Farage pledges to scrap income tax on overtime hours

Nigel Farage has promised to strip income tax from overtime hours for workers earning less than £75,000, a Reform UK plan the party says would cost about £5bn a year and reward people already putting in more than a 40-hour week.

Reform is branding the proposal a “hard work bonus” and says it would leave a full-time nurse working six hours of overtime each week more than £1,300 a year better off. The party also says around 3.2 million workers receive overtime pay and that 90% of workers could benefit from the earnings threshold, although the policy would only apply to people whose overtime is paid in the first place.

That distinction matters. The Trades Union Congress said 3.8 million people worked an average of 7.2 unpaid hours a week in 2024, losing out on about £8,000 a year, with teachers, health workers and care workers among those most likely to be doing unpaid hours. A tax break on paid overtime would do nothing for that larger pool of underpaid labour, even as it offers a visible gain to workers whose employers already record and pay extra hours.

The policy was unveiled during the Makerfield by-election campaign, where Farage said workers at the Heinz factory would be more than £1,000 better off across the year. Reform has also said it would change related EU law, including Working Time Regulations, so people can “take advantage of this tax break.” Under current UK rules, overtime usually means any time worked beyond normal contractual hours, employers do not have to pay overtime at all, and average pay must still stay above the National Minimum Wage. The standard personal allowance is £12,570 for the 2026-27 tax year.

The funding question is now the sharpest test of the policy. Helen Miller of the Institute for Fiscal Studies said the proposal was “problematic in principle and practice” and questioned why an incentive should be aimed at employees already working at least 40 hours a week. Treasury Chief Secretary Lucy Rigby said Reform should explain where its unfunded cuts would fall and which public services would pay the price, while shadow chancellor Sir Mel Stride said the party had set out no new savings.

For now, the pledge is less a neat wage policy than a stress test of Reform’s fiscal arithmetic. It would hand a clear tax cut to some overtime workers, especially nurses, police officers and civil servants, but it would also exclude higher earners, leave unpaid overtime untouched, and force the party to show which welfare cuts or service reductions would cover the bill.