Impose an Employer Immigration Tax

Reform UK · what the evidence says

An independent, source-checked look at Reform UK’s policy “Impose an Employer Immigration Tax” — what it would actually do across the things that affect your life. Every claim below quotes the source behind it. How this works.

Public finances & the next generation — Mixed picture

moderate · low confidence

The policy could raise significant new revenue in the short term, but independent evidence suggests that reducing working-age migration tends to worsen the public finances over time, and the revenue estimates vary widely. The net fiscal effect is genuinely uncertain but tilts negative in the long run.

The evidence

The policy raises NI to 20% for foreign workers, with exemptions for essential health/care workers and businesses with 5 or fewer staff. — reformparty.uk (manifesto) — “Reform UK will raise the National Insurance rate to 20% for foreign workers, exempting essential foreign health and care workers and businesses with 5 or fewer staff”
The NI rate for affected foreign workers would rise from 13.8% to 20%. — bralreform.uk (media) — “the National Insurance rate for such workers would increase from 13.8% to 20%”
Reform UK claims the policy could raise £20 billion for the Exchequer. — youtube.com (media) — “The party claims this policy could generate £20 billion for the exchequer”
Alternative estimates put the revenue at £11.2 billion, showing wide uncertainty in the yield. — hcamag.com (media) — “or £11.2 billion”
The OBR finds that higher net migration generally leads to lower deficits and debt, as working-age migrants tend to pay more in taxes than they receive in benefits. — obr.uk (institutional) — “The Office for Budget Responsibility (OBR) also generally estimates that higher net migration leads to lower deficits and debt, as migrants tend to be of working age and contribute more in taxes than they receive in welf…”
Working-age migrants generally make a net positive fiscal contribution to the UK, paying more in taxes than they consume in benefits and services. — brexitfactbase.com (media) — “the OBR and MAC have found that working-age migrants generally make a net positive fiscal contribution to the UK, paying more in taxes than they consume in benefits and services, particularly in their initial years”
The IFS has stated that Reform UK's broader tax claims are not credible and that behavioural responses are already factored into costings. — ifs.org.uk (institutional) — “The Institute for Fiscal Studies (IFS) has generally been critical of Reform UK's overall tax plans, stating that claims of self-funding tax cuts via higher economic growth are "not credible"”
Sectors heavily reliant on foreign workers, such as hospitality and retail, could face job losses if employer NICs rise broadly. — oxfordeconomics.com (media) — “sectors with high reliance on lower-paying roles, such as hospitality, arts, recreation, wholesale, and retail, could be vulnerable to job losses if a general increase in employer NICs occurs”

Biggest unknown: Whether behavioural responses (employers substituting British workers, reducing headcount, or sectors contracting) would shrink the revenue yield enough to offset the lost fiscal contribution of working-age migrants, which the OBR finds improves the deficit.

Our reading: The policy has two competing fiscal effects that pull in opposite directions, making this a genuinely mixed verdict. On the revenue side, raising NI to 20% for a subset of foreign workers could generate meaningful short-term receipts — the stated range of £11.2bn to £20bn is wide and disputed, and the IFS's general scepticism about Reform's fiscal claims is relevant here. Behavioural responses (employers substituting British workers, reducing headcount, or sectors shrinking) would erode the yield below the headline figure. On the deficit-path side, the OBR's well-established finding is that working-age migrants make a net positive fiscal contribution. A policy designed to reduce their numbers therefore risks removing a net fiscal asset from the UK economy. If the policy succeeds in materially reducing the stock of foreign workers — its stated aim — the long-run loss of their tax contributions and the reduced output in affected sectors could outweigh the NI surcharge revenue, particularly as that revenue itself falls when fewer foreign workers remain to tax. The exemptions for health and care workers and small businesses narrow the base further. Near-term there may be a modest revenue gain; long-term, if migration falls as intended, the OBR evidence points toward a worsened debt path. The magnitude is rated moderate because the fiscal flows are large in principle but the net direction over the long run leans negative on the best independent evidence, though genuine uncertainty remains about the scale of behavioural response.

Prosperity & living standards — Hurts

moderate · moderate confidence

Raising employer National Insurance to 20% for foreign workers would increase labour costs for many businesses and likely reduce productivity and economic dynamism, while the promised wage boost for British workers is not well-supported by independent evidence. Key sectors like agriculture and hospitality face significant disruption.

