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UK legal and accounting sector pays £20.5bn in tax, TCUK says

The total tax can provide an ‘important and resilient source of government revenue’ which can support its ‘levelling-up’ ambitions.

The UK legal and accounting sectors contributed £20.5b in tax in 2020, up 5.4% from 2018, according to the latest report from TheCityUK.

It revealed 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%.

The report, ‘2021 total tax contribution study for UK legal and accounting activities,’ showed the tax contributed by the two sectors made up 2.8% of total UK tax receipts in 2020 which is equivalent to the combined capital spending budgets for the departments of Health, Education and Housing, and Communities and Local Government.

It also revealed the UK Government was the largest beneficiary taking 47% of the money generated in the form of tax, with the next largest beneficiaries 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 together with financial services 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, underlining the “disproportionate positive contribution” the industry makes to the UK’s capacity to pay for key public services.

Anjalika Bardalai, chief economist and head of research at TheCityUK, said: “This report highlights the continued and increasing fiscal contribution the legal and accounting sectors make to the UK. 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.”

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