Alongside the obvious contenders of online retail giants and pharmaceutical companies, there are plenty of industries who can expect to see opportunities for growth as the world adapts to the challenges of 2020. With digital transformation at the forefront of much of the conversation of growing industries, it can be expected that the industries and companies which are best positioned to adapt to a digital environment will also be expected to thrive.

CyberSecurity

With the pandemic leading to a surge in companies of all ilks developing their presence in online spaces, businesses who provide services in this arena have lots to look forward to. The haste in action required for companies to accelerate their digitisation plans means that some safety and best practice measures have been at risk of being overlooked. Precautions surrounding customer details and user data are particularly vulnerable and considered profitable assets by would-be cyber criminals.

Cybersecurity budgets have seen steady growth year on year for some time now, and with businesses and individuals alike developing a higher dependence on digital tools, that can be expected to continue. More data to protect means more business for the CyberSecurity sector.

Online Learning

While most nations have prioritised the education of their youth rather than choosing to keep schools closed, there has still been an enormous impact on the world of education. With parents and siblings forced into the role of teacher at a moment’s notice and social distancing high on the agenda, it was only natural for the tools which facilitated these priorities to experience growth. 

Online learning tools are by no means a new invention, but educational institutions have traditionally been slow to adopt new technology. The necessity of their use throughout the pandemic has forced the normalisation of home-schooling and online classrooms, and it will be unlikely for this trend to disappear in a post-Covid world. Online learning doesn’t end at schools, however, a combination of rising unemployment and an increase in time spent at home means that people across generations and circumstances are looking to develop new skills and hobbies. In the US during March 2020 alone, Duolingo, the language-learning app, saw a 148% increase in sign-ups. 

Eco-Friendly Technologies

An increasing awareness of the environmental impact of diesel and petrol cars, along with an urgency to act in the face of climate change, has been looming over the traditional car manufacturing industry for some time. As the pandemic developed and non-essential travel was severely reduced, the travel industry more or less ground to a halt. Oil prices were greatly affected, and satellite imagery released by the European Space Agency showed that air pollution across the world had seen a dramatic reduction compared to the same time of the previous year. 

In November, Boris Johnson announced a new green plan for the UK which included the pledge that from 2030 there would be no new cars or vans sold which are powered wholly by petrol or diesel. The plan also includes investment into off-shore wind, nuclear and hydrogen power as well as aiming for net-zero emission planes and maritime vehicles. 

This spells the opportunity for growth for businesses with a focus on developing eco-friendly technologies. Tesla, the electric car producer, saw its stocks skyrocket by 492% in 2020, with the first quarter of the year being their best performing ever. Audi too are committed to pivoting, with their new ‘Artemis’ department which is focussing on bringing electric cars to market faster than they had originally anticipated. 

It’s safe to say that Christmas 2020 is no usual Christmas. With the latest updates from the Government suggesting that families will be able to meet at Christmas and enjoy the company of up to three households between 23rd and 27th December, there may at least be some level of normality for those who choose to do so. 

Restrictions on church services are due to be lifted, too, so that Christmas Day services may still take place. Boris has stated, however, that Covid-19 is still very much here, and we should remain cautious, avoid travelling and minimise social contact wherever possible. 

With that in mind, this Christmas won’t be quite like any other, and there are more differences you should expect. Work Christmas parties are going to be different: you might have to think outside the box, but you can certainly still find ways to indulge in food and drink with your colleagues online. It’s also smart to put any ideas for a New Years Eve party firmly in the digital realm this time round, but first, let’s look at a few ideas to enjoy the most magical time of year from the comfort and safety of your own home.

Bake!

A lot of people have turned to baking at some point throughout the lockdowns, and there’s no better time to roll up your sleeves and make something delicious than at Christmas. With the Great British Bake Off coming to an end too, we may be left with a sponge shaped hole in our lives. Look beyond the banana bread and set aside the sourdough. Why not bake your very own showstopper this year?

