Workers’ average yearly wages could eventually rise by £755 if Reform UK implements a trio of tax policies being proposed by the party, an analysis has suggested. A forecast of tax policies laid out by Nigel Farage’s party suggested it could boost the UK’s growth rate by 0.2 percentage points each year, modelling by the TaxPayers’ Alliance (TPA) found.
The think tank suggested it could mean £66billion added onto the size of the economy after 10 years, average wages would be £755 higher at the end of the same period and 35% of the lost receipts from tax cuts would be recouped as a result. The analysis suggested this would come from changes to inheritance tax, the personal allowance and the marriage allowances.
Dawin Friend, head of research at the TPA, said: “These Reform UK tax policies would make a significant difference in terms of boosting sluggish economic growth, and should be taken seriously.
“Scrapping inheritance tax, an increase in the personal allowance and more generous provisions for married couples would make a real difference, although they need to be part of a complete transformation of the tax system. But Reform UK’s policymakers have to clearly and cogently explain how they will ensure the spending restraint desperately needed for these plans to be fiscally credible.”
Reform UK has proposed the complete abolition of inheritance tax, an increase in the personal allowance to £20,000 and an additional £5,000 marriage allowance for one partner in a married couple.
The TPA, which is hosting a panel on slashing levies at Reform’s two-day national conference which begins today (FRI), warned that a tax-cutting agenda will not succeed without significant spending restraint.
Tom Clougherty, executive director of the Institute of Economic Affairs, said: “We know that taxes affect behaviour and that this has an economic impact. All politicians should think far more about what tax policies will boost growth.
“It’s important to recognise too, though, that in this case the growth effects of tax cuts only offset a third or so of the revenue loss. That means that tax cuts must be accompanied by meaningful cuts to public spending.
“Soft targets like diversity, equity and inclusion (DEI) net zero and asylum hotels might be a start – but I don’t think they’ll be anywhere near enough. If we want a lower tax economy, we need lower government spending too. That means dealing with deep-seated problems in welfare, pensions and the NHS.”
In May, Mr Farage said he wanted to make it easier for people to have children by backing more generous tax breaks for married people and scrap the two-child benefit limit. Currently married couples can transfer £1,260 of their personal allowance – the amount they can earn without paying tax – to a spouse or civil partner who earns more than them.
This results in a yearly tax cut worth £252 for some couples. In addition to raising the personal allowance for everyone from £12,570 to £20,000, Reform have also proposed exempting one partner in a marriage from paying tax on the first £25,000 of their income.
Reform UK’s deputy leader Richard Tice said: “Reform have a transformative economic agenda for the country and we are only just getting started.
“For a decade now we have had near to little growth under Labour and the Tories – instead of tinkering around the edges, Reform will get Britain’s economy motoring again.”
Political parties’ annual conferences this month come weeks before Rachel Reeves is likely to hike taxes to balance the nations; books at her autumn budget on November 26. The Chancellor has acknowledged the economy is “not working well enough” and promised a “tight grip” on spending.
Ms Reeves said she will prioritise curbing inflation and borrowing costs, keeping public spending under control by meeting her fiscal rules, and kick-starting economic growth. It comes after concerns over the public finances helped push UK long-term borrowing costs to 27-year highs ahead of the Budget date announcement.
In a video on X, the Chancellor said: “Britain’s economy isn’t broken. But I know it’s not working well enough for working people. Bills are high. Getting ahead feels tougher. You put more in, get less out. That has to change.”
She said “fixing the foundations” has been her mission for the past year, and touted Government action including trade deals with the US, India and the EU and making a start on tearing up planning rules to reach the target to build 1.5 million homes.
“But I’m not satisfied,” she said. “There’s more to do. Cost-of-living pressures are still real.
“We must bring inflation and borrowing costs down by keeping a tight grip on day-to-day spending through our non-negotiable fiscal rules. It’s only by doing this can we afford to do the things we want to do.
“If renewal is our mission and growth is our challenge, investment and reform are our tools. The tools to building an economy that works for you – and rewards you. More pounds in your pocket. An NHS there when you need it. Opportunity for all. Those are my priorities. The priorities of the British people. And it is what I am determined to deliver.”