What professional practices can expect in 2026

The professional practices landscape is changing. Technology, particularly AI, is reshaping the way professional practices across law, property, and medical partnerships operate and go to market. Combined with a shifting tax landscape, the growth of external financial investment and a challenging labour market, professional practices are having to embrace major change.

As firms look ahead to 2026, the pace of change shows no sign of slowing. It is therefore imperative that firms plan ahead, using change as a driver to differentiate themselves in the marketplace, improve profitability and drive sustainable growth. Firms that fail to adapt to the evolving landscape risk being left behind.

A changing tax landscape

Tax remains one of the most significant variables for professional firms. With staff costs being one of the most significant expenses to professional service firms, changes to employer NICs will have increased overheads considerably and have already had an impact on hiring decisions.

While corporation tax rates remain unchanged, attention is shifting towards broader reform and enforcement. Measures aimed at tightening compliance will continue into 2026. Professional practices, and the partners and business owners that manage them, can expect greater scrutiny of tax affairs.As a result firms will need to pay close attention to cashflow planning, partner remuneration structures and the tax efficiency of their business models. With HMRC increasingly data-driven, robust record-keeping and proactive tax planning will be essential.

Client money under greater scrutiny

The way in which firms are required to handle client money will remain a regulatory focus in 2026. In December 2025, the Solicitors Regulation Authority (SRA) opened the next phase of their consultation as part of their Consumer Protection Review (for our full summary click here).

This Summer, the SRA are looking to publish their decisions on changes to the Accountants’ Report regime and checks and balances, including proposed increased requirements and separation of the roles of Compliance Officer for Legal Practice (COLP) and Compliance Officer for Finance and Administration (COFA).

Furthermore, we expect to see further consultations surrounding the oversight of firms changing profile, including risk indicators and information requirements.

With increased scrutiny on client money handling in order to enhance consumer protection, firms may look to strengthen their systems and procedures.

Rise of private equity and consolidation

Private equity investment in professional practices continues to gather momentum. For many firms, 2026 may present opportunities to access growth capital, fund succession planning or grow through consolidation.

However, private equity investment is not a one-size-fits-all solution. Firms must carefully consider valuation, governance changes and cultural alignment. Partners should understand how performance targets, exit timelines and operational expectations may shift following investment. Taking early professional advice is key to ensuring any transaction aligns with long-term strategic goals.

As always, we urge firms to consider and update their succession plan at least annually.

Rise of AI

Technology will remain a defining theme for professional practices in 2026. Automation, AI and enhanced practice management software are no longer optional – they are becoming core infrastructure.

AI-enabled tools are already improving case management, checks and workflow efficiency, allowing professionals to spend more time on higher-value advisory work. Secure client portals and integrated systems are also enhancing client experience and data security. The challenge for firms investing in technology is how to do so strategically and cost-effectively.

People and culture

Alongside structural and technological change, people remain at the heart of every professional practice. Hybrid working, skills shortages and rising expectations around wellbeing and development will continue into 2026. Firms that invest in training, culture and flexible working are likely to be best placed to attract and retain talent.

Looking ahead

While 2026 is likely to bring challenges and increased complexity around compliance requirements, it also offers opportunities for firms to distinguish themselves in their markets. Firms that take a proactive approach will be well-positioned for the year ahead.

If you would like further information or guidance, please speak to your usual Kreston Reeves contact or get in touch.