Video Call with Santa

Here’s hoping that old Saint Nick can find a loophole in the travel bans and still enjoy a glass of sherry or two in your living room this year. Whether his delivery schedule will be impacted or not is one thing, but you certainly won’t be sitting on his knee at any shopping centres. That doesn’t mean the kids have to miss out though, with websites like www.santascallingyou.co.uk and www.santasgrotto.live offering you the chance to talk to him over the wonders of the internet! Even in December, videoconferencing continues to innovate. 

Indulge yourself in Christmas movies

There’s no reason to go anywhere, or even see anyone, to get in the Christmas spirit. It doesn’t matter if you’re home alone; wrap up warm, make yourself a hot chocolate, marshmallows optional but recommended (‘tis the season!) and put your feet up. Classic christmas movies will be available from all streaming services and broadcasters this year and you’ve earned at least one full day of watching them.

As the UK is set to depart from the frameworks of the EU, there is concern amidst London’s biggest share trading venues surrounding the topic of where they may be able to buy and sell European stocks and where they may not.

The dilemma

In order for trading to continue as normal, the EU would have to recognise that the UK and its exchanges are operating with rules and regulations that can be considered ‘equivalent’ to those under which the EU functions. Alasdair Haynes, the Chief Executive of Aquis Exchange who hold 5 per cent of the European Market, is very clear about his view of what is to come. He says, “there will be no equivalence. People are living in a pipe dream if they think it’s going to happen. People are getting prepared to move business over.” 

A declaration of no equivalence means that some EU based institutions will be prohibited from trading in London. That trading will be moved to other European cities, two popular examples of which are Amsterdam and Paris, which leaves London at serious risk of losing its dominance as a share trading centre. 

Currently, London handles up to 30 per cent of the European daily market, the daily market as a whole being worth €40billion. As exchanges opt to move their venues elsewhere in Europe to avoid the implications of share trading obligations (which determine which exchanges investors can trade their liquid stocks in), London’s grip on that 30 per cent will inevitably fall. 

Announced Plans

The London Stock Exchange Group’s share trading platform Turquoise has confirmed through a spokesperson that they now intend to open a base in Amsterdam at the end of November, from which it will trade EU shares. Cboe Europe, the largest stock exchange in Europe who are currently headquartered in the UK, has submitted their application to also establish an entity in the Dutch capital. TP ICAP, who are also headquartered in London at present, has begun discussion with French regulators with regard to setting up an EU base in Paris. While all three of these exchanges intend to keep their London venues where they are, their new plans are indicative of the overriding sense of uncertainty over the shape that Europe’s cross-border share trading market may take post-Brexit. 

David Howson, president of Cboe Europe, stated his concern by saying that “we need to be mindful Brexit doesn’t result in trading reverting back to national exchanges and undo all of the good work we’ve done to bring competition to [the] European equities market over the past decade.” 

Is cash still king? As contactless payment options have grown dramatically in availability and popularity in recent years, we have seen a reduction in the use of cash as a result. While there has been a steady decline in cash withdrawals, and the use of cash transactions in general was to be expected as new technology becomes more widespread, the unprecedented events of 2020 have resulted in a marked acceleration in this decline. The UK in particular provides a stark example of this trend, with the use of cash declining faster than the European average.

Where did the decline begin?

According to the banking trade body, UK Finance, debit card payments overtook cash payments for the first time in the UK in 2017. This moment was indicative of a wider trend, with cash payments falling steadily since 2012 and debit card payments rising at a similar rate. Contactless payments, too, have seen a steady increase in their usage since their introduction in 2007. They broke the £1bn in annual transactions landmark in 2013, seeing a further boost in 2014 when Transport For London introduced Oyster card readers that accept contactless bank cards. By 2018, over 60% of people over the age of 65 were reported to use contactless payments, which is a considerable number of the, historically, least tech-savvy portion of society. In the last three years alone, cash usage has effectively halved. In September 2017, there were 170 million withdrawals from cash machines; in September 2020, there were just 88 million. 

