77% of accountancy firms optimistic about future, Xero finds

Some 77% of UK accounting practices are optimistic about their future outlook, new research from Xero has revealed.

Xero’s 2025 Accounting and Bookkeeping Industry Report surveyed 250 UK accountants and bookkeepers to explore the key trends shaping the sector. 

Despite news last year showing the number of accounting firms has fallen, the report reveals that practices are experiencing strong growth: 79% report an increase in revenue and 74% an increase in profits compared to the prior year. Nearly half (49%) gained new clients; with client numbers growing by 15% on average. 

To serve a growing number of businesses with complex needs, practices are embracing technology to automate processes, improve efficiency and expand service offerings to provide value beyond compliance-based work. Two in five (42%) cite adopting new technology or software as one of the most significant changes in their practice over the last year. 

More than a quarter (29%) see advancements in AI as one of the biggest opportunities for the industry in the next few years. Investment in technology provides a competitive edge and positions them more favourably for the upcoming Making Tax Digital for Income Tax (MTD for IT) legislation.  

The research shows that while bookkeeping remains a core offering, contributing 31% of revenue on average, advisory services contribute 32%. This highlights the importance of service offerings and reflects how accountants and bookkeepers operate as strategic partners who help businesses navigate financial complexities, a trend that may continue with the introduction of MTD for IT. 

With just under a year until the new MTD for IT legislation is introduced, practices feel confident in their ability to support clients with the shift to digital reporting. Of those who plan to serve clients impacted by MTD for IT, 36% are fully prepared for the transition to MTD for IT and a further 46% are adequately prepared. 

Overall, 75% are positive about the regulatory changes and believe it will benefit small businesses by improving accuracy (46%), streamlining processes (43%), simplifying tax compliance (42%), and reducing administrative burdens (32%).  

Kate Hayward, UK country manager at Xero, said: “Despite some initial nerves around MTD for IT, this data shows many are seeing it as a big opportunity to differentiate, and to take their practices further.  

“The other thing for me that really stands out is client relationships. They are still the absolute bedrock of the industry but technology is allowing them to evolve. Accountants and bookkeepers are delivering even more value to small businesses now and this is reflected in the revenue growth they are experiencing.”