Nigel Farage has pledged to axe income tax on overtime as he vows to “make work pay”.

If Reform UK wins the next general election, people who earn less than £75,000 and work overtime above a 40-hour week will pay no income tax on the extra hours.

The £5bn a year tax cut announcement, made during the crucial Makerfield by-election campaign, will be seen as a direct challenge to Andy Burnham, the Mayor of Greater Manchester. Mr Burnham hopes to oust Sir Keir Starmer if he wins the seat.

It appears to be inspired by Donald Trump’s move to scrap tax on tips and is an attempt to make it harder for Labour to define itself as the party of working people.

On Saturday, Survation released the constituency voting intention for Makerfield – with Labour leading on 43 per cent, edging Reform on 40 per cent, Restore Britain on 7 per cent, the Lib Dems on 4 per cent, the Green Party on 3 per cent and the Conservatives on 2 per cent.

Writing for The Telegraph, the Reform leader said “people who put in the extra hours” at work see “no real reward at the end of the month” under the current system.

He added: “They look around and see that hard work in this country simply doesn’t pay, that benefits often match or beat what they earn, and that ordinary families are being dragged into higher tax bands with nothing to show for it.”

Taking aim at Labour, he said: “More significantly, perhaps, they also feel that the party that was once on the side of workers is now more on the side of welfare.”

Mr Burnham has been criticised over his plans to bring in a £35bn land value tax and and a £39bn social care levy. Both would see millions of people paying more.

The new Reform policy would benefit employees from nurses, to police officers and civil servants. Highlighting how it would benefit workers in Makerfield, Mr Farage said: “This would leave workers at the Heinz Factory over £1,000 better off across the year.

“Similarly, a newly-qualified nurse up the road at the Royal Albert Edward Infirmary who has a 40-hour contracted week and working an extra six hours of overtime each week would keep £5 extra for every hour of overtime worked.

“This would leave nurses there over £1,300 better off across the year.”

It is Mr Farage’s first major tax policy announcement since he said in October that he would drop his £90bn tax cuts pledge in an attempt to improve Reform’s image as a party of fiscal responsibility.

Reform believes its “hard work bonus” tax break will increase productivity by providing an incentive for people to work extra hours, as well as boosting spending in the wider economy by workers enjoying extra take-home pay.

The move will involve reforming relevant EU laws, such as the Working Time Regulations, to ensure that people can take advantage of the tax break. A series of anti-avoidance rules will also be drawn up to ensure that employers are not able to exploit the tax break by classifying regular working hours as overtime.

Reform believes the move will cost £5bn per year based on average annual gross overtime pay and assuming some reclassification of currently unpaid overtime.

The party said it would be funded out of the £40bn it intends to raise through cuts and savings each year – ending welfare entitlement for foreign nationals, capping foreign aid at £1bn, removing personal independence payments for non-serious anxiety conditions, scrapping net zero schemes and making cuts to Civil Service back office roles.

The announcement comes less than four weeks before the Makerfield by-election, which Mr Burnham must win in order to challenge Sir Keir for the Labour leadership.

The by-election was triggered by the resignation of former minister Josh Simons, who was elected in 2024 with a majority of 5,399 votes. Reform comfortably won every ward there at last month’s local elections.

Mr Farage’s party has dubbed the election fight between their candidate, plumber Robert Kenyon, and Mr Burnham, as a “David and Goliath” battle.

National polls have found a Labour Party led by Mr Burnham would beat Reform in a general election. A “Burnham bounce” would secure Labour 30 per cent of votes – three points ahead of Mr Farage’s party, according to a survey of 2,599 people carried out by More in Common.

Sir Keir may also be challenged by Wes Streeting, the former health secretary, who this week pledged to introduce a wealth tax if he was elected as leader. He said he would reform capital gains tax by bringing it in line with income tax, saying it could raise £12bn a year.

In response, Mr Burnham promised not to alter Rachel Reeves’s fiscal rules if he becomes prime minister, as he seeks to calm investor concerns over unconstrained public spending.