The UK legal and accounting sectors paid £20.5bn in tax in 2020, up 5.4% from 2018, according to the latest report from TheCityUK, the industry-led body representing UK-based financial and related professional services, writes David Little, a Partner in our Corporate and Commercial department.
Over the past decade, the growth of these sectors has consistently outpaced the rest of the economy growth according to their research, with legal and accounting Gross Value Added (GVA) up by 27.8% compared to 5.3% for the wider UK economy between 2011-2020.
The report, 2021 Total tax contribution study for UK legal and accounting activities shows that the tax contributed by the two sectors made up 2.8% of total UK tax receipts in 2020. This is equivalent to the combined capital spending budgets for the Departments of Health, Education and Housing, Communities & Local Government, providing important and resilient source of government revenue which can support its levelling-up ambitions.
The UK Government was the largest beneficiary of the value distributed from the two sectors, taking almost half (47%) of the money generated in the form of tax. The next largest beneficiaries were employees in the form of wages and salaries at 33.6% of total value distributed, followed by partners at 19.4% of value in the form of profits after partner taxes.
UK based Legal and accounting activities form key part of the ecosystem which underpins the UK’s status as global financial centre. Together with financial services, the industry contributed an estimated £96.1bn in tax in 2020, 12.9% of total UK tax receipts, while making up 10% of total UK economic activity. This underlines the disproportionate positive contribution the industry makes to the UK’s capacity to pay for key public services.
In total, 755,800 people are employed by the UK’s legal and accounting sectors, 2.3% of the total UK workforce. It just goes to show even in light of the economic damage wrought by the Covid-19 pandemic the resilience of the UK’s legal and accounting sectors.
The above is accurate as at 19 October 2021. The information above may be subject to change during these ever-changing times.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.