Salary trends for newly qualified accountants: A market analysis

In the current UK job market, newly qualified accountants are encountering an unexpected salary landscape. Despite a clear shortage of candidates, starting salaries for these professionals have decreased by 10%.

This data, provided by Wade Macdonald, a specialist in accountancy and finance recruitment, highlights a significant gap between salary expectations and market realities.

Over the past year, starting salaries for newly qualified accountants were 10% lower than anticipated. This discrepancy is notable, especially considering that salary increases across various roles have generally ranged from £3,000 to £5,000 in 2023. However, trainees and part-qualified roles have seen a more modest increase of around £1,000 since the previous year.

After extensive training, many newly qualified professionals are setting their salary expectations between £50,000 and £55,000. However, the typical positions available to them have experienced a 10% salary reduction since 2021. This follows a period of wage inflation of 10% to 15% during the pandemic when many of these professionals were in training. By 2021, salaries had returned to previous levels, but it appears that employee expectations have not adjusted accordingly. In 2023, the average salary increase for accountancy roles was between 4% and 6%.

The decrease in starting salaries has surprised many newly qualified professionals, particularly given the current high cost of living and inflation pressures. This situation could potentially deter some individuals from entering the accountancy profession.

Despite these challenges, there is still significant demand for individuals pursuing professional accounting qualifications, especially those specialising in payroll. Newly qualified accountants with strong technical skills remain in high demand, as many part-qualified professionals seek roles in business partnering or commercial areas.

There is also a growing need for data analysis skills as organisations increasingly focus on leveraging data for commercial purposes.

While salaries have shown moderate growth over the past year, the rate of increase has not matched the levels seen in 2022-2023. For entry-level positions post-qualification, accounts payable managers can expect salaries ranging from £40,000 to £65,000, assistant accountants from £32,000 to £45,000, and accounts assistants from £28,000 to £35,000. Part-qualified accountants can expect to earn around £40,000, rising to £46,500 for those who are fully qualified. Management and financial accountants have an average salary of £60,000.

In the tax sector, demand for staff continues to grow, driving salary increases. This is particularly true for SMEs requiring their first dedicated tax specialist and larger multinationals expanding their workforce. Given the existing shortage of skilled professionals, this increased demand has led to upward pressure on salaries. An average salary for a tax manager is £75,000, while a VAT manager can command £80,000.

Regarding benefits, flexible working is the most popular, offered by over 75% of businesses, followed by contributory pension and bonus schemes. Less valued benefits include season ticket loans and bike to work schemes. Only 14% of those surveyed worked in an office five days a week, while nearly one in four (24%) worked in the office twice a week, and 18% adopted a hybrid working model.

There are significant staff shortages in payroll, with pronounced skills shortages, especially for roles requiring expertise in managing payroll across multiple countries. The trend of organisations bringing payroll functions in-house has continued, leading to a notable rise in interim and project-based roles focused on reviewing payroll systems and processes.

Despite the need to fill these positions, salary offerings in this area are falling at the lower end of pay ranges, while more commercial and business-related roles now boast higher salary averages.

Chris Goulding, managing director of Wade Macdonald, emphasised the importance of investing in talent. He cautioned against offering inflated salaries to newly qualified professionals that businesses cannot sustain in the long term. He advocated for a realistic and open dialogue about what is possible for the business at a particular time, suggesting that other benefits and opportunities for progression could be offered as a reasonable exchange.

Dominic Wade, recruiter and co-founder of Wade Macdonald, added that while salaries and bonuses are important, employees also value flexible working, learning and development, and a clear path to progression. He suggested that by offering benefits in training and wellbeing, employers could help to mitigate some of the negative impacts of unexpectedly lower salary rates on newly qualified hires.