Blomfield stated, “I don’t think we’ll tax human labour, we’ll tax compute, [meaning systems like] data centres, and then we will use the proceeds to pay for government.” This perspective comes as AI systems are increasingly outperforming humans in specific tasks, with Blomfield noting, “These tools are performing beyond university professor level – they are actually beating humans in narrow domains.”

As AI technology continues to develop, it is expected to become generalizable by the end of 2026, which could lead to a dramatic reduction in the need for human involvement in tax accounting. Currently, the UK government relies on income tax and National Insurance for 42% of its revenue, while capital-based taxes contribute only 4%.

The implications of such a shift are significant, particularly as the Labour Party government may need to consider levying taxes on computing power as automation increasingly replaces traditional jobs. 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 note that the biggest change to HMRC income tax is anticipated to occur within the next five years. The current system, which is heavily dependent on wages, may no longer be sustainable in light of these technological advancements.

Details remain unconfirmed regarding how the government plans to implement such changes, but the conversation around taxing AI and computational resources is gaining momentum. As the landscape of work and taxation evolves, the need for innovative solutions becomes increasingly critical.

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