Reform UK Proposes £20k Tax-Free Threshold
Major Tax Policy Shift Announced by Reform UK
Nigel Farage has unveiled Reform UK’s flagship economic policy: increasing the personal tax-free threshold from £12,570 to £20,000. Speaking at an event in Central London, Farage outlined how this would constitute the most significant change to the UK’s tax landscape in recent years.The aim, according to Reform UK, is straightforward: put more money in the pockets of the UK’s lowest and middle-income earners. The party argues this would provide a clear incentive for employment and reduce reliance on state benefits.
Ambitious Savings to Cover the Cost
To pay for these tax cuts — projected to cost up to £80bn per year according to the Institute for Fiscal Studies (IFS) — Reform UK has set its sights on major government programmes:- Ending Net Zero initiatives (current annual expenditure: £45bn)
- Scrapping the diversity, equity, and inclusion (DEI) agenda (estimated saving: £7bn)
- Ceasing asylum seeker accommodation costs (annual cost: £4bn)
- How would the revenue shortfall from the increased tax-free threshold be managed long-term?
- What would be the broader economic impact if major government programmes were scrapped?
- How will DOGE’s local council programmes translate to national efficiency savings?
- Stay attuned to policy updates as parties refine their manifestos.
- Consider the practical implications for payroll, benefits planning, and organisational budgeting should such a tax shift occur.
Additionally, Farage announced the formation of a Department of Government Efficiency (DOGE), inspired by Elon Musk, aimed at rooting out waste and unnecessary spending at both local and national government levels.
Party Control and Immediate Actions
As of May 2025, Reform UK controls five local councils. The party has moved swiftly to instruct staff in diversity and climate roles within these councils to find new employment, in line with its cost-cutting strategy. Farage pledged to demonstrate measurable cost savings at the local level over the coming year.Financial Impact: The Numbers
The IFS “Be the Chancellor” tool highlights the magnitude of Reform UK's proposal:| Policy Change | Estimated Annual Cost/Saving |
|---|---|
| Raise tax-free threshold to £20,000 | -£80bn |
| Scrap Net Zero | +£45bn |
| Eliminate DEI agenda | +£7bn |
| End asylum accommodations | +£4bn |
Direct Statements from the Reform Leader
Farage stated: “If we win the next election, we will scrap Net Zero, eliminate asylum seeker accommodation, and end the costly DEI agenda. Yes, I do accept that these proposals are expensive, but I genuinely believe that we can pay for it.”He insisted the new threshold would “encourage people to get off benefits and go back to work” and maintained that thorough scrutiny of both local and national government spending will reveal opportunities for further savings.
On social spending, Farage confirmed his party's support for lifting the two-child benefit cap, noting it was a matter of principle rather than an endorsement of a “benefits culture.” He remained non-committal on the future of the pensions triple lock, stating only that "we are building out our policy platform" ahead of the next election.
What’s Next for Businesses and Taxpayers?
Reform UK’s policy platform is likely to prompt substantial debate among business leaders, tax professionals, and political observers. Key considerations include:Those interested in the party’s full policy platform can review the [Reform UK Manifesto](https://peninsulagrouponline-my.sharepoint.com/personal/sara%5Fwhite%5Fcroneri%5Fco%5Fuk/%5Flayouts/15/onedrive.aspx?id=%2Fpersonal%2Fsara%5Fwhite%5Fcroneri%5Fco%5Fuk%2FDocuments%2FMicrosoft%20Teams%20Chat%20Files%2FReform%5FUK%5FOur%5FContract%5Fwith%5FYou%5FManifesto%5Fjun2024%2Epdf&parent=%2Fpersonal%2Fsara%5Fwhite%5Fcroneri%5Fco%5Fuk%2FDocuments%2FMicrosoft%20Teams%20Chat%20Files&ga=1).
Far-reaching tax reform is on the table. The path to funding remains the critical question.
