Farage wants tax cuts for working overtime – here’s who could benefit

Reform UK has pledged to scrap income tax on overtime pay for workers earning under £75,000 a year, with leader Nigel Farage calling his party “the true party of the workers now”.

Writing in The Telegraph, Farage said people who “put in the extra hours” at work currently see “no real reward at the end of the month”.

“At the moment, people in this country who work hard currently receive nothing from the state but eye-watering bills and sky-high taxes. Under a Reform UK government that will all change. Our message is clear: If you work hard, you will be rewarded,” he said.

The announcement of the “Hard Work Bonus” policy was made during the Makerfield by-election campaign, where Reform is running a close second to Labour – 40 per cent to 43 per cent according to Survation – ahead of the 18 June vote.

Who could benefit from Reform’s policy?

Under the current system, all earnings above the personal allowance of £12,570 a year are subject to income tax – including overtime pay.

Reform wants to exempt overtime hours from income tax entirely, for any paid work above a 40-hour contracted week for employees earning less than £75,000 a year. Conversely, the policy would not benefit workers in roles where overtime is unpaid nor those earning above £75,000.

Paid overtime is common among roles like healthcare workers, lorry drivers, warehouse operatives, construction workers and factory line staff – roles where extra hours are typically tracked and paid at an agreed rate.

How would the policy work?

The amount any individual worker would gain from Reform’s proposal depends on their hourly rate and how many overtime hours they regularly work.

Neither Farage nor Reform has published details on how the proposal would operate or how the calculations were made, and the figures could not be independently verified.

But he said that a factory worker on a standard 40-hour contract, working an extra hour and a half per day, would keep an additional £3 per overtime hour worked – saving more than £1,000 a year.

Similarly, a newly qualified nurse working six hours of overtime a week would keep an extra £5 per hour, saving more than £1,300 a year, he claimed.

According to the Office for National Statistics, around 11 per cent of UK employees work paid overtime.

The Trades Union Congress (TUC) estimates that a further 3.8 million people worked unpaid overtime in 2024, putting in an average of 7.2 hours a week for free — a group who would see no benefit from the policy.

How would Reform’s policy be paid for?

Farage estimated that the policy would cost the Government £5bn a year, based on average annual gross overtime pay across the workforce.

He said it would be funded from a broader £40bn package in annual cuts and savings that Reform previously proposed.

That package includes ending welfare entitlements for foreign nationals, capping foreign aid at £1bn, removing personal independence payments for those with non-serious anxiety conditions, scrapping net zero schemes, and reducing Civil Service back office roles.

Could it actually work?

Questions remain about how the policy would be administered.

In The Telegraph, Farage wrote that Reform would “introduce anti-avoidance rules to stop employers classifying regular working hours as overtime” and would reform Working Time Regulations to “ensure that people can safely take advantage of this tax break”.

Those regulations, inherited from EU law, currently cap the average working week at 48 hours – meaning workers who regularly clock overtime above that level must formally opt out in writing.

Reform says it would change those rules to make it easier for workers to take up the new tax break, but has not set out how.

It also remains unclear how the policy would work in practice. Currently, HMRC does not distinguish between regular pay and overtime – both are processed through the PAYE system and taxed in the same way.

Implementing the exemption would require employers to separately identify and report overtime hours to the tax authority – something current payroll systems may not be designed to do.

TUC General Secretary Paul Nowak said the proposal was “just a cynical gimmick”, arguing that “working people don’t need politicians encouraging a culture of ever-longer hours — they need decent pay rises, secure jobs and strong rights at work”.

Nowak also raised concerns about the impact on existing worker protections, warning that Reform wanted to “strip away protections that keep workers safe and healthy — including limits on excessive hours and rights to paid holidays and rest breaks”.

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