🚹 Reform promised a “hard work bonus” now economists are calling it a disaster waiting to happen. Nigel Farage’s plan to make overtime tax-free was supposed to reward workers putting in extra hours. But critics say the proposal could mainly benefit higher earners while leaving many struggling workers behind. One economist warned that a single mum taking extra shifts might not even qualify while wealthier employees could simply reclassify hours as “overtime” and pocket the tax break. So who would really win from this policy? The working class
 Or people clever enough to game the system?

Reform’s overtime tax scrap ‘fundamentally flawed’ despite ‘good intentions’, warns economist

‘The sort of people the reform says they want to help wouldn’t benefit from this scheme,’ the finance expert predicted

An economist has warned that Reform’s plan to scrap tax on overtime pay is “fundamentally flawed”.

Speaking to GB News, Julian Jessop said he could not find a single economics expert who would endorse the plan.

 

Last week, Reform UK unveiled the ÂŁ5billion tax break, dubbed the “hard work bonus,” to eliminate tax on overtime for anyone earning below ÂŁ75,000 annually who also works more than 40 hours per week.

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

“It’s a well-intentioned plan that aims to address the problems I’ve been talking about of making work pay,” Mr Jessop began.

“But I think actually it’s fundamentally flawed.

“I’ve yet to find a single economist or tax expert who thinks it would actually be a good idea in practice. There are a number of problems with it.”

“It’s well-intentioned, and it’s good to be talking about a potential tax cut for a change rather than a tax increase. But I think this idea just wouldn’t work.”

An economist has warned that Reform’s plan to scrap tax on overtime pay is ‘fundamentally flawed’

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The finance expert then explained that the proposal would not be “particularly fair to those people who wouldn’t benefit from the scheme”.

“For example, the self-employed or perhaps a part-time worker who works an extra shift to make ends meet, they won’t benefit because they’re not working more than 40 hours a week. So I don’t think it’s necessarily fair.

“Suppose you’re a hard-working single mum working 20 hours a week and you take an extra shift in order to make ends meet, precisely the sort of people the Reform says they want to help. You wouldn’t benefit from this scheme.

“It’s also potentially very complex. And we’ve seen this in other countries. France actually experimented with effectively making overtime tax-free.

Finance expert Julian Jessop said ‘the sort of people the reform says they want to help wouldn’t benefit from this scheme’

“All that really happened is that a lot of relatively well-off people reclassified their time as overtime rather than normal working and pocketed the difference.

“There was no benefit to poorer people or to the economy as a whole. So there are lots of problems around it,” Mr Jessop warned.

The finance expert also raised questions about the scheme’s cost, suggesting the money could be better spent elsewhere.

“I think the bigger picture is that this is potentially going to cost £5billion at least.

“I think there are many better ways to spend 5 billion to help make work pay and to make general tax cuts.

“This could be lowering employers’ national insurance,” he suggested.

“Those are the sorts of things I think that people should be looking at instead,” Mr Jessop suggested.

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