The City generated nearly £100bn in taxes last year, highlighting the degree to which the government relies on finance, law and accountancy firms for cash.
For every £100 in taxes, the financial, legal and accountancy sectors contribute nearly £13, research by the City lobby group TheCityUK found.
The legal and accountancy sectors alone yielded £20.5bn in taxes for the public coffers, a 5.4 per cent uplift from two years ago, and the equivalent of the combined capital spending budgets for the Departments of Health, Education and Housing.
The sectors’ high tax take is mainly the result of finance, legal and accountancy workers being highly skilled and extremely productive.
Over the past decade, the growth of these sectors has consistently outpaced the rest of the economy’s growth, with legal and accounting’s gross value added, a measure of output, rising 27.8 per cent compared to 5.3 per cent for the wider UK economy between 2011 and 2020.
Anjalika Bardalai, chief economist and head of research at TheCityUK, said: “Legal and accounting activities are a key part of the UK’s world-leading financial and related professional services ecosystem, and a source of high-value jobs right across the UK.”
The finance, legal and accountancy sectors were largely shielded from the worst effects of the pandemic due to workers being able to rapidly shift to remote working without too much disruption to their normal working practices.
“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,” Bardalai added.
755,800 people are employed in the UK’s legal and accounting sector, around 2.3 per cent of the country’s entire workforce. Partners were estimated as paying £5bn in taxes.
TheCityUK’s research measured up until June of last year, so does not capture the full impact of the Covid-19 crisis.