The UK’s legal and accounting firms made a total tax contribution of £19.1bn in 2018, up 6.8% from 2016 for those firms studied, according to the latest report from TheCityUK.
The total tax contributed by the two sectors makes up 2.8% of total UK tax receipts, equivalent to over half the total UK government transport budget. This comprises of taxes borne (£8.3bn) and taxes collected (£10.8bn). For every £100 of turnover, UK legal and accounting firms contribute £38.40 in taxes.
In ‘Total tax contribution study for UK legal and accounting activities,’ TheCityUK found that the two sectors’ overall growth has outpaced wider UK economic growth in every year since 2010, with legal and accounting Gross Value Added (GVA) growing by 58% compared to 35% for wider UK GVA. This has resulted in the industry making up a greater proportion of the total UK economy in terms of GVA, up from 2.4% in 2010 to 2.7% in 2018.
In total, 743,000 people are employed by the UK’s legal and accounting sectors, representing 2.4% of the total UK workforce. EU statistics show that the UK has the largest number of people working in the legal and accounting sector of any EU country, with employees in the UK representing 23.5% of the total number of legal and accounting employees in the EU.
Anjalika Bardalai, Chief Economist & Head of Research, TheCityUK, said,
Legal and accounting firms are a key part of the UK’s world-leading financial and related professional services ecosystem. The expertise and experience they embody help to make the UK an attractive and competitive place to do business, serving as an important part of the mix which draws investment and jobs to the UK. They also make a substantial contribution in the form of high-quality jobs, and from taxes which help to pay for the public services which make the UK an attractive place to live and work.”
The provision of legal and accounting activities relies upon the labour of skilled personnel rather than inputs from suppliers. This means the future health and contribution of the industry is highly dependent on its ability to attract the best talent and those with the right skills, both from within the UK and from overseas.
The UK Government was the largest beneficiary of the value distributed from the two industries, taking 49.4% of this in the form of taxes borne or collected. The next largest beneficiaries were employees in the form of wages and salaries at 30.5% of total value distributed, followed by partners at 20.1% of value in the form of profits after partner taxes.