Reform propose tax breaks on overtime to 'restore appeal of a strong work culture'

Tax is all this Labour Government can think about, and we were warned - Nana Akua

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GB NEWS

Oliver Partridge

By Oliver Partridge


Published: 23/05/2026

- 22:49

According to the party, nine in ten workers would benefit from tax-free overtime under the scheme

Reform UK has unveiled a £5 billion tax break proposal designed to benefit workers who pick up overtime beyond the standard working week.

The policy, dubbed the "hard work bonus," would eliminate tax on overtime for anyone earning below £75,000 annually, who also works more than 40 hours per week.


According to the party, nine in ten workers would benefit from tax-free overtime under the scheme.

Nigel Farage said the measure would "restore the appeal of a strong work culture" across Britain.

Reform claims the policy's annual cost could be covered through a broader £40 billion programme of spending reductions and efficiency savings.

A warehouse employee putting in six extra hours per week would see their annual income rise by some £700 under the scheme.

Meanwhile, a Band 3 prison officer could pocket an additional £1,300 each year if they work eight hours of overtime per week.

The policy announcement comes as Reform targets voters in traditional Labour strongholds, with the party seeking to block Andy Burnham from winning the upcoming Makerfield by-election.

Reform

According to the party, nine in ten workers would benefit from tax-free overtime under the scheme

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Mr 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."

Despite Mr Farage's confidence, both Labour and Conservative colleagues were quick to attack the proposal as financially unviable.

Treasury Chief Secretary Lucy Rigby accused Mr Farage of false promises, and 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 £40 billion of cuts would fall and which public services would pay the price."

Shadow Chancellor Sir Mel Stride was equally dismissive, noting "Reform's proposal sets out no new savings to fund the £5 billion price tag."

He added: "Reform do not do the serious thinking, which is why they keep promising things they cannot deliver."

Reform previously proposed ending Personal Independence Payments (PIP) for people with anxiety disorders and would strip EU citizens of their right to claim benefits, which it argued could fund the hole.

The party added it would change related EU law, such as Working Time Regulations, to ensure people can "take advantage of this tax break".

Last year, the Trade Unions Congress estimated 3.8 million people worked an average of 7.2 unpaid hours a week, losing out on earnings of £8,000 per year.

The body said those in the teaching and health and care jobs were most likely to be working unpaid hours.

Helen Miller, from the Institute of Fiscal Studies, said the Reform proposal was "problematic in principle and practice", and "if the intention is to increase labour supply, it is not clear why an incentive should be targeted at increasing the hours of employees already working at least 40 hours a week".

Ms Miller said it could also create an incentive to have more work classified as "overtime" in order to reduce tax payments, adding “evidence from a similar French policy is not encouraging".