That is all to say, the decline in cash withdrawals and transactions, and particularly relative to the use of other forms of payment, comes as no surprise. The speed at which that decline has accelerated, however, is something of note.

Covid Acceleration

The data from Link, who operate the largest network of free-to-use ATMs in the UK, suggests that weekly ATM withdrawals since the first lockdown was lifted are a third lower than they were before the lockdown began. Accenture has reported that between 17th and 25th March 2020, cash usage in the UK declined by 50%. The report has forecast that across the whole of 2020, compared to 2019, the decline will look more like 40%. With the rest of Europe forecast to see a 30% decline in cash usage, that’s a considerable number. That reduction may well be here to stay. As consumers change their behaviours, and opt to avoid handling cash to avoid physical interaction with others throughout the pandemic, they may not return to older habits as time goes on. Time will tell what lasting impact the pandemic has on the UK’s preferred methods of transaction, but as it stands, the future looks largely cashless.

At the virtual Conservative Party Conference on 6th October, Prime Minister Boris Johnson gestured towards a plan in the pipeline to introduce 95% Loan To Value mortgages in an attempt to reinvigorate home ownership and in his words, “help turn generation rent, into generation buy.” 

While the details of this plan remain unclear, the PM declared that there were up to 2 million potential homeowners who would be able to afford repayments but do not currently have access to a mortgage. His proposed solution is to give young, first time buyers the option of fixed rate, long term loans of up to 95% of the value of the home.

Why is this new?

Up until the pandemic, there were many lenders who were providing 95% LTV mortgages, albeit generally requiring a guarantor. Due to the economic uncertainty and job insecurity accelerated by COVID-19, those lenders have chosen to rescind these products which require lower deposits. The result of this is that would-be first time buyers who have been saving for their first home, no longer have a large enough deposit to secure their mortgage.

The lenders, then, will need good reason to return these low deposit mortgages to their offering. The PM has suggested reducing the ‘stress tests’ that have been in place since the 2008 financial crisis, meaning would-be buyers would have to tick fewer boxes to be considered eligible and able to afford repayments.  

This relaxing of stress tests exposes the lenders to a risk of bad debts, should the economy take a downturn. To combat this, the PM has suggested a state guarantee to lenders. This would most likely come in the form of underwriting the debt; with the average home in the UK costing £220,000, underwriting 10 per cent of a deposit for 2 million buyers would leave the government and the taxpayer liable for £44billion.

The potential knock on effects

A side effect of the temporary reduced rates of stamp duty and the subsequent inflated house prices is that first time buyers are currently hesitant to commit to high LTV mortgages, where they are able to. They fear that they’re at risk of finding themselves in negative equity upon the return of full rates of stamp duty, and the possibility of reduced property value that may come with it. With reduced checks to validate who’s eligible for these mortgages, we could also see a larger portion of new buyers unable to afford their repayments, turning generation buy into generation foreclosed. 

While the state guarantee to lenders could incur a potential risk of £44billion of the public purse, experts believe this to be a high end estimate, and unlikely in practice.

95% LTV mortgages were available before the pandemic, and yet owning a home remained a pipe dream for many. Why this would be different now is up for debate, but time will tell.

Considering how small and densely populated the UK is, we are blessed with some amazing natural beauty.

There are 15 national parks in total: 10 in England, three in Wales and two in Scotland. Each national park has its own distinct beauty and character, drawing visitors from around the globe. 

From the Cairngorms’ rugged mountains to the quaint South Downs, Britain’s parks differ enormously in terms of scenery, climate and culture. 

The country’s most visited national park is the Lake District, which sees 16.5 million visitors a year. However, others see far fewer. Here are some of the least visited:

Exmoor

Despite being located in the more populous South of England, Exmoor is actually Britain’s least visited national park. It receives just 1.4 million visitors a year.