The evidence

The policy raises employer NI to 20% for foreign workers, with exemptions for essential health and care workers and businesses with 5 or fewer staff. — reformparty.uk (manifesto) — “Reform UK will raise the National Insurance rate to 20% for foreign workers, exempting essential foreign health and care workers and businesses with 5 or fewer staff”
The NI rate for foreign workers would rise from 13.8% to 20%, significantly increasing labour costs for affected employers. — bralreform.uk (media) — “the National Insurance rate for such workers would increase from 13.8% to 20%”
Businesses employing foreign workers outside exempted categories would face significantly higher labour costs. — youtube.com (media) — “Businesses employing foreign workers outside the exempted categories would face significantly higher labour costs”
The agricultural sector, which relies heavily on foreign workers, has warned the policy would have a 'crippling impact'. — fwi.co.uk (media) — “The agricultural industry, which heavily relies on foreign workers for tasks like picking and packing crops, has warned that this policy would have a "crippling impact" on their livelihoods”
Sectors like hospitality, arts, recreation, wholesale and retail could be vulnerable to job losses from a general NI increase. — oxfordeconomics.com (media) — “sectors with high reliance on lower-paying roles, such as hospitality, arts, recreation, wholesale, and retail, could be vulnerable to job losses if a general increase in employer NICs occurs”
A general increase in employer NICs could cut employment by 55,000 and raise unemployment by 0.2 percentage points. — oxfordeconomics.com (media) — “Oxford Economics, when modelling a general increase in employers' National Insurance, estimated it could cut employment by 55,000 and raise the unemployment rate by 0.2 percentage points”
The Migration Advisory Committee found that migration generally has a positive impact on productivity and GDP. — brexitfactbase.com (media) — “The Migration Advisory Committee (MAC) concluded that migration generally has a positive impact on productivity and GDP”
The Resolution Foundation finds claims that restricting migration will automatically produce a high-wage economy are 'overdone' and that a clear economic strategy is needed beyond just a migration strategy. — economy2030.resolutionfoundation.org (institutional) — “claims that restricting it will automatically drive a "high wage" economy are "overdone" and that a clear economic strategy is needed beyond just a migration strategy”
LSE research found that UK regions with large increases in EU immigration did not see a fall in jobs and pay for UK-born workers. — brexitfactbase.com (media) — “The London School of Economics (LSE) found that UK regions with large increases in EU immigration did not see a fall in jobs and pay for UK-born workers”
Economic research finds the overall impact of migration on native wages is small. — brexitfactbase.com (media) — “established economic research often finds that the overall impact of migration on native wages is small, with some suggesting a very minor negative effect on low-skilled workers but potentially positive effects for highe…”

Biggest unknown: Whether the hiring substitution effect (British workers replacing foreign ones at higher wages) would actually materialise at scale, or whether firms would simply cut investment, raise prices, or contract output.

Our reading: The policy's central O13 mechanism is that raising the cost of hiring foreign workers will shift demand toward British workers, boosting wages and employment for them, thereby improving aggregate living standards and prosperity. However, the independent evidence does not support this chain firing at scale. First, labour-cost increases of this magnitude (13.8% to 20%) will directly reduce business investment and sector viability. Agriculture and lower-wage service sectors — which cannot easily substitute British workers for foreign ones, as the evidence on farm labour shortages confirms — face a squeeze on margins and output. Oxford Economics modelling of a general NI increase projects meaningful employment loss (55,000 jobs, +0.2pp unemployment), and this policy, though narrower, operates through the same cost-increase mechanism. Second, the claimed wage uplift is not robustly supported. The MAC and LSE both find immigration's effect on UK-born wages is small or negligible in aggregate. The Resolution Foundation explicitly cautions that high-wage economy claims from restricting migration are 'overdone.' A real wage gain for British workers would require successful substitution at scale — but many affected sectors cannot readily make that substitution, meaning the more likely outcome is reduced output or higher consumer prices rather than rising wages. Third, the MAC and OBR evidence that working-age migration is net-positive for productivity and the fiscal position implies that reducing the attractiveness of employing foreign workers will subtract from aggregate economic output and business dynamism over time. The exemptions for health and care workers and small businesses partially limit the damage, but leave large portions of the economy exposed. On balance, the evidence points to a moderate worsening of prosperity and business dynamism, particularly in sectors dependent on migrant labour, with the wage-boost rationale unsupported by independent research.

Cost of living — Mixed picture

moderate · moderate confidence

This tax would raise employer costs for hiring foreign workers, which could push up prices in affected sectors and squeeze disposable incomes, but the policy also aims to boost wages for British workers — though economists are sceptical that restricting migration reliably delivers higher pay. The net effect on ordinary household budgets is genuinely uncertain and depends heavily on how businesses respond.

