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In 2025, the accounting sector is likely to change quickly as evolving technology, updated regulations, and shifting business needs reshape the industry. Tim Pinkney, Director of Professional Standards at the Institute of Financial Accountants (IFA), addresses some of the trends likely to dominate the business landscape for accountancy practices and their clients.
Pinkney considers Web3 a pivotal driver of change and sees it taking a more central stage in 2025 and beyond. “Web 3, often referred to as Web3.0, is the concept of the future of the world wide web which prioritises user experience and transparency. It’s not a software with a ‘launch date’, but more a trending move to more advanced technology, that changes how we use the web. It is certainly changing the game for accountants by introducing new tools like decentralised finance, smart contracts, and blockchain for cross-border payments. These innovations are set to transform how small and medium-sized businesses work by reducing transaction costs and making processes more efficient. This means that companies can trade internationally with greater ease, helping them grow and compete better in the global market. Accountants now have exciting opportunities to support businesses in this evolving landscape.”
Pinkney believes that even though there are some regulatory challenges to overcome, the benefits of decentralisation are huge. “It allows different systems to work together (interoperability) and provides better data security, which is a great opportunity for growth.” He thinks this is the perfect time for accountants to rethink their roles in a decentralised virtual marketplace, identifying where they can add value by helping businesses navigate these changes and ensuring trust in financial transactions.
“New technologies are set to transform financial reporting and improve client services through innovations such as blockchain. To keep up, professionals need to learn about important concepts such as smart contracts, the basics of blockchain, and decentralised applications (dApps). These topics are key to understanding the future of Web3, which aims to create more secure and efficient ways to handle financial transactions and interactions. Embracing this knowledge will help businesses deliver better services and stay competitive in a rapidly evolving landscape.”
One important issue to focus on in 2025 is Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA), which will start in April 2026. Pinkney warns that “while the rules won’t kick in until 2026, accountants and businesses might find themselves unprepared if they put off their planning for too long. It’s essential for everyone to start getting ready now to avoid any last-minute stress and ensure a smooth transition when these new regulations take effect.”
He continues: “Although there have been several delays before, it’s easy to think there might be another one. Still, it seems unlikely that it will be postponed again. Ignoring the upcoming changes until they take effect next year could make the transition even harder. It’s vital to prepare now to avoid unnecessary difficulties later on. Being proactive and staying informed will help everyone adjust more smoothly when the changes finally arrive. As a first step, accountants need to clearly understand the MTD ITSA requirements and how they impact both their work and their clients. By knowing these rules, accountants can better help their clients transition smoothly to the new system, ensuring they meet deadlines and maintain accurate records, ultimately making tax processes easier for everyone involved.
“One method to get ready for the upcoming changes is to consider joining HMRC’s MTD ITSA beta programme. HMRC is actively reaching out to accountancy firms and sole practitioners, sharing important updates about MTD through their Agent Update and other newsletters. By participating, you can stay informed and ensure your practice meets the new requirements effectively. This approach helps professionals stay proactive and prepared for the future. To ensure a smooth rollout in April 2026, businesses must use accounting software that can easily send updates to HMRC. HMRC has published a list of software that meets the MTD ITSA requirements. It’s imperative this year for businesses to focus on being ready for 2026, so they can smoothly transition to the new system and meet compliance needs.”
As businesses get stuck into 2025, Pinkney predicts a sharper focus on profitability and cash flow following the Autumn Budget changes. “With the rise in minimum wage and an increase in employer National Insurance contributions from 13.8% to 15%, companies will face higher employment costs. This situation could reduce their short-term profits and potentially affect their long-term stability if handled badly. Therefore, it is crucial for businesses to prioritise managing their finances effectively to ensure they can thrive in what’s anticipated as being another challenging year ahead.
“What’s clear is that businesses have gained valuable insights from the challenges posed by the pandemic, which will help them face the tough year ahead. We’re likely to see more practical strategies such as improving how they operate, which can enhance their financial outcomes. By focusing on resilience and efficiency, businesses can better prepare for whatever comes next, ensuring they are stronger and more adaptable.
“Focusing on effective cash flow management and addressing bad debt directly will help businesses prepare. Additionally, getting the right support from their accountant is crucial for making informed decisions. Together, these strategies will position businesses to achieve long-term, sustainable growth, giving them the stability needed to thrive in a changing economic landscape.”
As we enter the new year, technology will remain a key focus for businesses. Many companies are diving into AI to enhance their accounting and operations. However, it’s crucial for firms to strike a balance during this digital transformation. Pinkney emphasises that “technology isn’t a one-size-fits-all solution,” meaning each business needs to tailor their approach to fit their unique needs and challenges. Embracing technology thoughtfully can lead to better outcomes for everyone involved.
“It’s important for businesses to carefully consider the technology they choose to invest in. They should ask key questions: Does this technology improve the customer experience? Does it make operations more efficient? By focusing on these aspects, companies can ensure that their technological investments add real value and support their goals effectively to help streamline tasks and improve communication.”
He adds: “While these tools can make tasks easier and faster, accountants must still build trust and personal connections with their clients while maintaining strong ethical standards. By combining technology with a personal touch, accountants can continue to provide valuable services while fostering strong relationships with those they support.”