Nestled on the border between Somerset and Devon, visitors can take in a spectacular mixture of dramatic coastal landscapes, rolling hills and lush woodland.

Sparsely populated, Exmoor is home to some of the darkest skies in the country and is a designated International Dark Sky Reserve. On a clear night, the Exmoor skies are simply stunning. Many astronomical wonders can be seen with the naked eye alone. 

Northumberland National Park

This diverse national park is the most northerly in England and the least populated in the UK. Covering an area of 1,048 kilometres, this park encompasses Kielder Forest and the Cheviot Hills and receives just 1.5 million visitors a year.

The park is an excellent place to see Hadrian’s Wall, a colossal triumph of Roman engineering and a designated World Heritage Site. You can also still find red squirrels hiding in the park’s woodlands, a rare sight in England these days because of invasive grey squirrels which have nearly wiped out their red cousins due to a fatal virus they transmit.

Pembrokeshire Coast

The Pembrokeshire Coast is Britain’s only coastal national park, and its beauty hasn’t gone unnoticed. The American National Geographic Traveler magazine recently rated the Pembrokeshire Coast one of the top two coastal destinations in the world.

This section of the welsh coast is notable for its rugged cliffs, dazzling beaches and hidden coves. A mecca for adventure sports, walkers, surfers, kayakers and sailors are in their element.

The national park also features some amazing wildlife. Visitors can find puffins and Manx shearwaters on the islands of Caldey, Grassholm, Skokholm, Skomer and Ramsey. On a sunny day, you might even see a seal snoozing in the sun.

Cairngorms

Located in North East Scotland, the Cairngorms is by far the country’s largest national park, stretching for 4,528 square kilometres. Despite its large size, the park sees just 1.5 million visitors each year. 

If it’s remoteness you’re after, this is the place to come. The park is home to some of the UK’s most spectacular scenery and the country’s second highest mountain, Ben Macdui. 

You can also find Scotland’s best established ski areas. Cairngorm Mountain near Aviemore can provide some excellent skiing or snowboarding if you get the conditions right. And if you’re blessed with a crisp, clear day, the views across the Cairngorms are truly a sight to behold.

There’s a chance that many workplaces may never return to office. Several prominent tech firms have already said that their staff can continue to work from home even after the pandemic and the evidence suggests that a large number of other employers are thinking the same thing.

Essentially, the pandemic accelerated an already established shift in the way we work, so that a few years worth of changes happened overnight.

The Chartered Institute of Personnel and Development recently conducted a survey and found that the proportion of people working regularly from home has risen to 37%, more than double the number from before the pandemic.

What’s more, employers think that the proportion of staff who work permanently from home full time will rise to 22% post-pandemic. In those pre-pandemic, halcyon days, this figure was 9%.

This shift will have financial implications for those home-working. And, as usual, the good comes with the bad. Here are some things you should consider:

It might affect your insurance costs

Back in March, the sudden change to home working will have been unexpected and you might have overlooked the impact it could have on your insurance. However, now the dust is settling, you should mention it to your home insurer. 

Chances are your home will have an extra printer, laptop and tablet, valuables that should be covered by your home insurance policy. Remember that if this kit belongs to your employer, their insurance should protect it. It’s worth double checking before you add anything to your policy.

Lastly, if you’re working from home permanently and no longer using your car to commute, tell your insurer. You may be able to pay less on your premiums.

You can claim tax relief on expenses

On 6 April, Rishi Sunak raised the claim allowance to £6 a week to cover extra household bills caused by working at home. 

When there is a home working arrangement in place, an employer can pay a weekly amount to its employees tax free. If you think that your costs exceed this amount, you should check with your employer to see if they will make higher contributions.

This benefit will only be available if your employer specifically asked you to work from home. If you’re working from home voluntarily, you cannot claim this tax relief on your bills.

It might be harder to secure a pay rise

By now, it’s widely established that working from home needn’t have an adverse effect on the quality of your work. However, there’s still quite a lot of uncertainty around the effects of homeworking on employees’ ability to secure promotions and pay increases.

