has introduced a similar scheme in the US and it is already backfiring. For example, some firms are offering more hours at lower pre-tax rates, rather than boosting pay across the board. The US scheme is also proving to be a nightmare to administer.'Treasury Chief Secretary Lucy Rigby said: 'Nigel Farage pretends to stand up for working people but in reality he wants to cut back our NHS and strip away the hard-won boost to workplace rights Labour has delivered.'If Reform want people to take their unfunded, back-of-a-fag packet plans seriously, they should come clean about where their £40billion of cuts would fall and which public services would pay the price.'Shadow chancellor Sir Mel Stride said: 'Hard work should be rewarded, which means getting taxes down in a fair and responsible way.'Reform's proposal sets out no new savings to fund the £5 billion price tag.' The policy is designed to appeal to the 'Red Wall' seats in the North and Midlands, such as Makerfield where Reform is currently to stop Andy Burnham making a return to the CommonsReform Treasury spokesman Robert Jenrick was asked about the risk employers would decide to pay workers' first 40 hours at minimum wage and then overtime at an exorbitant rate.He told Sky News' Sunday Morning With Trevor Phillips: 'We don't think that's what's going to happen. There will be anti-avoidance measures in place.'He added: 'We've allocated £5billion to this and that includes an apportionment for some reclassification of unpaid overtime to paid overtime, so we expect there will be some changes within the labour market.'But if there is gaming of this, if there's abuse, then obviously we'll clamp down on that and we'll work with HMRC and the Treasury when we enter government to make sure that we get that right.'