In a report prepared for TheCityUK by PwC it is estimated that in 2018, the total tax contribution of legal and accounting activities in the UK was £19.1bn, made up of £8.3bn in taxes borne and £10.8bn in taxes collected. This represented 2.8% of total UK government receipts in 2018.
The Total Tax Contribution Study for UK legal and accounting activities estimates that the total tax contribution for the study participants has increased, on a like-for-like basis, by 6.8% over the two years since the first report reviewing the tax contribution of legal and accounting activities to the UK economy was published in 2017.
The largest tax payments are for partner and employment taxes, indicating the importance of highly skilled labour. The net VAT contribution is also significant compared to other sectors, representing 5.9% of total UK VAT receipts. The UK government was the largest beneficiary of value distributed by study participants, with almost half (49.4%) of value distributed going to the government in taxes borne and collected.
Within the overall professional, scientific and technical activities sector, the accounting sub sector is the third-largest by number of employees, estimated at some 402,100.
The legal and accounting activities sub sector is made up of 76,830 firms which employ a total of 743,000 people. This represents 30.3% of total employment in the professional, scientific and technical activities division, and 2.4% of the total UK workforce. Looking at the number of firms, the accounting activities sub sector is heavily weighted towards SMEs, which make up 99% of accounting firms in the UK. Around 80% of accounting firms are made up of fewer than four employees.
ICAEW director for business and industrial strategy Iain Wright commented: “The UK is a world leader in accountancy. Many countries look to us and accountancy services are a major export because businesses around the world trust the skills of our accountancy professionals. Chartered accountants up and down the country are adding real value to our economy, which is reflected in the size of the sector’s contribution to the UK’s tax receipts.”