Nigel Farage, Tories Attack ‘Two-Tier Kier’ on India Tax Terms

Keir Starmer, UK prime minister, during a meeting with Mohammad Mustafa, Palestinian Authority prime minister, at Downing Street in London, UK, on Monday, April 28, 2025. Mustafa told Bloomberg in January that his organization could replace Hamas as the governing power in Gaza. Photographer: Jason Alden/Bloomberg Photo by Jason Alden /Bloomberg

Article content

(Bloomberg) — Supply Lines is a daily newsletter that tracks global trade. Sign up here.

Article content

Article content

Reform UK leader Nigel Farage and Britain’s main opposition Conservative Party attacked Prime Minister Keir Starmer over the country’s new trade deal with India, criticizing a provision that would see some Indian workers pay less tax in the UK.

Article content

Under the deal announced on Tuesday, Indian employees of Indian firms seconded to the UK won’t have to pay Britain’s national insurance payroll tax for three years, with the same terms applying to British employees and firms in India. The UK government said it has 16 similar reciprocal agreements on double taxation with other countries, including Canada and the US.

Article content

Article content

The political blowback over the double taxation agreement cast a shadow over the UK-India deal, which was supposed to be a feel-good story for Starmer as he seeks to bounce back from weak local election results and show progress to voters on his key mission of lifting economic growth. 

Article content

Article content

The government declined to comment on how much it would cost the Treasury in lost revenues from the tax change, but said that the overall economic benefits of the trade deal would make the concession worth it.

Article content

Farage and the Tories said the measure amounted to disadvantaging British workers, because it would be cheaper for an Indian firm operating in the UK to employ an Indian national rather than a Brit.

Article content

“This government doesn’t give a damn about working people,” Farage, whose party topped the polls in local elections last week, said in a video on X. “The Labour Party have this time, in a big, big way, betrayed working Britain. This deal is truly appalling.”

Article content

The main opposition Conservative Party also attacked Starmer over the tax concession. Tory leader Kemi Badenoch said it was ‘two-tier taxes’ and that ‘when Labour negotiates, Britain loses.’ Robert Jenrick, the shadow justice secretary, said on X: “British workers come last in Starmer’s Britain.”

Article content

Article content

One Labour member of parliament, speaking on condition of anonymity, said many rank and file members were concerned about the tax plan. The Home Office and Home Secretary Yvette Cooper, who leads on issues of migration, was also unaware of the national insurance exemption for Indian workers, according to a person familiar with the matter.

Article content

The UK’s Business and Trade Secretary Jonathan Reynolds, however, defended the government’s action over the tax concession.

Article content

“I think some people are getting a little bit carried away as to what this actually means,” he said to reporters at a briefing in London on Tuesday, citing the similar agreements Britain has with the EU and South Korea, among other nations. “For our people in India, and Indian people in the UK, they don’t simultaneously pay into both social security systems.”

Article content

The question of the national insurance payroll tax is a sensitive subject for the Labour government: the levy was controversially hiked for employers at Chancellor Rachel Reeves’s inaugural budget last year, a measure that hit business confidence and led to a reduction in hiring. The Tories sought to weaponize that fact in their attacks on Labour on Tuesday.

Article content

The government is “putting up taxes for British workers while cutting them for Indian workers,” shadow trade minister Harriett Baldwin said in the House of Commons on Tuesday. “This deal looks like it’s subsidizing Indian workers while undercutting British workers.”

Article content

—With assistance from Ailbhe Rea and Alex Wickham.

Article content