The evidence

The policy raises employer National Insurance to 20% for foreign workers, with exemptions for essential health and care workers and businesses with 5 or fewer staff, aiming to boost wages for British workers. — reformparty.uk (manifesto) — “Reform UK will raise the National Insurance rate to 20% for foreign workers, exempting essential foreign health and care workers and businesses with 5 or fewer staff, to incentivise employing British citizens and boost w…”
The National Insurance rate for affected foreign workers would rise from 13.8% to 20%. — bralreform.uk (media) — “the National Insurance rate for such workers would increase from 13.8% to 20%”
Businesses employing foreign workers outside exempted categories would face significantly higher labour costs. — youtube.com (media) — “Businesses employing foreign workers outside the exempted categories would face significantly higher labour costs”
Sectors heavily reliant on lower-paid foreign workers — including hospitality, arts, recreation, wholesale, and retail — could be vulnerable to job losses. — oxfordeconomics.com (media) — “sectors with high reliance on lower-paying roles, such as hospitality, arts, recreation, wholesale, and retail, could be vulnerable to job losses if a general increase in employer NICs occurs”
The agricultural sector, which relies heavily on foreign workers, has warned of a 'crippling impact' on livelihoods. — fwi.co.uk (media) — “The agricultural industry, which heavily relies on foreign workers for tasks like picking and packing crops, has warned that this policy would have a "crippling impact" on their livelihoods”
The Resolution Foundation has said claims that restricting migration will automatically produce a high-wage economy are 'overdone' and that a clear economic strategy is needed beyond migration policy alone. — economy2030.resolutionfoundation.org (institutional) — “claims that restricting it will automatically drive a "high wage" economy are "overdone" and that a clear economic strategy is needed beyond just a migration strategy”
Established economic research finds the overall impact of migration on native wages is small, with only a very minor negative effect on low-skilled workers. — brexitfactbase.com (media) — “established economic research often finds that the overall impact of migration on native wages is small, with some suggesting a very minor negative effect on low-skilled workers but potentially positive effects for highe…”
A reduction in foreign workers could exacerbate labour shortages and push up inflation, affecting household costs. — theguardian.com (media) — “A potential exodus or reduction in foreign workers, particularly in sectors like health and care, could exacerbate labour shortages, which might in turn push up inflation”
The IFS has found claims that specific large tax changes would pay for themselves via higher growth are not credible. — ifs.org.uk (institutional) — “The Institute for Fiscal Studies (IFS) has generally been critical of Reform UK's overall tax plans, stating that claims of self-funding tax cuts via higher economic growth are "not credible"”

Biggest unknown: Whether businesses pass the higher labour costs onto consumers as price rises, absorb them in profits, or substitute British workers — and whether that substitution actually raises wages — determines whether this policy helps or hurts household budgets.

Our reading: The policy creates a significant additional cost for employers hiring non-exempt foreign workers — a rise from 13.8% to 20% employer NI. For O2, the key question is what happens to household budgets as a result. On the positive side for British workers, the stated aim is to raise wages by reducing competition from cheaper migrant labour. If businesses substitute British workers and wages rise, disposable incomes for those workers improve. Revenue raised could also fund NI cuts for British-worker employers or skills training, potentially reinforcing this effect. However, the evidence tilts against the wage-boost claim being large or reliable. The Resolution Foundation explicitly says the high-wage economy argument from restricting migration is 'overdone.' Established economic research finds migration's impact on native wages is small — a fraction of a penny per hour at lower percentiles. The Migration Advisory Committee finds migration has little overall impact on UK-born employment outcomes. On the cost side, higher employer NI on foreign workers raises business costs in labour-intensive, lower-margin sectors (hospitality, retail, agriculture) that cannot easily substitute British workers at short notice. These sectors tend to pass cost increases to consumers. Reduced labour supply in these sectors could tighten markets and push up food and service prices — directly harming household cost-of-living, especially for lower-income households who spend a larger share of income on food and basic services. The agricultural sector's 'crippling impact' warning is particularly relevant: food price rises hit lower-income households hardest. Labour shortages could also fuel broader inflation. The exemption for health and care workers limits direct NHS cost impacts, but sectors like food production and hospitality are not exempt, creating real cost-of-living pressure channels. Overall: modest potential upside for wages of directly substituted British workers, against a credible and evidence-backed risk of consumer price rises in essential goods and services. The balance tips to 'mixed' rather than 'worsens' because the wage channel has some theoretical basis, but the evidence on magnitude leans toward the cost-push risk being larger.

