How AI is changing accounting firms, and what you should expect from yours
The work behind your accounts is changing faster than at any time since cloud software arrived. Less of your accountant’s time will go on preparing the numbers and more on explaining them. What is changing, what should not, and the questions worth asking.
For most of the last century an accountant’s year had a shape: a rush of paperwork after the year end, a set of accounts, a tax return, and a conversation about what had already happened. That shape is breaking up. The tools that prepare the numbers have improved so quickly that the slow part of the job is no longer the arithmetic. It is deciding what the arithmetic means.
What has already changed
Much of the preparation is now automatic. Bank transactions flow into accounting software every day. Receipts and invoices are read from a photo or an email. Software suggests how each transaction should be coded and matches payments to invoices. A reconciliation that once took an afternoon can take minutes, with a person reviewing the few items the system could not match.
The newer change is that AI is starting to draft the analysis as well: a first version of the management commentary, a summary of a long letter from HMRC, a comparison of this year with last that points to what looks out of place. The draft still needs a qualified person. But starting from a draft rather than a blank page changes how a firm spends its day, and what it can offer.
- Processing records
- Compliance and filing
- Review and checking
- Advice and planning
Our illustration of how the mix of work shifts once processing is automated; not survey data.
Show the data
| Traditional firm: Processing records | 45% |
|---|---|
| Traditional firm: Compliance and filing | 30% |
| Traditional firm: Review and checking | 10% |
| Traditional firm: Advice and planning | 15% |
| Modern firm: Processing records | 15% |
| Modern firm: Compliance and filing | 30% |
| Modern firm: Review and checking | 20% |
| Modern firm: Advice and planning | 35% |
HMRC is changing the rhythm
The tax system is going digital on a published timetable, and that changes when accounting work happens. Under Making Tax Digital, sole traders and landlords with qualifying income over £50,000 have kept digital records and sent quarterly updates since April 2026; the threshold falls to £30,000 in April 2027 and £20,000 in April 2028. VAT invoices become e-invoices from April 2029. HMRC’s own AI assistant handled around 6.3 million customer interactions in 2025-26.
The practical effect is that books have to be kept current. A firm that sees your records once a year will struggle to support a client who reports every quarter. The firms adapting best are moving from an annual catch-up to a monthly rhythm, which also happens to be when the numbers are most useful.
From the annual catch-up to a monthly rhythm
- Every dayBank feeds, receipts and invoices captured automatically.
- Every monthBooks reconciled and reviewed, with a short report and a conversation.
- Every quarterMaking Tax Digital updates and VAT returns, and a look ahead at tax.
- Every yearAccounts, the final tax return and a plan for the year ahead.
What should not change
Some things are worth protecting. Responsibility for what is filed stays with people: the taxpayer, and the accountant who prepared it. Judgement about what is allowable, which reliefs apply and how to answer HMRC is not something to hand to a general AI tool, which can sound confident and still be wrong about a rule that changed last month. And your data deserves care: client information belongs only in tools that have been checked for data protection and security.
Questions worth asking your accountant
- Which parts of my work do you automate, and what does a person check before it reaches me or HMRC?
- Which AI tools do you use with my data, where is it stored, and who can see it?
- How often will I see up-to-date figures, and what will you tell me about them?
- Are you ready for Making Tax Digital and e-invoicing, and what do I need to do?
- What happens to the time automation saves: faster turnaround, more advice, or both?
How we work
Our standard is simple. We automate where it improves accuracy and speed, and a qualified accountant reviews every result before it reaches you or HMRC. We tell clients which tools we use, keep their data in services we have checked, and spend the time we save on the part automation cannot do: understanding the business and helping its owners decide what to do next.
The view of how accounting firms are changing is ours. The dates and figures are from the sources listed.
Sources
This insight is general information, not advice for your circumstances. Talk to us before acting on it.