The accounting and legal sectors contribute £15.5bn in tax to the UK economy, representing 2.5% of UK tax receipts, according to The CityUK report prepared by PwC.
The contribution made by both professions to the UK economy has remained relatively undocumented, until now. With factors such as the vote to leave the EU and the pace of technological change Miles Celic, CEO of The CityUK, explained that the Total Tax Contribution study was necessary to determine the value and contribution the sectors make to public finances.
To illustrate the accounting and legal sector’s contribution, the study highlighted a number of areas such as taxes borne and collected, employment and wages. The study calculated the results based on the participating fifteen firms, using data on taxes borne and collected for their accounting period ending 30 June 2016.
Those included in the study mainly veered towards larger and medium firms, with government data used to estimate the contribution made by the sector as a whole. According to the data, larger firms (with over 1,000 employees) employ 40.3% of workers.
The study underpins the impact accounting and legal sector makes to the economy by highlighting the number of accounting firms in UK and the sector’s representation of the UK’s workforce.
In 2016, for example, the report lists 60,470 accounting and legal firms employing 693,000 workers, the largest of any EU country. The number of employees in the UK represented 23.3% of the EU total. Meanwhile, the report said around 99% of legal and accounting activities firms employed 99 people or fewer.
The employment data also showed that the average employee’s wage from larger firms was £61,176, which represents an average £25,642 employment taxes paid per employee. Employment tax from firms alone adds £5bn to the Treasury’s coffers.
The report said leaving the EU and the transformation of the financial services industry are going to have a “direct impact” on both the accounting and legal sector. It is expected this uncertain financial climate will initially hit the larger firms more than smaller firms.
The PwC report explained the reason for this is because larger firms are more dependent on activity in the financial sector such as international business, while small businesses are dependent on local activities.
However, because larger accounting firms will be called upon to guide financial service companies through regulation and legislative uncertainty, the report expects larger firms will be in demand in the short-term.
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