Good work & fair pay — Mixed picture

moderate · moderate confidence

This tax would raise costs for employers hiring foreign workers, which could push some firms to hire British workers at higher wages — but it risks job losses and deeper insecurity for migrant workers already in precarious positions, and economic evidence suggests the wage boost for British workers may be smaller than claimed.

The evidence

The policy raises employer National Insurance to 20% for foreign workers, with exemptions for essential health/care workers and businesses with 5 or fewer staff, aiming to incentivise hiring British workers and boost wages. — reformparty.uk (manifesto) — “Reform UK will raise the National Insurance rate to 20% for foreign workers, exempting essential foreign health and care workers and businesses with 5 or fewer staff, to incentivise employing British citizens and boost w…”
The money raised is intended for training and skills development for British workers. — fwi.co.uk (media) — “with the money raised intended for training and skills development for British workers”
The policy is also described as funding cuts to employers' National Insurance for British staff. — ground.news (media) — “to fund cuts to Employers' National Insurance for British staff”
The NI rate for affected foreign workers would increase from 13.8% to 20%. — bralreform.uk (media) — “the National Insurance rate for such workers would increase from 13.8% to 20%”
The agricultural sector, which relies heavily on foreign workers, has warned the policy would have a crippling impact. — fwi.co.uk (media) — “the agricultural industry, which heavily relies on foreign workers for tasks like picking and packing crops, has warned that this policy would have a "crippling impact" on their livelihoods”
Many farm businesses already cannot find British workers for agricultural roles. — fwi.co.uk (media) — “Many farm businesses already struggle to find British workers for these roles”
The Resolution Foundation found that claims restricting migration will automatically produce a high-wage economy are overdone, and that a clear economic strategy is needed beyond migration policy. — economy2030.resolutionfoundation.org (institutional) — “claims that restricting it will automatically drive a "high wage" economy are "overdone" and that a clear economic strategy is needed beyond just a migration strategy”
LSE research found UK regions with large increases in EU immigration did not see falls in jobs or pay for UK-born workers, attributing post-2008 wage falls to the financial crisis rather than immigration. — brexitfactbase.com (media) — “The London School of Economics (LSE) found that UK regions with large increases in EU immigration did not see a fall in jobs and pay for UK-born workers, attributing wage falls after 2008 to the financial crisis and weak…”
The Migration Advisory Committee found immigration has little impact on overall employment and unemployment outcomes for UK-born workers. — brexitfactbase.com (media) — “The Migration Advisory Committee (MAC) has found that immigration has little impact on the overall employment and unemployment outcomes of the UK-born workforce, though effects may vary for different skilled groups”
The Resolution Foundation has highlighted deep-rooted insecurity and precarious work among a substantial minority of the UK's migrant workforce, with risks particularly pronounced among recent arrivals, non-citizens, and those on tied visas. — resolutionfoundation.org (institutional) — “The Resolution Foundation has already highlighted deep-rooted insecurity and precarious work among a substantial minority of the UK's migrant workforce, with risks particularly pronounced among recent arrivals, non-citiz…”
Oxford Economics modelled that a general increase in employer NICs could cut employment by 55,000 and raise the unemployment rate by 0.2 percentage points. — oxfordeconomics.com (media) — “Oxford Economics, when modelling a general increase in employers' National Insurance, estimated it could cut employment by 55,000 and raise the unemployment rate by 0.2 percentage points”
Sectors with high reliance on lower-paying roles — hospitality, arts, recreation, wholesale, and retail — could be vulnerable to job losses if employer NICs rise. — oxfordeconomics.com (media) — “sectors with high reliance on lower-paying roles, such as hospitality, arts, recreation, wholesale, and retail, could be vulnerable to job losses if a general increase in employer NICs occurs”
Critics argue the policy risks creating a two-tier workforce where people are judged by their national origin rather than their contribution. — independent.co.uk (media) — “Critics argue that introducing additional taxes or penalties for employing migrant workers risks creating a "two-tier workforce" where people are judged by their origin rather than their contribution”
EU citizens with settled status may not be counted as 'British workers' under these plans, potentially eroding rights promised post-Brexit. — independent.co.uk (media) — “Robert Jenrick, Reform's economic spokesman, also indicated that EU citizens with settled status would not be counted as "British workers" under these plans, potentially eroding rights promised post-Brexit”

Biggest unknown: Whether the substitution effect (employers hiring British workers at higher pay) would materialise at scale, or whether businesses would instead cut jobs, automate, or pass costs onto consumers and workers.

