Outrage Over Labour’s Move to Exempt Indian Workers from UK Taxes

The Labour government has finalised a new agreement with India that will allow Indian nationals temporarily transferred to the UK for work to be exempt from paying National Insurance contributions for up to three years.

National Insurance, though technically separate from income tax, functions in practice as a payroll tax in the UK. It is paid by both employees and employers and funds key public services such as the NHS, state pensions, and welfare benefits.

The measure is part of a broader UK-India trade and labour mobility agreement, which includes a “double contribution convention” enabling reciprocal treatment for British workers in India. The exemption applies to both employees and employers involved in temporary international assignments.

Critics have raised concerns about the potential impact on the UK workforce, noting that British workers continue to face increasing tax burdens—including a recent 2% rise in Employers’ National Insurance contributions announced in the latest budget. They argue that the new exemption for Indian workers unfairly disadvantages British employees, who are still subject to rising NI rates and continue to shoulder the full cost of funding the system.

Reform UK leader Nigel Farage slammed the move, claiming the deal effectively makes it about 20% cheaper for companies to employ Indian workers over British ones. “There are no caps on this deal,” Farage said, warning that the agreement could incentivise a significant influx of temporary foreign workers, adding to what he described as already unsustainable immigration numbers. According to government figures, approximately 500,000 Indian nationals have moved to the UK in the past two years.

Two-tier Keir betrays British workers. pic.twitter.com/4Aiw7W8lBf
— Nigel Farage MP (@Nigel_Farage) May 6, 2025

Farage criticised the government for failing to conduct an impact assessment or cost analysis. “This government doesn’t give a damn about working people,” he said, accusing the Labour Party of betraying British workers.

The Labour government has defended the deal as a necessary step to strengthen trade ties with India and boost economic cooperation. While framed as a standard international social security arrangement, the exemption amounts to a targeted tax break, significantly lowering employment costs for companies hiring from abroad.

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