UK Shift Workers Could See Bigger Paychecks Under Proposed Overtime Tax Changes

Last updated on May 29th, 2026 at 09:12 am

A bold new proposal by Reform UK could see a significant increase in pay for millions of shift workers and hourly workers in Britain each month. The party has tabled a proposal to drop the income tax on any hours worked over 40 a week — a change which would have an impact on the way overtime is paid to employees and could lead to a revival of the tax on hard work debate.

What’s the Overtime Tax Proposal?

Reform UK dubs its overall strategy a “hard work bonus.” The proposed overtime tax in the UK says that anyone who works over 40 hours a week would not be subject to any income tax on the additional hours they work. The party believes this would apply to around 90% of employees in the UK (around 3.2 million workers who are currently paid for overtime).

To give a real-life example of the cost of the impact on the pay of shift workers in the UK, Reform provided an example: if a nurse working full-time (40 hours/week) had an additional 6 hours of overtime each week, they could save more than £1,300 per year. The same cost savings were expected for warehouse operatives and prison officers, both of which are often required to work shift work and long hours to ensure the smooth operation of critical services.

A Meaningful Shift Worker Salary Boost

In industries such as the construction trade or jobs that require around-the-clock work, better paychecks for shift workers isn’t just a financial matter — it’s a moral one, too. Reform leader Nigel Farage suggested that the current system sees “hard working people looking around and seeing that work simply does not pay”, as benefits are “as high or higher” than take-home pay, and ordinary families are “trapped in higher tax bands without getting much out of it”.

The proposal is part of a wider debate on tax changes for workers in the UK that might encourage people to work more hours for better pay. Critics say under the current system, the additional pound of overtime is taxed at the same rate as earnings, thus reducing the incentive to work overtime.

The Cost — and How Reform Plans to Fund It

The UK overtime tax relief cost is estimated to be around £5bn per year by Reform. It will cost the party, and they claim this is being offset by measures to cut welfare expenditure, such as the proposed changes to Personal Independence Payments (PIP) for those with anxiety disorders and EU citizens’ benefit restrictions.

Reform has also announced it will review the EU-derived Working Time Regulations, which would allow workers to make the best use of the new tax break without risking breaching the legal limits on how much they can work.

Opposition and Expert Pushback

It has been widely criticised by politicians on both sides of the aisle for the proposal of overtime pay tax relief in the UK. Labour’s Treasury Chief Secretary Lucy Rigby said it was an “unfunded, back-of-a-fag packet” plan, calling for transparency on where £40 billion of additional cuts to Reform would go. Conservative shadow chancellor Sir Mel Stride said the proposal “sets out no new savings”, but he agreed hard work should be rewarded. It was referred to by the Liberal Democrats as “fantasy economics.”

Economists have also voiced worries. The UK overtime tax plan was described by the Institute for Fiscal Studies (IFS) as “problematic in principle and practice” by Helen Miller. She wondered what the point of incentives was to the employees to target those who work 40+ hours when they don’t work any hours at all. She also said the policy might be used by employers and workers to define regular hours as “overtime” in order to minimise their tax liability, as an analogous policy is in place in France, which must be avoided.

What It Means for UK Workers

Regardless of whether this particular tax allowance for the UK employees’ schemes succeeds or fails, what it has managed to achieve is putting the real and widely discussed issue in the spotlight: shift workers in various industries, such as health care, logistics, retail, and emergency services, who tend to put in long and abnormal shifts, with their pay being unable to cover the costs of taxation. According to a TUC study, around 3.8 million workers in 2024 would work an average of 7.2 hours of unpaid overtime per week, losing approximately £8,000 in earnings.

Any future developments in the UK overtime tax must ensure both the productivity aspect and the sustainability of public finances. For the moment, the issue of shift worker pay is firmly on the political agenda.

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