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Summary: The Nicolson Report

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The Nicolson Report: Poverty Benefits No-One




London, 17 February 2026 - Taxpayers Against Poverty (TAP) publishes The Nicolson Report: Poverty Benefits No-One to demonstrate that poverty in the UK is neither inevitable nor affordable — and that economic reform, particularly of the tax system, is essential to reducing inequality and hardship at scale.


The central finding

The UK has persistently high poverty levels — over 14 million people, including 4.5 million children, now live in poverty, with deep poverty and destitution rising. This imposes enormous social and economic costs, estimated at over £75 billion per year through lost productivity, increased NHS demand, social care pressures, and reduced tax revenues.


The report’s central conclusion is clear:


Poverty benefits no one — and the current economic system actively sustains it.

At the heart of this failure is a structurally unfair tax system that over-taxes work and under-taxes wealth, allowing inequality to widen while starving public services of investment.


The economic case for tax reform

The report argues that poverty and excessive wealth are directly connected. When large concentrations of wealth are lightly taxed, government loses the resources needed to invest in the very systems that underpin prosperity — education, health, care, housing and infrastructure.

Key structural failures identified include:

  • Heavy reliance on taxes on earnings and consumption (income tax, National Insurance, VAT)

  • Light and inconsistent taxation of wealth, assets, and unearned income

  • An outdated local taxation system (Council Tax) that is regressive and unfair

  • Major loopholes in capital gains, inheritance tax, and property taxation

  • Tax subsidies that disproportionately benefit high earners

The result is a system that entrenches inequality and makes poverty harder to prevent.

Core tax reform proposals


The report sets out a practical, modernised approach to tax reform, designed to raise revenue fairly while reducing poverty and inequality.


1. Tax wealth and unearned income more fairly

  • Align Capital Gains Tax with Income Tax, ending the anomaly where income from wealth is taxed less than income from work

  • Apply National Insurance to investment income (dividends, rent, interest)

  • Introduce a modest annual tax on extreme wealth (e.g. assets over £10 million), affecting only the very richest while raising significant revenue

These measures would raise tens of billions annually while improving fairness.


2. Reform property and local taxation

  • Replace Council Tax with a proportional property tax or land value tax, or at minimum revalue properties and add higher bands for high-value homes

  • Strengthen Council Tax Reduction schemes to prevent low-income households falling into debt

This would shift the burden away from those least able to pay and better reflect real wealth.


3. Reform inheritance tax to reduce entrenched inequality

  • Close loopholes such as Business Property Relief and Agricultural Property Relief, which are widely exploited

  • Move toward a lifetime gifts or receipts-based system, taxing large inheritances more effectively while protecting modest transfers


4. End regressive tax subsidies

  • Reform pension tax relief, which overwhelmingly benefits high earners, by moving to a flat-rate or capped system

  • Redirect savings into poverty reduction and support for low-income pensioners


5. Tackle avoidance and evasion

  • Abolish or substantially reform non-dom status

  • Invest in HMRC enforcement and transparency to ensure taxes legally owed are actually paid


What tax reform enables

The report is explicit that tax reform is not an end in itself. It is the mechanism that allows government to:

  • Guarantee that social security covers the essentials of life

  • Make work a reliable route out of poverty

  • Invest in education, health services, social care and infrastructure

  • Reduce regional inequality through targeted investment

  • Prevent poverty rather than managing its consequences

In short, fair taxation funds prosperity — and prevents poverty.


Conclusion

The Nicolson Report makes a clear case:poverty in a wealthy country is a policy failure — and ending it is a policy choice.

Modernising the tax system so that wealth contributes fairly is economically rational, socially just, and essential to long-term prosperity. With political will, these reforms can reduce hardship, strengthen public services, and build a fairer, more resilient economy.

Poverty benefits no one — but ending it benefits us all.


 

About Taxpayers Against PovertyTaxpayers against Poverty is a UK-based independent advocacy group dedicated to tackling poverty, inequality, and social injustice by promoting economic policies that have a direct effect on reducing poverty and the unnecessary financial hardship. TAP seeks to influence national and local policy with well-researched and robust evidence of hardship and promote practical policy proposals using a direct approach to decision makers and other influencers.

 

TAP was founded by the late Rev Paul Nicolson and is led by Tom Burgess, author of From Here to Prosperity, a new political agenda for a sustainable economy and greater social justice, which proposes taxing wealth more and income less. TAP’s sister organisation and partner is Compassion in Politics which seeks to bring more honesty, respect and compassion into political life

 

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