Richard Sampson, CRO at Tax Systems
Across the tax and business ecosystem, 2024 was a challenging year characterised by growing regulatory pressures, economic uncertainty and significant workforce challenges. It also saw the acceleration of major tech-led transformation and market consolidation that has set the stage for more change in 2025. But what will the next 12 months bring? Richard Sampson, Chief Revenue Officer at Tax Systems, shares his perspectives.
- Businesses will balance optimism against uncertainty
Driven by new government policies, businesses will see additional cost pressures, with the impact of increased National Insurance contributions expected to hit profits and investment, according to the CBI. Over in the US, the incoming Trump administration is likely to focus on deregulation and efficiency, with the domestic policy impact having ripple effects globally. The current outlook for inflation, which has been a significant challenge for several years, is reasonably optimistic, with rates expected to slow among major economies next year.
These issues are reflected in growing business optimism, with the latest D&B Global Business Optimism Insights report citing favourable borrowing conditions and improving market dynamics for “increased optimism in domestic and export orders, capital expenditures, and financial risk management.”
However, the years of economic instability and geopolitical tensions will continue to influence decision making in 2025 (and beyond), despite these positive signs in the marketplace. Many organisations are likely to continue to “proceed with caution”, keeping strategy under constant review.
- Driven by AI, technology adoption will accelerate
By far the biggest technology talking point for many years, AI, will drive efforts to deliver cost and process efficiency worldwide throughout 2025. However, many businesses are still in the experimental phase, conducting proof-of-concept exercises to understand where it can have the most impact. While early adopters may gain temporary competitive advantage, this window of opportunity will close next year as more businesses move to the implementation phase of AI adoption.
Concerns about the costs of adopting AI technology and aligning it with current operational models will persist, particularly for industries such as accounting and tax, where traditional processes and technologies still dominate. In this context, AI will play an increasingly important role in tax compliance by helping to streamline legacy processes, improve manual intensive activities and change the role of industry professionals. This will be most evident at entry and graduate levels, where roles will move away from repetitive tasks and towards critical thinking, interpretation, and value-added contributions.
- Tax industry transformation will be driven by regulation, consolidation and client demand
Alongside the significant impact that AI will make on the tax sector, transformation will also be driven by regulatory changes, evolving client demands, and industry-wide consolidation. For instance, Pillar Two compliance will push businesses to adopt technologies to manage their complexity, with 2025 being a pivotal “hockey stick year” for tech adoption. For some, however, delaying these investments is likely to result in missed compliance deadlines.
Next year, private equity firms will continue to drive sector-specific merger and acquisition activity, with the consolidation of smaller firms into larger brands creating efficiencies and improved margins. This mirrors what has already been seen in other industries, such as the dentistry and veterinary sectors.
From the client perspective, expectations are moving from traditional time-based billing models to a demand for fixed-cost services. This shift will increase the pressure on firms to accelerate digital transformation, streamline processes to remain competitive and work hard to meet new service expectations.
- Hybrid working practices will evolve, focusing on productivity, morale and mental health
As cost pressures persist, businesses are more likely to re-evaluate the feasibility of hybrid and remote working models. For some, there is a growing sentiment that hybrid work, while beneficial during the pandemic, may not have delivered the ongoing productivity gains initially expected. In some cases, major organisations are already mandating stricter office attendance policies, such as requiring employees to be in the office for several days a week, monitored via access logs.
Moreover, the shift to remote work during COVID-19 has created a cohort of employees with reduced workplace experience and practical skills. Some managers are reporting less experienced staff often require more prescriptive guidance and support to complete tasks, as opposed to the autonomy seen pre-pandemic. In addition, the reduction of in-office mentorship and organic learning opportunities has hindered the development of critical soft skills, such as problem-solving and time management.
Elsewhere, the increasing reliance on technology and remote working has exacerbated existing mental health challenges. It’s not uncommon, for example, for employees to feel they are always working, with no clear division between work and personal time.
In 2025, employers will need to carefully balance what can at first seem to be conflicting demands between the business requirements and people’s desires; however, if leaders can get this right, they will create engaged and resilient teams that are highly productive and able to adapt to whatever changes next year (and the following years) may bring.
Overall, 2025 is set to be a year where the tax sector will continue to evolve at an accelerating rate, testing the adaptability of organisations that will face some difficult challenges but also some exciting opportunities. Those who embrace the opportunities, rather than shy away from them, will drive efficiency, improve margins and free up resources to spend more value-add time with clients.
