Over 60,000 legal and accounting firms contributed £15.5bn worth of taxes in 2015/16, representing 2.5% of tax receipts in the UK, according to a new report by TheCityUK.
The legal and accounting sector employs just under 700,000 people across the UK – including over 300,000 in law, representing 2% of the total workforce. The average wage per employee at the study participants, which the report said ‘broadly represent the largest firms’ totalled £61,176, with each employee contributing around £22,463 to public finances.
In the foreword to the report, Miles Celic, CEO of TheCityUK said: ‘Collectively, the financial, legal and accounting sectors’ tax contribution is estimated to be around £87bn.’ Contribution from partners’ tax is estimated as £4.7bn, making up 30% of total tax contribution for the sector.
The report is the first carried out by TheCityUK in conjunction with accounting PwC and takes an in depth look at tax contributions for UK legal and accounting activity. It found that the number of employees at legal and accountancy firms represents 23% of the EU’s total with 99% of the profession made up of businesses with fewer than 99% employees.
Considering the implications of Brexit in future, TheCityUK expects small businesses dependent on work deriving from local activities are less likely to be affected by changes than larger firms, which are subject to the decisions of international business.
TheCityUk’s chief economist and head of research Anjalika Bardalai told Legal Business: ‘From my perspective as an economist the report gives law and accountancy firms a deeper understanding of the business activity, the value that activity generates and the way that the value is distributed. It’s quite a unique way of looking at the business activity.
‘It puts these figures and the data that’s been generated in a broader context. Why is this work important? What kind of benefit does it have to the wider economy? We now have the employment of the industry as a proportion of the total tax revenue generated.’
A City of London report on the total tax contribution of UK financial services in conjunction with PwC for the 2015/16 financial year found the sector contributed £71.4bn, amounting to 11.5% of the UK government’s total tax receipts.