Income fees for the UK’s leading accountancy firms breached £17bn for the first time, the Top 50+50 Accountancy Firms report reveals.
Despite the pandemic, the UK’s accountancy sector is in a healthy position having enjoyed an average fee increase of 9.1 percent in the last year. However, due to current economic uncertainty around a third of this year’s respondents predict profits will be lower in 2021.
Service areas which generated the most growth were consultancy and corporate finance, while forensic and tax reported strong increases of above 10 percent.
Pensions advice took the biggest hit, rising just 2.8 percent after a huge increase of 20.26 percent in 2019.
Personal finance and insolvency were the only other areas that respondents stated a lower than nine percent increase on last year with figures expected to rise in the coming months with insolvency figures on the increase across the UK.
The report also offered insight into how resources are allocated in the sector. More partners are employed in auditing and accounting than in any other area with pensions recording the fewest number of partners per firm.
Crunching the numbers
- Tax fee services generated the largest amount of income bringing in £1.8bn in revenue
- Consultancy experienced the highest growth this year with respondents reporting on average an increase of 25 percent on last year’s business
- This service continues to be dominated by a few key players demonstrated by total fee income across all firms being greater than £1bn but the median firm earning just £620,000
- Despite overall growth in the Top 50 + 50, corporate finance income varies greatly between firms with some experiencing losses as high as other firm’s gains
- Audit fee income increased by over three percent on last year’s findings, growing to an average of £25.8m per firm
- On average, 18 partners work in audit and accounting in firms across the UK
- Firms outside of the top 25 experienced the greatest average income from audit and tax services
- Payroll income has continued on a steady upward trajectory over the past two years rising 10.19 percent in 2019 and a further 11.25 percent in 2020
Where are the future opportunities?
While 2021 threatens to be a tumultuous year as the industry deals with the fallout from the pandemic there are opportunities to be taken.
Consultancy remains one of the biggest growth stimulants with firms reporting earnings of over £19m in 2020. This figure is expected to rise as the industry assists clients to navigate continual market disruption and a new regulatory path unfolds.
For firms outside of the top 25, payroll continues to be a steady earner showing increases year-on-year, while gains in personal finance remain strong.
The industry is understandably cautious but we believe the strong growth demonstrated by the sector in 2020 will put firms in a robust position to tackle head on the challenges that 2021 will almost certainly bring.