Full Breakdown
Reform UK's Proposed Tax on Employers of Foreign Workers Sparks Political and Legal Controversy
6/15/2026, 11:02:19 PM
Policy Announcement: New Payroll Tax and Migrant Levy
Reform UK unveiled a two-part tax plan that would raise the employer National Insurance Contribution (NIC) rate for foreign-national employees to the current 15 % while cutting it to 13.8 % for British workers. In addition, the party proposes an annual “migrant levy” per overseas employee, with illustrative rates of £3,750 for a full-time worker on the National Living Wage, £1,500 for earnings around £50,000 and £500 for salaries near £100,000. The measures are presented as a “British workers first, migrant workers second” system and are slated for implementation if Reform wins the forthcoming Makerfield by-election.
Brexit Settlement and Prior Tax Changes
The policy directly challenges the EU-UK Withdrawal Agreement, which granted settled status to roughly three million EU citizens residing in the UK. Those individuals were assured that their rights would be protected under the treaty. The plan also seeks to reverse the national-insurance increase introduced by Chancellor Rachel Reeves in 2025, framing the reform as a rollback of what Reform describes as a “job-destroying” tax.
Main Proponents and Opponents
- Robert Jenrick – Reform Treasury spokesperson and former Tory immigration minister, the chief architect of the proposal.
- Nigel Farage – Reform leader, who has pledged to abolish settled status and require five-year visa renewals for all foreign workers.
- Monique Hawkins – Acting chief executive of The 3 Million, representing EU citizens with settled status.
- Sir Mel Stride – Tory shadow chancellor, criticising the policy’s cost and timing.
- Labour Party – Opposes the plan, warning of higher bills and a breach of international obligations.
Financial Mechanics and Sector Impact
Oxford University’s Migration Observatory estimates that, as of December 2025, 12 % (754,200) of non-British workers were employed in retail, 11 % (713,800) in hospitality, and one-fifth in health and social care. In adult social care, 70.8 % of filled posts in 2024-25 were held by British staff, despite a recent ban on recruiting overseas personnel. Reform argues the levy would target low-paid sectors most reliant on migrant labour, while critics note the additional cost could exacerbate thin margins in those industries.
Official Statements and Government Response
Reform asserts the tax will “make it easier to employ British workers than to employ migrant workers” and will fund the reversal of Reeves’ NIC hike for domestic staff. UK government sources caution that the scheme would contravene the Withdrawal Agreement and could trigger trade-related tariffs, potentially raising food prices. Labour’s spokesperson described the plan as “half-baked” and likely to leave both businesses and the public worse off.
Opposition and Criticism
The 3 Million warned that the proposals “make a mockery of the promises that EU citizens were given when the UK left the European Union,” arguing they would erode settled-status rights. Sir Mel Stride labelled Reform’s by-election platform “the most reckless and expensive” in recent history, noting the absence of costed figures.
Conflicting Assessments and Uncertainties
Reform has not disclosed final levy rates, citing the need for further refinement before an election. No independent analysis has yet quantified the projected impact on welfare expenditures or on sector-specific labour costs, leaving a gap in evidence for the party’s claim that migrant labour inflates welfare spending.
Verbatim Quotes
- “We are going to design a tax system that backs British workers and puts their interests first every single time.” — Robert Jenrick, Reform Treasury Spokesperson
- “ Tory shadow chancellor Sir Mel Stride said: “In their desperation to try to win Makerfield, Reform are running the most reckless and expensive by-election campaign in history - throwing out a litany of policies in the hope something sticks.” — Sir Mel Stride, Tory Shadow Chancellor
- “Announcing that policy last year, he said any foreign workers in the UK would instead have to apply and pay for a visa every five years.” — Nigel Farage, Reform Leader
- “A Labour Party spokesperson said: “Nigel Farage’s latest half-baked plan would leave British businesses and British people worse off.” — Labour Party spokesperson
Upcoming Election and Potential Policy Trajectory
The Makerfield by-election, scheduled for Thursday, will determine whether Reform can translate its tax proposal into legislative action. A Reform victory could trigger legal challenges over the Withdrawal Agreement, while a Labour win would likely halt the plan and maintain the existing settled-status framework.
