Reform UK's 'Immigration Tax': higher employer NI on foreign workers

Reform's 'immigration tax': dearer employer NI on foreign workers

Reform UK proposes charging employers a higher rate of National Insurance — around 20% instead of the standard 15% — on foreign workers' wages, to make hiring British staff comparatively cheaper. Exemptions have been floated for health and care and the smallest firms.

Status: Proposal — not law Region: UK-wide Party: Reform UK (Nigel Farage) From: Party announcements, 2024–25

What's proposed

Employers currently pay National Insurance of 15% on almost all wages above £5,000 per worker, regardless of nationality. Reform would introduce a higher employer rate — figures around 20% for foreign workers have been used — creating a standing cost gap in favour of hiring British citizens. The party has floated exemptions for the NHS and care sector and for very small businesses, and pairs the tax with its wider migration platform: abolishing Indefinite Leave to Remain and the Britannia Card.

The case for

Prices in a preference the party says voters want: firms can still hire globally, but pay for the privilege — revenue that offsets migration's fiscal costs.
Blunter tools (visa caps) block hires outright; a tax lets genuinely irreplaceable skills through at a price.
On a £35,000 salary the gap is worth about £1,500 a year per worker — enough to change hiring maths at the margin.

The case against

Employer NI is largely passed on — economists expect the cost to land on wages and prices, not just profits.
Sectors that can't find domestic staff (hospitality, logistics, care outside any exemption) face a cost rise, not a hiring switch.
Legal questions: differential taxation by nationality would collide with equality law and trade agreements; design details are unpublished.
It sits atop a 15% employer rate that businesses already call a jobs tax — the combined burden on affected roles would top 20%.

What it means for the calculator

This is an employer-side tax: your payslip wouldn't show it, but hiring, wages and prices would move. Business owners can weigh it against Reform's corporation tax cuts, which point the other way for the same firms.

Sources & further reading

Reform UK — party announcements on employer NI for foreign workers.
Institute for Fiscal Studies — evidence on employer NI incidence.
Migration Observatory — labour-market and migration data.

Figures are from public material and may change. Not financial, legal or tax advice.

Frequently asked questions

What is Reform UK's immigration tax?

A proposed higher rate of employer National Insurance — around 20% instead of the standard 15% — on the wages of foreign workers, making British hires comparatively cheaper. Exemptions have been floated for health and care and very small firms.

Would the immigration tax come out of workers' pay?

Not directly — it's an employer tax and wouldn't appear on payslips. But economists find employer NI is substantially passed through to wages and prices over time, so affected workers and consumers would bear much of it indirectly.

How much would it cost to employ a foreign worker under Reform's plan?

On a £35,000 salary, employer NI would rise from about £4,500 (15% above £5,000) to roughly £6,000 at a 20% rate — a gap of about £1,500 a year per worker versus a British hire.