When working remotely, it can be hard to keep relationships with people in your firm. There’s also a chance that employees who work from home permanently in a company where some staff still work from the office could get sidelined when promotions come up.

Showing the value of your efforts can be more difficult. It seems like good communication is important to avoid being overlooked. Try to communicate any new skills you have learnt and consistently show how your personal development is supporting you to do your job effectively at home.

If you’d like to know more about how your career choices affect your financial future, please get in touch. We’d be more than happy to help.

The government has confirmed that the minimum age for drawing a personal pension is to rise to 57 in 2028.

Savers who pay into a personal pension either directly or through their workplace can currently access their money at 55. However, the government plans to raise the age as a result of increased life expectancy.

The change hasn’t yet been brought into law, but Treasury Minister John Glen has confirmed there are plans for legislation. 

In parliament, he said: “In 2014 the government announced it would increase the minimum pension age to 57 from 2028, reflecting trends in longevity and encouraging individuals to remain in work, while also helping to ensure pension savings provide for later life.”

The change will affect workers currently aged 47 and under, and was first announced by then chancellor George Osborne.

As chancellor, George Osborne significantly changed the way we can access our pensions.

He brought in rules that allowed retirees more access to their personal pensions, removing both the limit on cash withdrawals and the requirement to buy an annuity to ensure a secure retirement income.

Opponents to the rise in pensions age claim that the changes restrict workers’ freedom to retire. The changes will make it more difficult for some to retire sooner.

One investment analyst has described the change as a “kick in the teeth at a time when many people are reassessing their work/life balance after a terrible year socially, emotionally and economically.”

However, others believe that the changes are a positive step because they give people two years more to pay into their pension funds. They argue that this will increase the chances that retirees will have enough saved in their pension pots to provide an adequate level of income for the remainder of their lives.

Those who were planning to access their pensions at 55 but can no longer do so could look at other options. These could include saving into an Isa to fund the two year period before turning 57. 

Most savers will agree that the government is right to give so much advance warning, unlike with the increase in state pension age for women from 60 to 65, which caused some animosity. These changes do not affect when you can claim your state pension.

If you have any further questions around your pension pots, please get in touch.

In December 2019, the Conservatives won an 80 seat majority in the General Election and three months later, new Chancellor Rishi Sunak presented his first Budget. But by then there was a large cloud on the horizon – the outbreak of Covid-19. 

The Chancellor used his Budget speech in March to present a raft of measures to support businesses and jobs, promising to do “whatever it takes.” A week later he was back with more emergency measures and on Monday 23rd March, the UK went into full lockdown. 

Six months on from lockdown, the Treasury announced that the Chancellor’s traditional Budget speech had been cancelled for this year and instead he would present a Winter Economic Plan on Thursday 24th September.  

What has happened in the last six months? 

The last six months for the UK economy can perhaps be summarised in two words: ‘recession’ and ‘redundancies’. Figures released for the second quarter of the year – April to June – showed that the UK economy had shrunk by 20.4%. Early hopes of a ‘V-shaped recovery’ from the downturn quickly vanished.

The pandemic has unquestionably accelerated trends that may otherwise have taken 20 or 30 years to arrive. We may well all have been working from home by 2050 but this week, the Prime Minister told office workers to do it for perhaps the next six months. That will surely have serious consequences for many town centres and the ‘commuter economy’. 

These changes have, inevitably, meant widespread redundancies. Figures recently released suggest that UK payrolls shrank by 695,000 in August as the Chancellor’s furlough scheme started to wind down. 

The Chancellor’s Speech 

The Chancellor, Rishi Sunak, was at pains to stress that he’d consulted both sides of industry on the measures he was going to introduce. He was photographed before the speech with Carolyn Fairbairn of the CBI, and Frances O’Grady of the TUC. 

He rose to his feet in a suitably socially-distanced House of Commons and stated that his aim was to protect jobs and the economy as winter approached, and to try and “strike a balance between the virus and the economy.” We were, he said, “in a fundamentally different position to March.” 

