Author: swenta

UK accounting firms are shifting from compliance to advisory services, with 83% now offering them and 20% planning to expand. This shift is driven by client demand for proactive financial guidance in areas like cash flow management, tax planning, and business strategy. High-growth firms are leading, emphasizing services such as financial forecasting and risk management, supported by digital transformation.

By leveraging AI and cloud platforms, firms provide real-time financial insights, helping clients make faster decisions. The move toward advisory services is not just about relevance but about long-term client value. By focusing on strategic planning and tailored solutions, firms are positioning themselves as key partners in business growth, reflecting a broader industry trend.

The accounting industry is rapidly transforming, with AI adoption rising by 34% in a year. Firms are automating tasks like data entry and reconciliation, allowing accountants to focus on strategic advisory roles. AI also enhances accuracy in financial reporting and provides real-time insights. However, challenges like data security and high implementation costs remain, particularly for smaller firms.

Despite these hurdles, AI adoption is accelerating, with 27% of firms already using generative AI tools and another 22% planning to implement them soon. European and APAC firms lead the way, driven by regulatory support and client demand, while Canadian firms remain cautious due to compliance concerns. To adapt, firms are investing in workforce training, aiming to enhance efficiency, client service, and competitiveness.

As 2025 approaches, several significant tax changes in the UK are set to impact both individuals and businesses. One notable adjustment is the increase in National Insurance contributions for employers, rising from 13.8% to 15% starting April 6, 2025. Additionally, the earnings threshold for these contributions will be lowered from £9,100 to £5,000. This change means that employers will incur higher costs per employee, which could influence hiring decisions and wage structures.

Another significant change involves Inheritance Tax (IHT). Starting April 6, 2025, the UK will shift from a domicile-based IHT system to a residency-based one. Under the new rules, individuals who have been UK residents for at least 10 out of the previous 20 tax years will be considered ‘long-term residents’ and subject to IHT on their worldwide assets. This change could have substantial implications for expatriates and non-domiciled individuals, potentially increasing their tax liabilities.

Given these upcoming changes, it’s crucial for both individuals and businesses to review their financial and tax planning strategies to ensure compliance and optimize their tax positions.