Britain’s long-term fiscal stability will depend less on increasing the burden on existing taxpayers and more on expanding the workforce, according to leading tax advisers, who argue that unlocking the country’s economically inactive population could provide a significant boost to growth and public finances.
The warning comes after the latest HM Revenue & Customs figures showed that tax receipts from internationally mobile taxpayers remain substantial, with non-domiciled and deemed domiciled individuals contributing £13.6bn in income tax and national insurance liabilities in the 2024/25 tax year — a 9 per cent increase despite a 1 per cent fall in their numbers.
However, advisers at Blick Rothenberg argue that relying on a relatively small group of taxpayers cannot provide a sustainable solution to Britain’s fiscal pressures.
“The UK’s ability to fund public services and support economic growth ultimately must depend on the strength and breadth of its overall tax base, not one small group carrying all the fiscal weight,” said Elisa Sofocli, a partner at the firm.
The bigger opportunity, she said, lies in tackling economic inactivity. Latest Office for National Statistics figures show around 9.1 million working-age people are economically inactive — a group that includes people who are not seeking work, such as students, full-time carers and early retirees, alongside those who could return to employment with the right support.
Sofocli estimated that helping just 1 per cent of this group back into employment could bring around 91,000 people into the workforce and generate more than £1bn a year in additional income tax and national insurance receipts.
That figure would come before accounting for wider economic benefits, including increased consumer spending, stronger business activity, higher corporation tax revenues and reduced welfare costs.
The analysis highlights a broader challenge facing policymakers: Britain’s tax base has become increasingly dependent on a smaller working population while economic growth remains weak and demand for public spending continues to rise.
Rather than focusing solely on raising taxes, Sofocli said the government should prioritise measures that increase employment, productivity and skills.
“A more targeted regional approach, linking skills, training and employment opportunities to both current and future labour market demand, could help people back into work more quickly,” she said.
Such policies, she argued, would also help businesses facing recruitment difficulties while strengthening the UK’s ability to compete in future growth sectors.
The debate comes amid continued uncertainty over Britain’s international tax regime following reforms affecting non-domiciled residents. HMRC data covering 2024/25 does not yet capture the full behavioural impact of the new Foreign Income and Gains regime, leaving questions over whether wealthy internationally mobile individuals will remain in the UK or relocate elsewhere.
Sofocli warned that conclusions about the impact of the reforms should be based on evidence rather than speculation.
“The number of people who have relocated, remained in, or been attracted to the UK during 2025/26 will only become clear as future HMRC data is published,” she said.
For policymakers facing pressure to fund public services while supporting economic growth, the central issue is increasingly clear: Britain’s fiscal resilience may depend not simply on how much tax existing earners pay, but on how many more people can be helped into productive employment.
Building a broader workforce, improving skills and raising participation could offer a more durable route to stronger public finances than repeatedly increasing the tax burden on those already contributing.
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