As we step into 2025, it’s the perfect time to reflect on a year of transformation and resilience in the accounting sector. Jonathan Barber, Executive Director – UK of the Institute of Financial Accountants (IFA), shares his insights on the key trends, challenges, and opportunities that shaped the industry in 2024. From technological leaps to evolving roles and policy shifts, accountants once again proved their adaptability and value.
What’s been the general mood of the past year?
2024 was a year of change, echoing a theme we’ve heard since 2020, though for a different reason each year. With a new leader at No. 10 and the recent Autumn Budget announcements, the accounting sector is feeling the impact. Businesses are adapting to new policies, which may bring challenges.
However, despite the uncertainties, there are still reasons to feel hopeful. Many experts believe that the measures introduced could lead to growth opportunities in the future, albeit with some initial lag. As we navigate through these changes, staying positive and preparing for what lies ahead will be key for everyone involved.
How have you seen accountants’ roles evolving?
As businesses face increasing complexity in their operations, more accountants are playing a crucial role in analysing data, something which has been particularly evident over the past 12 months. Their insights are helping businesses make informed decisions, enabling them to take calculated risks when needed, and helping identify areas where budget cuts may be necessary, so that companies can manage their finances more effectively. By interpreting financial data and trends, we’re starting to see more accountants guiding leadership teams in making choices that support growth while ensuring stability. This shift highlights the growing importance of accountants in strategic planning within organisations.
AI’s impact is an ever-present theme, but is the sector truly starting to embrace it more?
In short, yes. AI is the ever-hot topic these days, especially in the accounting world. While the technology is still developing, it has already made a big impact by helping businesses automate tasks like audits and predicting financial trends. Many companies are starting to use AI-powered tools to improve their operations, showing that it can save time and increase efficiency. However, the accounting sector still faces challenges in fully integrating AI into its practices, meaning there’s more work to be done to unlock its full potential. It will be interesting to see how it shapes the future of accounting.
Yet while these tools can make tasks easier and faster, they also raise important concerns about data security and ethics. Accountants must be careful to protect sensitive information from breaches or misuse. Additionally, as technology continues to evolve, the responsibilities of accountants are changing. They need to stay informed about the latest regulations and ethical standards to ensure trust and integrity in their work. Balancing the benefits of technology with these challenges is crucial for the accounting profession moving forward.
Have firms seen an uptick in sustainability reporting – in terms of both demand and embracing it as a value-added service?
ESG reporting has become increasingly important for businesses, and is continuing to present a big growth opportunity for accountants. This area is starting to shift from being a specialised service to a standard requirement for companies, for the sake of compliance and also to enhance their reputation and support sustainability efforts. Accountants who understand ESG reporting are increasingly playing a crucial role in guiding these companies, making it an essential skill for 2025 and beyond.
As regulations become stricter and stakeholders demand more transparency, businesses are under growing pressure to disclose their ESG performance. This shift is making reporting more complex, requiring companies to not only track their own practices but also assess their entire supply chain. Businesses must now evaluate their suppliers and partners to ensure they meet ESG standards, which adds another layer to their reporting responsibilities.
This means that more accountants are eyeing a unique opportunity to offer advisory services beyond standard financial reporting, allowing firms to build their expertise in ESG areas, such as sustainability practices and social responsibility. By doing so, they can position themselves as essential partners for businesses navigating changes in regulations and client expectations. Equally, accountants who do not adopt modern practices and offer innovative services may struggle to keep up with their competitors, and those who resist change, risk losing clients to firms that provide more efficient and forward-thinking options. It will be a case of when, not if, we can expect more accountants to offer this service in 2025.
It’s been a strange year for legislation updates with a new government ringing further changes. How is this impacting the sector?
The new government has brought in significant changes, especially regarding business policies and taxes. Key updates include adjustments to capital gains tax and Business Asset Disposal Relief, which affect how profits from selling business assets are taxed. Starting from 1 April, businesses have also faced changes in the Research and Development (R&D) regime, making it easier or harder to claim tax relief on new projects. Additionally, from 6 April, the National Insurance contributions (NICs) rules changed, impacting how businesses contribute to employee benefits. This is set to change again in spring 2025, as outlined in the Autumn Budget.
In addition, there were major changes aimed at improving public services. A new policy for renewable energy was introduced, which is expected to help keep energy costs steady for everyone. Additionally, a new employment rights bill was published, bringing important updates to how companies handle hiring and firing.
As companies face changing economic conditions, accountants are finding themselves busier than ever; it’s a critical time for them to showcase their expertise and value. With increased demands from clients, they are stepping up to help businesses manage their finances more effectively. This involves creating budgets, forecasting future earnings, and finding ways to cut costs.
With the rise in business insolvencies last year, accountants have a vital role to play in helping companies navigate financial challenges. They can offer essential insights into proper financial management, risk assessment, and strategic planning. Focusing on these tasks will not only strengthen their position within the industry but also help clients regain stability and confidence in their financial futures.
Are we now seeing a return to office working?
The pandemic transformed our work environment, making remote and hybrid work models standard in numerous sectors. In recent months, more and more of the bigger accounting firms have been urging, and in some instances requiring, their employees to go back to the office on a full-time basis. In 2025, it will be interesting to see how many small firms follow suit, although it appears that hybrid working remains a popular choice for smaller accounting firms in the UK. Many are continuing to champion flexibility, embracing digital strategies, and offering more remote working opportunities to redress the work-life balance. By implementing adaptable working models, these firms aim to draw in top talent, lower their overhead expenses, and remain competitive.
What are 2024’s takeaways and in a nutshell, what can we expect to see in 2025?
This year has definitely brought its ups and downs, just like any other. However, it’s good news to see that some of the ongoing challenges we’ve faced in recent years are beginning to level off. With effective strategies now established, including outsourcing, embracing digital innovations, and focusing on upskilling and training, there are promising opportunities in the industry for the next year and beyond. As various systems and processes continue to evolve, it opens up significant possibilities for accountants and firms.