Tom Blomfield, the founder of digital bank Monzo, has made a bold prediction: income tax could become obsolete within the next five years due to rapid advancements in artificial intelligence (AI). He suggests a revolutionary shift in taxation, proposing that society should consider taxing computational infrastructure instead of human labor.
Blomfield’s insights come as AI systems increasingly outperform humans in specific tasks. He stated, “These tools are performing beyond university professor level – they are actually beating humans in narrow domains.” This technological evolution raises questions about the sustainability of the current income tax system, which heavily relies on wages for government revenue.
Currently, income tax and National Insurance contribute to 42% of the UK government’s revenue, while capital-based taxes account for a mere 4%. As AI continues to evolve, Blomfield believes that traditional tax accounting could require virtually no human involvement, further complicating the reliance on income tax.
By the end of 2026, AI is expected to become generalizable, meaning it could perform a wider range of tasks that were once thought to require human intelligence. Blomfield remarked, “They’re not yet generalisable, so they’re very narrow geniuses, but by the end of 2026 they will be generalisable.” This shift could lead to a significant restructuring of the British economy.
As automation replaces more jobs, the Labour Party government may need to consider taxing computing power to compensate for the loss of income tax revenue. A recent report from Morgan Stanley warned that the UK could face an AI-driven employment crisis more acutely than other nations, with entry-level job advertisements dropping by 35% since the launch of ChatGPT.
Observers are closely watching these developments, as the biggest change to HMRC income tax is anticipated to occur within the next five years. Blomfield’s vision of a tax system that prioritizes computational resources over human labor could reshape the landscape of work and taxation in the UK.
As discussions around the future of work and taxation continue, the implications of AI on the economy and society at large remain to be fully understood. Details remain unconfirmed, but the conversation initiated by Blomfield is one that could pave the way for a new era in fiscal policy.
