The purpose of this project was to consider differences in the reaction of businesses to the same tax change, including the effect of financial constraints on firms, and the drivers of productivity growth for service sector firms. It combined United Kingdom data with that for other European countries, thereby allowing use of the best available techniques to answer some key questions and deliver relevant evidence for the UK. Further information may be found on the ESRC Effects of Taxation on Heterogeneous Firms: Micro Level Evidence Across Europe award page. The data are estimates of total factor productivity (estimated using the Levinsohn-Petrin method) for UK firms over the period 1995 to 2008. There are 8,001 firms giving a total sample of 31,927 observations. The data were constructed as a retrospective sampling of the balance sheet data deposited at Companies House and accessed through the Financial Analysis Made Easy (FAME) database (produced by Bureau Van Dijk). The sampling weights (not included) were taken from the OECD Structural and Demographic Business Database for 2003. The data are representative of the size-distribution within each industry and across industries. The industry composition covers the manufacturing and services sectors (NACE 15-93) (NACE is derived from the French title 'Nomenclature generale des Activites economiques dans les Communautes Europeennes' and is the acronym used to cover statistical classification of economic activities in the European Community). The corporate tax data are the statutory corporate tax rate for the UK. Along with a firm, industry (NACE) and year indicator the data include a measure of total factor productivity (TFP); TFP growth; the level of TFP relative to the industry frontier (measured by the TFP of the firm at the 95th percentile of TFP in each year) and employment.