The UK legal and accounting sectors contributed £20.5bn in tax in 2020, up 5.4% from 2018, according to the latest report from TheCityUK.
Over the past decade, the growth of these sectors has consistently outpaced the rest of the economy growth, 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.
Anjalika Bardalai, Chief Economist & Head of Research, TheCityUK, said,
Legal and accounting activities are a key part of the UK’s world-leading financial and related professional services ecosystem, and a source of high-value jobs right across the UK.
“This report highlights the continued and increasing fiscal contribution the legal and accounting sectors make to the UK. This contribution has become even more striking in light of the economic damage wrought by the Covid-19 pandemic. The relative resilience of the legal and accounting sub-sector make it well-placed to make a strong contribution to the UK’s post-pandemic economic recovery.”
In total, 755,800 people are employed by the UK’s legal and accounting sectors, 2.3% of the total UK workforce. Despite the pandemic, there was a sustained level of investment in graduate recruitment with 13 out of the 15 study participants that provided additional data related to Covid-19 maintained their originally intended recruitment levels in 2020.
Watch the recording of the report launch webinar below, featuring:
- Ian Liddell-Grainger, MP for Bridgwater and Somerset and Chairman of the Taxation All-Party Parliamentary Group.
A presentation on the report's findings:
- Anjalika Bardalai, Chief Economist and Head of Research, TheCityUK.
A Panel discussion with Q&A:
- Emma Reynolds, Managing Director, Public Affairs, Policy & Economic Research (chair)
- Sandy Bhogal, Partner, Gibson Dunn, and Chair, TheCityUK Tax Group
- Janet Kerr, Senior Manager, Tax Transparency & Total Tax Contribution, PwC