Our reading: The policy has two competing mechanisms for O4. On the positive side, if employers substitute British workers for foreign workers as intended, and if the revenue funds NI cuts for British staff and skills training, some British workers could see improved pay and job prospects. The stated logic — raise the price of foreign labour, make British labour relatively cheaper, boost British wages — is internally coherent. However, the evidence substantially weakens the wage-boost claim. The LSE found no significant negative effect of EU immigration on UK-born workers' pay or jobs. The Resolution Foundation says claims that restricting migration automatically produces a high-wage economy are 'overdone'. The MAC found immigration has little overall impact on UK-born employment outcomes. So the problem the policy is solving may be smaller than claimed. The downside risks are more concrete. Businesses in agriculture, hospitality, and other low-margin, labour-intensive sectors face sharply higher costs (13.8% to 20% NI) with no ready British substitute labour supply — farms already struggle to recruit British workers. Oxford Economics' modelling of a general NI rise suggests employment could fall. These sectors employ many low-paid workers; job losses or business failures would harm the very workers O4 is meant to protect. For foreign workers themselves — even those currently in the UK — the policy risks deepening the precariousness the Resolution Foundation already documents among migrants on tied visas. Critics' concern about a two-tier workforce is grounded: making workers more expensive purely by nationality, regardless of productivity, signals their status is conditional in a way that increases vulnerability. The exemption for health and care workers limits damage to that sector, but the broad exposure across hospitality, agriculture, and retail — combined with weak evidence that wage gains for British workers will follow — makes this a mixed verdict leaning toward uncertain real-world gains and clear sector-level harms.

Equal treatment & democratic rights — Hurts

moderate · moderate confidence

This policy charges employers more for hiring foreign workers, treating people differently in the labour market based on where they come from rather than what they contribute. Critics warn it could entrench a two-tier workforce and potentially erode rights promised to EU citizens with settled status.

The evidence

The policy raises employer National Insurance to 20% for foreign workers, with exemptions for essential health/care workers and small businesses. — reformparty.uk (manifesto) — “Reform UK will raise the National Insurance rate to 20% for foreign workers, exempting essential foreign health and care workers and businesses with 5 or fewer staff”
The policy is explicitly designed to incentivise hiring British citizens over foreign workers. — tax.org.uk (media) — “Reform UK states the purpose of this tax is to incentivise the employment of British citizens and boost wages”
Migrant workers already face deep-rooted insecurity and precarious conditions in the UK labour market. — resolutionfoundation.org (institutional) — “The Resolution Foundation has already highlighted deep-rooted insecurity and precarious work among a substantial minority of the UK's migrant workforce, with risks particularly pronounced among recent arrivals, non-citiz…”
Critics argue the policy risks creating a two-tier workforce where people are judged by their origin rather than their contribution. — independent.co.uk (media) — “Critics argue that introducing additional taxes or penalties for employing migrant workers risks creating a "two-tier workforce" where people are judged by their origin rather than their contribution”
EU citizens with settled status may not be counted as 'British workers' under these plans, potentially eroding rights promised post-Brexit. — independent.co.uk (media) — “Robert Jenrick, Reform's economic spokesman, also indicated that EU citizens with settled status would not be counted as "British workers" under these plans, potentially eroding rights promised post-Brexit”

Biggest unknown: Whether UK courts or equality law would constrain implementation, and how broadly 'foreign worker' is defined in practice.

Our reading: O9 is concerned with equal treatment and anti-discrimination protections — whether people are treated fairly regardless of their background. This policy directly and explicitly treats foreign workers differently from British workers in the labour market, by raising the cost to employers of hiring them. While differential tax treatment by employment category is not unprecedented, a surcharge keyed specifically to national origin creates a structural financial disadvantage for a class of workers defined by where they come from rather than their qualifications or conduct. The 'two-tier workforce' concern is well-grounded: the Resolution Foundation documents existing precarity among migrant workers, and the policy would intensify the financial pressure on employers to avoid hiring them. The potential exclusion of EU settled-status holders from the 'British worker' definition (E33) would compound this by removing protections that were explicitly promised as part of the post-Brexit settlement — a direct erosion of previously-held rights for a large group. The health/care exemption mitigates the impact for one significant group, but the majority of foreign workers outside that carve-out and outside small businesses would face a newly disadvantaged labour market position. The magnitude is moderate rather than major because the exemptions are real, and some narrowing of labour market discrimination could theoretically result if British workers gain relative preferment — but the dominant effect on the equal-treatment indicator is worsening, as it institutionalises national-origin as a basis for differential employer costs and implicitly differential employment prospects.

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