Rishi Sunak said that the UK had enjoyed “three months of growth” and that “millions of people” had come off the furlough scheme and returned to work. While ‘three months of growth’ is undoubtedly true, we must remember that the economy shrank by 20.4% in the second quarter. According to the Office for National Statistics, the economy grew by 6.6% in July – but it has only recovered just over half the activity lost because of the pandemic. 

The primary goal, the Chancellor stated, was “nurturing jobs through the winter” as we all faced up to the “new normal.” He conceded, though, that not all jobs could be protected and that people could not be kept in jobs that “only exist in furlough.” 

So what measures did the Chancellor propose? 

Emphasising that he could not protect “every business and every job” the Chancellor conceded that businesses faced uncertainty and reduced demand. In a bid to protect jobs through this period, the first measure he introduced was: 

The Job Support Scheme

• This is a six month scheme, starting on 1st November 2020
• To be eligible, employees must work a minimum of 33% of their normal hours 
• For remaining hours not worked, the Government and the employer will each pay one third of the employee’s wages 
• This means employees working at least 33% of their hours will receive at least 77% of their pay 
• The Chancellor also announced that he was extending the support scheme for the self-employed on “similar terms” to the Job Support Scheme 

Pay as you Grow 

After ‘eat out to help out’, we now have the Chancellor’s next catchy slogan: pay as you grow. 

• Businesses which took loans guaranteed by the Government during the crisis will now be able to extend those loans from six years to ten years, “nearly halving the average monthly repayment,” said the Chancellor. 
• There is also the option to move to interest only payments, or to suspend payments for six months if the business “is in real trouble,” with no impact on the business’s credit rating. 
• Coronavirus Business Interruption Loans (CBILS), taken out by a reported 60,000 SMEs, can now also be extended to 10 years.
• The Chancellor also promised a new government-backed loan scheme, to be introduced in January.

VAT Deferral 

• Businesses who deferred their VAT during the crisis will no longer have to pay a lump sum at the end of March next year. 
• They will have the option of splitting it into smaller, interest free payments during the 2021-2022 financial year. “This will benefit up to half a million businesses,” claimed the Chancellor. 

Income tax is deferred – but it still needs to be paid 

As we all know, death and taxes are inevitable. The Chancellor did at least delay one of them for many people…

• He announced extra support to allow people to delay their income tax bill, which should benefit millions of the self-employed. 
• Those with a debt of up to £30,000 will be able to go online and set up a repayment plan to January 2022.
• Those with a debt over £30,000 should contact HMRC and set up a plan over the phone. 

The planned VAT increase is postponed 

• The Chancellor’s final move was to give direct, targeted help to the tourism and hospitality sectors. 
• These two sectors had benefitted from a lower VAT rate of 5%. This lower rate was due to end in January, but will now remain in force until 31st March 2021. 

What was the reaction to the speech? 

As with all Budget speeches, the reaction was mixed. Carolyn Fairbairn of the CBI praised the Chancellor for “bold steps which will save hundreds of thousands of viable jobs this winter.” 

Manufacturing group Make UK said the Chancellor ‘deserved credit’ for looking at action taken in other countries such as Germany and France and copying their successful ideas. 

The Adam Smith Institute was more cautious: the Chancellor’s plans were “sensible – but not costless.” Matthew Lesh, head of research at the free-market think tank said, “The Government must resist becoming addicted to spending. Temporary spending is sensible to keep struggling businesses afloat, but in the longer run we are going to have to get the national accounts in order.” 

There was, though, plenty of criticism, especially from the retail sector. Lord Wolfson, boss of Next, warned that ‘hundreds of thousands’ of retail jobs may now become ‘unviable’ in the wake of the crisis. “I wouldn’t want to underestimate the difficulty,” he said, “I think it is going to be very uncomfortable.” 

Where do we go from here? 

