The Reform party has unveiled a “crowd-pleasing” £70 billion tax giveaway, funded by cuts to government spending, foreign aid and scrapping net zero.
The party, led by Nigel Farage, has pledged to hike the tax-free personal allowance from the current £12,570 up to £20,000, saving almost £1,500 a year in tax for anyone earning more than the new limit. In addition, higher-rate taxpayers would see their threshold increased from the current £20,270 up to £70,000, which on its own would save the highest earners £4,000 a year in tax.
On top of this, Reform have also said they would provide a bigger tax break to married couples.
Rachael Griffin, tax and financial planning expert at Quilter, said: “The pledge to increase tax thresholds would be a welcome proposition for many, signalling a potential increase in take-home pay for hardworking people. As with many tweaks to the tax system, while this policy would lift lots of people out of having to pay income tax, it also means that those on higher-than-average salaries pay much less in tax too.
“There are lots of reasons why a lower tax environment can stimulate economic growth but measures like these can take time to feed through and on the face of it these kinds of pledges can look like a giveaway to the wealthier. Given the current economic environment, the optics of handing someone with a salary of £75,000 a nearly £5,500 per year saving while those on the average salary only save £1,486 might be difficult for many to stomach.”
Laura Suter, director of personal finance at AJ Bell, said: “Considering the two main parties have committed to maintaining the freeze on income tax bands, this move from Reform is a departure from its rivals in Labour and the Conservatives. The move is no doubt crowd pleasing, as it would bring millions out of having to pay income tax altogether and give millions more people a tax cut. However, clearly it represents a big cost and Reform have had to make cuts elsewhere to afford it.”
Reform has also set its sights on stamp duty, with a proposal to scrap stamp duty on all home purchases up to £750,000 and reduce the rates for more expensive properties.
Suter said: “We know that stamp duty is a disliked tax among the UK population and can prevent people from moving. Raising the threshold to be universal for all takes away the price advantage that first-time buyers currently have, as they get a stamp duty break on properties worth up to £650,000.”
Inheritance tax has also featured in the party’s manifesto, with plans to scrap the tax for estates worth £2 million or less and halve the rate of tax to 20%. Inheritance tax receipts have been rising steadily in recent years, driven by rising house prices across London and the South East. According to HMRC, IHT receipts between April 2023 and January 2024 reached £6.3 billion.
Reform has vowed to fund tax cuts by scrapping net zero targets, which the party says would save £30 billion a year over 25 years, and cutting government departments and quangos which would save £50 billion a year.
Griffin commented: “As the battle lines are drawn, it is clear that Reform UK is not just chipping away at the status quo, it is shooting for the moon. Whether these tax pledges will prove to put pressure on the Tory and Labour policies remains to be seen, but they’re certainly poised to shake up the conversation on Britain’s fiscal future.”
Pension changes
In a departure from the main political parties, Reform failed to make mention of the state pension, which has featured heavily across other party manifestos. Instead, the party’s plans to increase the minimum income threshold for income tax would act as a boost for pensioners, who may find themselves paying income tax as a result of the frozen tax thresholds.
However, Reform unveiled several other major pension policies, including a review of pension provision in the UK to tackle complexity, cost and poor returns. The party highlighted the Australian model as a good example, which may lead to Reform pushing to increase minimum pension contributions as well as a move towards scheme consolidation.
Reform has also outlined its plans to get pension schemes investing in the UK, with bold proposals whereby 50% of each national utility would be managed by the UK’s pension funds.
