Pauline Jackson
Accountancy firms have had their first real rise since 2019, and the Midlands is ahead of the UK. But the local practice many businesses rely on is still disappearing.
For six years, the number of accountancy firms in the UK fell or stood still. This spring, that changed.
According to new research from Rapport Digital, which tracks ONS business counts for every UK region, there were 40,605 accountancy firms in March 2026. That is 630 more than a year earlier, the first real rise since 2019 and the biggest since 2017. For the first time since 2016, the number of firms went up in every region.
The Midlands did better than most. The West Midlands grew by 2.2 per cent and the East Midlands by 2.3 per cent, both ahead of the UK’s 1.6 per cent.
On the face of it, that is good news for any business owner who has waited a week for an accountant to call back. Look at which firms make up the numbers, though, and the story changes. The profession is changing shape, and the firms it is losing are the ones many Midlands businesses have relied on for decades.
All the growth is at the small end
Every bit of the 2026 rise came from limited companies. Their numbers went up by 790 in a year, while sole practitioners fell by 80 and partnerships by 85. The whole net rise was in micro firms with fewer than 10 staff.
Over a longer stretch, the losses are stark. Since 2019, nearly a third of sole practitioner firms have gone, falling from 5,960 to 4,145. More than a third of partnerships have gone too. Between them, these two types of practice account for about four in five of the 3,115 firms the UK has lost since 2019.
That matters because these are the firms most small businesses know. The sole practitioner who has done your books since you started. The two-partner practice on the high street that knows your family as well as your accounts. A handful of extra limited companies does not replace them like for like.
The figures need one caveat. They count the firms that exist each March, not the firms that opened that year. So the rise is not a wave of start-ups. There are more firms on the register at the small end, while the older forms of practice keep shrinking. The profession is being reshuffled rather than refilled.
Bought out or retired out
So where are the local practices going? “Britain hasn’t run out of businesses that need an accountant,” according to Ian Gargett from Rapport Digital. “There are more of them now than in 2019. What it’s run short of is accountancy firms. Many of the ones that disappeared didn’t fail. They were bought by private equity groups, or their owners retired with no one to take over. For the firms that are left, that’s a rare position to be in: more potential clients and fewer competitors, just as Making Tax Digital sends millions of people looking for help.”
Private equity comes first. Most UK accountancy firms are tiny. ICAEW’s Corporate Financier puts the UK at just over 40,000 firms, with around 80 per cent of them employing four or fewer people. To an investor, that is a scattered market waiting to be joined up.
Accountancy Age has described how the model works. Investors buy a larger firm, then bolt smaller local practices on to it. According to Crowe, as many as 20 of the UK’s top 60 firms are now backed by private equity.
Age is the second force. Many small practices are built around one or two people, and when they retire there is often nobody lined up to take over. ICAEW runs exit and succession guidance for small practitioners, and trade press expects more sales as owners without a plan step back.
Hiring does not help. AAT has reported that about a third of businesses struggled to recruit finance and accounting staff in 2025. With fewer people coming in and older owners going out, it is no coincidence the growth is in small, lean limited companies.
Read together, the fall in sole practitioners and partnerships looks like a retirement wave as much as a buying spree. For a business owner, the result is the same. The firm you chose may not be the firm you end up with.
Two Midlands regions, two different pictures
The West Midlands now has 3,200 accountancy firms, up 70 in 2026. That is still 105 fewer than in 2019, a fall of 3.2 per cent. The East Midlands has 2,430, up 55 and almost back to its 2019 level of 2,440.
Set against the number of businesses, the regions look different again. The West Midlands has 69 businesses for every accountancy firm, in line with the UK. The East Midlands has 76, so each firm there serves more businesses than the national average.
That ratio is the one to watch. Across the UK it was 62 in 2019 and is now 69, the highest since 2015. Businesses also grew faster than accountancy firms in the past year, by 1.9 per cent against 1.6 per cent, so the gap is still widening.
AccountingWEB ran a piece this year on what it called the UK’s accountancy shortage, and recruiters report firms turning work away. If you run a business in the East Midlands, you are already sharing your accountant with more businesses than the UK average.
The pressure arrives next April
All of this would matter less if demand were steady. It is not. Making Tax Digital for Income Tax started in April 2026 for sole traders and landlords earning over £50,000. That brought about 780,000 people into quarterly digital reporting.
About 970,000 more join in April 2027, when the threshold drops to £30,000. A further 900,000 follow in April 2028. Many will want an accountant to handle it, and not all of them are ready.
A Wolters Kluwer survey found 36 per cent of sole traders said they were not prepared. A TaxCalc survey of 215 accountancy professionals, reported by MoneyWeek, suggested firms taking on last-minute clients could charge 5 to 10 per cent more.
That is a lot of new work landing on a profession that has lost nearly a third of its sole practitioners in seven years. Some owners are already improvising. TechRadar has reported small businesses acting on financial advice from AI chatbots before speaking to their accountant. When advice is hard to get, that is understandable. It is also a risk.
Your accountant is no longer an admin decision
For most Midlands business owners, the accountant has been a fixture. You found one years ago, they did a good job and you stopped thinking about it. That made sense when the profession was stable. It makes less sense now.
The firm you have used for 20 years may be sold, folded into a larger group or closed when its owner retires. The fees, the service and the person who knows your business could all change without you having much say.
Meanwhile, the firms that are growing are smaller and hungrier. Some will be keen to win the clients that larger groups do not want. None of this is bad in itself. Some businesses will get better advice from a well-funded group, others from a young firm building its client list.
The risk is in not noticing. A business that knows who owns its accountancy firm, and what happens when the partner retires, can choose. A business that does not may end up with an accountant it never picked. Or with none at all, just as nearly a million more people go looking for one.
More accountancy firms is welcome news for the Midlands. A bigger profession is a different thing from a better-served one, though. The useful question for a business owner today is who their accountant is about to become.
