Foreign nationals would be excluded from most benefits under a Reform UK government, the party has said.

The ban, part of a proposed overhaul of Britain’s benefits system, would include European Union (EU) nationals with settled status in the UK.

It would require renegotiating the UK’s Brexit deal with the EU, potentially meaning that British expatriates living in the EU could lose equivalent rights.

Reform claims the policy would save £21bn a year by its fifth year, but Labour insists the “vast majority” of migrants have no access to benefits and the Conservatives have dismissed the plans as “cobbled together”.

It is the latest announcement ahead of a speech on Monday by Reform’s shadow chancellor Robert Jenrick to formally unveil the party’s welfare plans.

“Forcing British workers to pay for the benefits of foreigners is not just economically illiterate but plain immoral,” Jenrick said in a statement.

“People are more than happy to support their neighbours in hard times, but the British taxpayer cannot afford to subsidise everyone on the planet, especially those who have not paid in.”

This year the government expects to spend a total of £322bn on welfare in Great Britain, or 10.6% of GDP, just over half of which goes to pensioners.

Reform says it has spent six months drawing up a 50-page plan that it claims will save a total of £50bn a year.

On Saturday, the party said it would replace the disability payments system, Pip, if it entered Number 10 at the next election.

The latest proposals would ban foreign nationals from almost all welfare payments including housing benefit, pension credit, jobseeker’s allowance, child benefit, free childcare and disability benefits.

Only a small number of exemptions would apply, including the war widows pension and Armed Forces compensation.

The party had previously pledged to ban foreign nationals from claiming Universal Credit.

Given those affected would include EU nationals with settled status who have an indefinite right to live, work and study in the UK – and have usually lived in the UK for a continuous five-year period – the Brexit deal secured under the last Tory government would need to be renegotiated.

The party said it had accounted for a potential £500m cost of British expats returning from the EU to the UK to claim benefits if the EU retaliates.

Labour said Reform’s plans would be “plunging the UK back into years of Brexit renegotiations and stripping support from potentially millions of people who have lawfully lived, worked and paid taxes in Britain for years, and in many cases decades”.

Helen Whately, the Tories’ shadow pensions secretary, said that rather than disputes about Brexit, “British people want welfare spending under control, abuse stamped out and dignity for people who are seriously disabled”.

The Lib Dems said fixing the NHS and social care was key to slashing Britain’s benefits bill.

And the Greens said it was “cowardly to take from the most defenceless when we should be taxing the super wealthy including those who are in the privileged position of accepting £5m donations”.

That is a reference to the £5m gift given to Reform leader Nigel Farage before he became an MP, which is being investigated by the parliamentary standards watchdog.