FTSE 350 audit fee growth slows as a third of companies pay less

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FTSE 350 audit fee growth

Highlights

FTSE 350 total audit fees rise by about £20 million between 2024 and 2025, broadly matching inflation and marking a sharp slowdown versus previous years.
In 2025, the proportion of companies paying lower audit fees doubles from the previous year, as repricing winds down and some clients, including Shell, cut payments by over £6 million.
Introduction of AI prompts companies like KPMG to seek audit fee reductions of up to 12 per cent, but potential future increases may be offset as productivity gains emerge.

Fee trends point to audit repricing plateau

As reported by Financial Times, citing Ideagen Audit Analytics, total fees paid by FTSE 350 companies to their auditors increase by about £20 million between 2024 and 2025, broadly in line with inflation. That marks a much slower pace than in earlier years, after audit fees for London-listed companies in 2024 stand 75 per cent above levels from five years earlier.

In 2025, the share of companies securing a lower audit bill is roughly double the previous year. The slowdown suggests the Big Four and other accounting firms may have largely completed the repricing they say is necessary to meet tougher regulatory standards.

Audit firms have argued higher charges reflect extra work following scandals including Carillion and Patisserie Valerie, which lead regulators to demand more rigorous audits and operational changes. In 2020, the regulator tells firms to separate their audit arms from the rest of their businesses by 2024, adding costs that firms pass on to clients.

Industry insiders also say the pandemic and energy price instability make audits more expensive, as risks around misstatements rise and distancing restrictions make fieldwork harder. The head of one top 10 accountancy firm says the separation reduces the overall return from each client, but adds that fee growth then levels out to more of an inflation-linked annual increase.

AI and company-specific factors shape the outlook

Dean Beale, executive director of the Centre for Public Interest Audit, says audit quality has improved enough to support the recent plateau without firms needing more money to keep raising standards. Some in the sector also believe AI could lower future audit costs, although it remains unclear whether any efficiency gains will be passed on to clients.

One Big Four executive says fees could rise again in the near term because companies using AI internally require extra scrutiny. But that executive also says such increases are unlikely to last, as clients eventually expect productivity gains from AI to show up in lower audit bills.

Some companies are already pressing that case. KPMG last year negotiates lower fees from its own external auditor, Grant Thornton, by arguing that AI reduces the amount of work required, while Grant Thornton records the largest fee decline in 2025 across its FTSE 350 client book, at 12 per cent.

Stephen Osborne, audit partner at Grant Thornton UK, says a change in reported audit fees does not always mean a pricing shift because some FTSE 350 companies may have one-off events affecting their fee levels. He adds that audits for international groups are also exposed to currency movements, and says individual company context matters.

Among large companies, Shell records one of the biggest fee reductions last year, cutting its audit payment by more than £6 million. TP ICAP Group, Rentokil and BP also reduce their audit payments by between £1 million and £2 million.

Our earlier coverage of UK banks stepping up recovery efforts on state-backed Bounce Back Loans explained how lenders including Barclays, Starling Bank and HSBC have filed winding-up petitions against companies that defaulted on pandemic-era borrowing. It highlighted concerns over taxpayer losses from fraud and errors in the scheme and described how authorities and lenders are using legal action to recoup funds from dormant or non-trading businesses.

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