As we have commented above, six months, roughly to the end of March, now seems to be the accepted next phase of the fight against the pandemic. As people worry about whether they’ll be able to see their families over Christmas, many will also be worrying about their jobs.

In his speech, the Chancellor more than once stressed that he could not save ‘every job and every business’ and a sharp rise in unemployment through the winter seems inevitable, which will lead to more Government spending on benefits and lower tax receipts. 

The Treasury is already facing a significant shortfall and the Winter Economic Plan, although the level of Government support has been sharply scaled back, will only add to that. At some point, all the support will need to be paid for, either by increased taxes or more optimistically, a resurgent economy. 

What does this mean for my savings and investments? 

Many world stock markets have proved remarkably resilient to the pandemic and are showing gains this year. Unfortunately, the UK’s FTSE-100 index is not one of them: it ended 2019 at 7,542 and closed March as the country went into lockdown at 5,672. As we write this commentary (Friday morning), it is standing at 5,823, up 2.66% on the end of March. 

As we have stressed many times, saving and investing is a long-term commitment and, while there will undoubtedly be plenty of bumps in the road ahead, Governments and central banks around the world remain committed to an eventual economic recovery. Yes, the pandemic has accelerated trends and certain sectors of both the UK and world economies have suffered serious damage; but as we never tire of saying, new companies will find new ways to bring new products to new markets. 

We can, in the long term, still face the future with confidence but we appreciate that some clients may have understandable short term concerns. 

If you have any questions on this report, or on any aspect of the current situation, please do not hesitate to get in touch with us. 

The Chancellor has, we think, taken sensible and prudent action. As he said, “life can no longer be put on hold” and let us hope that economic activity in the UK – and the wider world – quickly reflects that. 

Thank you for reading the report.

If you’re reading this as one of our clients, we’re obviously pleased with the decision you’ve made (and hopefully you are too!) but we thought it would be helpful to outline some of the considerations.

So, if you’ve set up a limited company, must you have an accountant? By law, no, you don’t require one. It’s not a statutory obligation. But you must prepare an annual set of accounts which need to be filed with Companies House and you must have a full set of corporate tax accounts to show HMRC. 

For financial years beginning on or after 1 January 2016, companies are also exempt from being audited, if they have at least two of the following:

• an annual turnover of no more than £10.2 million
• assets worth no more than £5.1 million
• 50 or fewer employees on average

The only exception is if one of the shareholders who owns at least 10% of the shares demands an audit. 

What will an accountant do for you?  

It’s often thought that accountants just compile your accounts at year-end and submit your VAT  returns. A good accountant, however, will help with a wide range of other duties, such as:

• Registering the company with the relevant tax departments – VAT, Corporation Tax, PAYE 
• Setting up and running the company payroll, in line with the Real Time Information (RTI)  rules    
• Monthly bookkeeping (with online accounting – you may prefer to do this yourself and save extra fees)
• Dealing with the authorities on an ongoing basis (HMRC, Companies House)
• Providing tax planning advice
• Offering dividend advice
• Providing professional references for mortgages, lettings, other services

Services will differ from accountant to accountant so make sure you know what is included. 

An accountant’s role is to provide you with advice. You may have a query about what expenses you can offset against Corporation Tax or be unsure as to whether you have enough retained profit to declare a dividend legally. Whatever the issue, it’s good to have an experienced professional on hand.  

One major advantage is that a professional accountant will be experienced in dealing with the tax authorities should an enquiry arise. They will know the correct format to submit any information and will understand the various subtleties of different regulations.   

If someone does decide to look after their own affairs, they need to be aware that they must maintain their accounts in line with the Generally Accepted Accounting Practice in the UK. It’s their responsibility to submit their information in a timely and accurate manner so as to meet statutory legislation.

On balance, most people decide that once they’ve calculated how long it takes to prepare the accounts, do the bookkeeping and liaise with HMRC, a small business accountant would save them both time and money, while enabling them to get on with running their business.