Yahoo Finance UK legal and accounting firms swell Treasury coffers with £20bn in taxes
The UK legal and accounting sectors contributed £20.5bn ($28bn) in tax last year, up 5.4% from 2018, new data revealed.
A report from TheCityUK said that during the past decade, the growth of these sectors has consistently outpaced the rest of the economy’s growth and the tax contributed by them made up 2.8% of total UK tax receipts.
This is equivalent to the combined capital spending budgets for the departments of health, education and housing, communities and local government, “providing an important and resilient source of government revenue which can support its levelling-up ambitions”.
“This contribution has become even more striking in light of the economic damage wrought by the COVID-19 pandemic,” said Anjalika Bardalai, chief economist at TheCityUK.
“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.”
The UK government took almost half (47%) of the money generated in the form of tax by the two sectors.
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The next largest beneficiaries were employees, via wages and salaries at 33.6% of total value distributed, followed by partners (19.4%) in the form of profits after partner taxes.
Together with financial services, the industry contributed an estimated £96bn in tax in 2020, 12.9% of total UK tax receipts, while making up 10% of total UK economic activity.
In total, the sectors employed 755,800 people, which makes up 2.3% of the total UK workforce.
Earlier this week the Institute for Fiscal Studies' (IFS) Green Budget 2021 said the UK government's manifesto-breaking announcements of tax rises are the biggest tax increases in more than 25 years, but they will still leave chancellor Rishi Sunak with "little room for manoeuvre" in this month’s Budget and Spending Review.
The tax rises will increase the UK’s tax take to its highest sustained level in peacetime and spending will amount to 42% of national income, more than 2% above the pre-pandemic spending level and its highest level in "normal times" since 1985, the IFS predicted.
Watch: Why UK tax hikes seem inevitable
